0001856365-23-000033 | 10-Q | XBRL Viewer

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Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands	3 Months Ended				6 Months Ended		9 Months Ended	11 Months Ended	12 Months Ended
	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Jun. 30, 2023 USD ($) segment	Jun. 30, 2022 USD ($)	Sep. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) shares	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Aug. 16, 2022 shares
Subsidiary, Sale of Stock [Line Items]
Interest and fees on loans	$ 14,355		$ 12,864		$ 26,697	$ 26,020
Adjustment to net income	4,638		5,482		8,499	14,916
Gain on sale of loans		$ 2,100			887	7,464
Gain on sale of loans, net	700	1,500	$ 2,412		$ 887	$ 7,464
Past due period after which loans are placed on nonaccrual status					90 days
Common stock repurchase program, shares authorized to be purchased (in shares) \| shares											644,241
Stock repurchases (in shares) \| shares								413,263
Common stock repurchased, value	$ 2,173				$ 2,388			$ 3,500
Number of reportable segments \| segment					1
Other Assets
Subsidiary, Sale of Stock [Line Items]
New loan trailing fee asset		$ 2,300							$ 2,300
Out-of-Period Adjustment
Subsidiary, Sale of Stock [Line Items]
Interest and fees on loans				$ (800)
Interest and fees on loans, net of tax				$ (600)
Adjustment to net income									$ (900)
Gain on sale of loans							$ 1,200			$ 900
Gain on sale of loans, net							$ 900			$ 600
FinWise Bank
Subsidiary, Sale of Stock [Line Items]
Percentage of business acquired	100.00%				100.00%			100.00%

Investment in Business Funding Group, LLC	6 Months Ended
Investment in Business Funding Group, LLC	Jun. 30, 2023
Equity Method Investments and Joint Ventures [Abstract]
Investment in Business Funding Group, LLC	Investment in Business Funding Group, LLC On December 31, 2019, the Company purchased from certain members of BFG a 10% membership interest in exchange for an aggregate of 950,784 shares of par value $0.001 Common Stock of the Company. The exchange was accounted for at fair value based on the fair value of the Company’s shares of approximately $3.5 million. The Company’s 10% membership interests of BFG are comprised of Class A Voting Units representing 4.96% of the aggregate membership interests of BFG and Class B Non-Voting Units representing 5.04% of the aggregate membership interests of BFG. The other existing members of BFG jointly own the remaining 90% of the outstanding membership interests, on a fully-diluted basis – all of which membership interests are Class A Voting Units. Based on the Company’s accounting policy with respect to investments in limited liability companies, the Company concluded that its level of ownership was indicative of significant influence and, as a result, the investment would be accounted for using the equity method. However, the Company elected the fair value option for its investment due to cost-benefit considerations. The Company received distributions from BFG in the amounts of $0.3 million and $0.1 million for the six months ended June 30, 2023 and 2022, respectively. These distributions were recorded in the Consolidated Balance Sheets as decreases in the investment in BFG. On March 31, 2020, the Company entered into an agreement with BFG whereby the Company has the right of first refusal to purchase additional interests in BFG from any selling members. Additionally, the Company was granted an option to purchase all, but not less than all, of the interests in BFG from the remaining members for an earnings multiple between 10 times and 15 times net profit based on the fiscal year ended immediately prior to the exercise of the option. The option period begins on January 1, 2021 and expires on January 1, 2028. In consideration of granting the first right of refusal and the option, BFG members received 270,000 warrants in the aggregate. The warrants have an exercise price of $6.67 per share and the warrants expire on March 31, 2028. The warrants are free-standing equity instruments and, as a result, are classified within equity at the fair value on the issuance date. The fair value of the warrants was determined by our board of directors with input from management, relying in part upon valuation reports prepared by a third-party valuation firm using a Black-Scholes option pricing model adjusted for a lack of marketability since the Company’s stock is not publicly traded. The resulting fair value of the warrants was $0.19 per share. Subsequent to June 30, 2023, the Company entered into a Membership Purchase Agreement (the "Purchase Agreement") with BFG and four members of BFG ("Sellers") dated as of July 25, 2023. Pursuant to the Purchase Agreement, the Company will acquire an additional 10% voting ownership interest in BFG (the "Transaction"). As a part of the Transaction, the Company’s existing 5.1% non-voting ownership interest in BFG will be converted to a voting ownership interest and, when combined with the Company’s existing 4.9% voting ownership interest and the 10% voting ownership interest in BFG to be acquired in the Transaction, the Company will have a 20% voting ownership interest in BFG. At the closing of the Transaction (the "Closing"), the Company will issue in the aggregate 372,132 shares of Common Stock of the Company, par value $0.001 per share, in a private placement to the Sellers in exchange for their 10% aggregate ownership interest in BFG, provided that the average of the last sales prices of the Company's Common Stock on the Nasdaq National Market for the 10 consecutive trading days preceding the Closing date (the "Average FinWise Share Price") is less than $12.63 per share and greater than $6.00 per share. The Purchase Agreement contains representations and warranties, covenants and indemnification provisions which the Company believes are customary for a transaction of this nature. If on the Closing date, the Average FinWise Share Price is more than $12.63 per share, the Company may terminate the Purchase Agreement. If on the Closing date, the Average FinWise Share Price is less than $6.00 per share, BFG may terminate the Purchase Agreement. Closing is subject to certain conditions, including the receipt of any required regulatory approval. Either of the Company or the Sellers may terminate the Purchase Agreement if any condition to the other parties’ obligations has not been satisfied by September 30, 2023. For further discussion on the Company’s investment in BFG, see Note 13 Related Parties.

Fair Value of Financial Instruments - Investment in BFG Level 3 Recurring Asset (Details)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2019
Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investment, measurement input			0.0450
Discounted Cash Flows \| Level 3 \| Revenue growth rate \| Fair Value, Recurring \| Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investment, measurement input	0.107	0.108
Discounted Cash Flows \| Level 3 \| Expense growth rate \| Fair Value, Recurring \| Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investment, measurement input	0.141	0.115
Discounted Cash Flows \| Level 3 \| Discount rate \| Fair Value, Recurring \| Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investment, measurement input	0.250	0.300
Guideline Public Company \| Level 3 \| Multiples of enterprise value \| Fair Value, Recurring \| Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investment, measurement input	3.5	3.0
Guideline Public Company \| Level 3 \| Multiples of enterprise value \| Fair Value, Recurring \| Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investment, measurement input	5.0	5.0

Fair Value of Financial Instruments - Investment in BFG Activity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Beginning balance			$ 4,800	$ 5,900
Distributions from BFG			(335)	(327)
Change in fair value of BFG	$ 120	$ (575)	35	(973)
Ending balance	$ 4,500	$ 4,600	$ 4,500	$ 4,600

Summary of Significant Accounting Policies	6 Months Ended
Summary of Significant Accounting Policies	Jun. 30, 2023
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Nature of business and organization – FinWise Bancorp is a Utah Corporation headquartered in Murray, Utah and operates all business activities through its wholly-owned subsidiaries FinWise Bank, f/k/a Utah Community Bank and FinWise Investment, LLC. FinWise Bank was incorporated in the state of Utah on May 7, 1999. FinWise Bancorp, f/k/a All West Bancorp, was incorporated in the state of Utah on October 22, 2002, after which, it acquired 100% of FinWise Bank. As of March 4, 2016, FinWise Bank’s articles of incorporation were amended to rename the entity FinWise Bank. As of March 15, 2021, FinWise Bancorp’s articles of incorporation were amended and restated to rename the entity FinWise Bancorp. References herein to “FinWise Bancorp,” “Bancorp” or the “holding company,” refer to FinWise Bancorp on a standalone basis. The word “Company” refers to FinWise Bancorp, FinWise Investment, LLC, and FinWise Bank collectively and on a consolidated basis. References to the “Bank” refer to FinWise Bank on a standalone basis. The Bank provides a full range of banking services to individual and commercial customers. The Bank’s primary source of revenue is from loans including consumer, Small Business Administration (SBA), commercial, commercial real estate, and residential real estate. The Bank also has established Strategic Programs with various third-party loan origination platforms that use technology to streamline the origination of unsecured consumer and secured or unsecured business loans to borrowers within certain approved credit profiles. The Bank earns monthly program fees based on the volume of loans originated in these Strategic Programs, as well as interest during the time the Bank holds the loans. The Company is subject to competition from other financial institutions and to the regulations of certain federal and state agencies and undergoes periodic examinations by those agencies. Basis of Presentation – The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with rules and regulations of the Securities and Exchange Commission ("SEC") and include the activity of the Company and its wholly owned subsidiaries, FinWise Investments, LLC and the Bank. The statements do not include all of the information and footnotes required by GAAP for complete financial statements. All significant inter-company transactions have been eliminated in consolidation. In the opinion of management, all the adjustments (consisting of normal and recurring adjustments) necessary for the fair presentation of the consolidated financial condition and the consolidated results of operations for the periods presented have been included. The results of operations and other data presented for the three and six months ended June 30, 2023 are not necessarily indicative of the results of operations that may be expected for subsequent periods or the full year results. The unaudited consolidated financial statements presented should be read in conjunction with the Company’s audited consolidated financial statements and notes to the audited consolidated financial statements included in the Company’s December 31, 2022 Annual Report on Form 10-K. Certain prior period amounts have been reclassified to conform to current period presentation. The Company has evaluated subsequent events for potential recognition and/or disclosure in this Quarterly Report on Form 10-Q through the date these consolidated financial statements were issued. Out-of-period adjustments – During the first quarter of 2022, we recognized a $(0.8) million ($(0.6) million net of tax) reduction of interest and fees on loans and loans receivable, net as an out-of-period adjustment. The impact associated with this correction was not considered material to the interim unaudited consolidated financial statements for the three and six months ended June 30, 2022, year ended December 31, 2022, or the financial statements of any previously filed interim or annual periods. During the third quarter of 2022, the Company identified an error in the calculation of the Company’s tax provision which understated income tax expense for previously reported financial statements. The error was related to an incorrect application of Section 162(m) of the Internal Revenue Code, which limits tax deductions relating to executive compensation of certain executives of publicly held companies. The Company recorded an out-of-period adjustment during the third quarter of 2022 to correct the previously understated income tax expense. The adjustment resulted in a decrease to after-tax income of $(0.9) million for the year ended December 31, 2022. The impact associated with this correction was not considered material to the interim unaudited consolidated financial statements for the three months ended September 30, 2022, year ended December 31, 2022, or the financial statements of any previously filed interim or annual periods. During the fourth quarter of 2022, the Company established a new loan trailing fee asset which is included in “Other assets” on the Consolidated Balance Sheets of approximately $2.3 million and recognized $2.1 million in gain on sale of loans ($1.5 million net of tax) as an out-of-period adjustment of which $1.2 million ($0.9 million net of tax) would have been recorded in the first three quarters of 2022 with the remaining $0.9 million ($0.6 million net of tax) associated with years prior to 2022. Before this correction, the loan trailing fees had been recognized in revenue during the month payment was owed by the Strategic Program rather than as a gain to be recognized upon sale of the loan receivables. The impact associated with this correction was not considered material to the interim unaudited consolidated financial statements for the three and six months ended December 31, 2022, year ended December 31, 2022, or the financial statements of any previously filed interim or annual periods. Cash and Cash Equivalents – For purposes of reporting cash flows, the Company defines cash and cash equivalents as cash, cash due from banks, interest-bearing deposits in other banks, other interest-bearing deposits, and federal funds sold. Loans Receivable – Loans receivable are reported at their outstanding principal adjusted for any charge-offs, the allowance for credit losses, and deferred fees and costs. Loan origination fees, net of certain direct origination costs, if any, are deferred and recognized on an adjustment of the related loan yield using an effective-yield method over the contractual life of the loan. Interest income on loans is recognized on an accrual basis commencing in the month of origination using the interest method. Delinquency fees are recognized in income when chargeable and when collectability is reasonably assured. The Company requires most loans to be substantially collateralized by real estate, equipment, vehicles, accounts receivable, inventories or other tangible or intangible assets. Real estate collateral is in the form of first and second mortgages on various types of property. The Company also originates unsecured loans to consumers and businesses. The Company may change its intent from holding loans for investment and reclassify them as held-for-sale. Loans Held For Sale - Loans held-for-sale are carried at the lower of aggregate cost and fair value. Gains and losses are recorded in non-interest income based on the difference between sales proceeds and carrying value. Nonaccrual Loans – The Company's policy is to place loans on a nonaccrual status when: 1) payment is in default for 90 days or more unless the loan is well secured and in the process of collection; or 2) full repayment of principal and interest is not foreseen. When a loan is placed on nonaccrual status, all accrued and uncollected interest on that loan is reversed. Past-due interest received on nonaccrual loans is not recognized in interest income but is applied as a reduction of the outstanding principal of the loan. A loan is relieved of its nonaccrual status when all principal and interest payments are brought current, the loan is well secured, and an analysis of the borrower's financial condition provides reasonable assurance that the borrower can repay the loan as scheduled. Stock Repurchase Program – On August 18, 2022, the Company announced that its Board of Directors (the “Board”) has authorized, effective August 16, 2022, a common stock repurchase program to purchase up to 644,241 shares of the Company’s common stock in the aggregate. The repurchase program expires on August 31, 2024, but may be limited or terminated at any time without prior notice. The repurchase program authorizes the repurchase by the Company of its common stock in open market transactions, including pursuant to a trading plan in accordance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or privately negotiated transactions. The authorization permits management to repurchase shares of the Company’s common stock from time to time at management’s discretion. Repurchases may also be made pursuant to a trading plan under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The actual means and timing of any shares purchased under the program will depend on a variety of factors, including the market price of the Company’s common stock, general market and economic conditions, and applicable legal and regulatory requirements. The repurchase program does not obligate the Company to purchase any particular number of shares. Since commencement of the repurchase program, the Company has repurchased 413,263 shares for approximately $3.5 million as of June 30, 2023 and retired them at cost. Revenue from Contracts with Customers – The Company applies the provisions of ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of this standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Services that the Company reports as part of non-interest income are subject to ASC 606 and include fees from its deposit customers for transaction-based activities, account maintenance charges and overdraft services. Transaction-based fees, such as ACH and wire transfer fees, overdraft, return and stop payment charges, are recognized at the time such transactions are executed and the services have been fulfilled by the Company. The fees are typically withdrawn from the customer’s deposit account balance. The Company also receives fees from third-parties in its Strategic Programs for setting up systems and procedures to efficiently originate loans in a convenient, compliant and safe manner. Because the third-party simultaneously receives and benefits from the services, revenue is recognized evenly over the term of the loan program. Program Fees received in connection with the Company’s Strategic Programs are recorded at the time services are provided. Segment Reporting – Operating segments are components of a business where separate financial information is available and evaluated regularly by the chief operating decision makers ("CODMs") in deciding how to allocate resources and in assessing performance. ASC Topic 280, Segment Reporting, requires information to be reported about a company's operating segments using a "management approach", meaning it is based on the way management organizes segments internally to make operating decisions and assess performance. Based on this guidance, the Company has one reportable operating segment, the Bank. Recently adopted accounting pronouncements Allowance for Credit Losses: On January 1, 2023, the Company adopted ASU 2016-13, Topic 326 which replaced the incurred loss methodology with CECL for financial instruments measured at amortized cost and other commitments to extend credit. CECL requires the immediate recognition of estimated credit losses expected to occur over the estimated remaining life of the asset. The forward-looking concept of CECL requires loss estimates to consider historical experience, current conditions and reasonable and supportable economic forecasts of future events and circumstances. The allowance for credit losses (“ACL”) on loans held for investment is the combination of the allowance for loan losses and the reserve for unfunded loan commitments. The allowance for loan losses is reported as a reduction of the amortized cost basis of loans, while the reserve for unfunded loan commitments is included within "other liabilities" on the Consolidated Balance Sheets. The estimate of credit loss incorporates assumptions for both the likelihood and amount of funding over the estimated life of the commitments, including adjustments for current conditions and reasonable and supportable forecasts. Management periodically reviews and updates its assumptions for estimated funding rates. The amortized cost basis of loans does not include accrued interest receivable, which is included in "accrued interest receivable" on the Consolidated Balance Sheets. The "Provision for credit losses" on the Consolidated Statements of Income is a combination of the provision for credit losses and the provision for unfunded loan commitments. ACL in accordance with CECL methodology With respect to the Bank's core portfolio which consists of SBA 7(a), local lending, retail point of sale, and equipment finance and leasing, the Bank pools similar loans that are collectively evaluated and determines an appropriate level of general allowance by portfolio segment using a non-discounted cash flow model taking into account probability of default, loss in the event of default, and prepayment speed estimates based on industry specific collected data. The model captures losses over the historical charge-off and prepayment cycle and applies those losses at a loan level over the remaining maturity of the loan. The model then calculates a historical loss rate using the average losses over the reporting period, which is then applied to each segment utilizing a standard reversion rate. With respect to the Bank's active retained Strategic Program loan portfolio, the Bank is using a methodology that compares the actual loan performance of a vintage to the worst performing loans within that vintage, known as the high-water mark. The Bank records the expected credit losses based on the high-water mark loss rate. With respect to the Bank's inactive retained Strategic Program loan portfolio, performance data at the summary level provided by the Strategic Programs is banded by credit profile and original loan term and compared to actual loan performance on a quarterly basis. The expected loss rate is supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, including but not limited to national unemployment rate forecasts. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. Also included in the ACL are qualitative factors based on the risks present for each portfolio segment. These qualitative factors include the following that are derived from the Interagency Policy Statement on Allowance for Credit Losses: changes in lending policies and procedures; changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the loan portfolio; changes in the nature and volume of the loan portfolio and in the terms of loans; changes in the experience, ability, and depth of lending management and staff; changes in the volume and severity of past due loans, nonaccrual loans, and classified or graded loans; changes in the quality of the Bank's loan review system; changes in the value of underlying collateral for loans that are not collateral-dependent; changes in the level of concentration of credit; changes in the effect of competition, legal, and regulatory requirements on the level of estimated credit losses; and, if applicable, changes in the composition and volume of the loan portfolio due to mergers, acquisitions, and other significant transactions not considered elsewhere. The Bank also considers as an additional qualitative factor any lingering "ripple" effects of the Covid-19 pandemic, including lasting changes to consumer behavior, lending, and society at large. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. When management identifies loans that do not share common risk characteristics (i.e., are not similar to other loans within a pool) they are evaluated on an individual basis. These loans are not included in the collective evaluation. For loans identified as having a likelihood of foreclosure or that the borrower is experiencing financial difficulty, a collateral dependent approach is used. These are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. Under CECL, for collateral dependent loans, the Company has adopted the practical expedient method to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. The CECL methodology requires a significant amount of management judgment in determining the appropriate allowance for credit losses. Several of the steps in the methodology involve judgment and are subjective in nature including, among other things: segmenting the loan portfolio; determining the amount of loss history to consider; selecting predictive econometric regression models that use appropriate macroeconomic variables; determining the methodology to forecast prepayments; selecting the most appropriate economic forecast scenario; determining the length of the reasonable and supportable forecast and reversion periods; estimating expected utilization rates on unfunded loan commitments; and assessing relevant and appropriate qualitative factors. In addition, the CECL methodology is dependent on economic forecasts, which are inherently imprecise and will change from period to period. Although the allowance for credit losses is considered appropriate, there can be no assurance that it will be sufficient to absorb future losses. In determining an appropriate amount for the allowance, the Bank segments and aggregates the loan portfolio based on common characteristics. The following segments have been identified: Commercial Real Estate. These loans are generally secured by owner-occupied nonfarm, nonresidential properties, or by other nonfarm, nonresidential properties. Owner-occupied commercial real estate loans are typically repaid first by the cash flows generated by the underlying business. Factors that may influence a business' cash flows include, but are not limited to, demand for its products or services, quality and depth of management, degree of competition, regulatory changes, and general economic conditions. Non-owner occupied commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions. Commercial and Industrial. These loans are generally secured by business assets such as furniture, fixtures, equipment. accounts receivable, inventory, business vehicles, and other business personal property. Commercial and industrial loans are typically repaid first by the cash flows generated by the borrower's business operations. The primary risk characteristics are specific to the underlying business and its ability to generate sustainable profitability and resulting positive cash flows. Factors that may influence a business' profitability include, but are not limited to, demand for its products or services, quality and depth of management, degree of competition, regulatory changes, and general economic conditions. Lease Financing Receivables. Equipment financing and leasing typically involve the use of equipment as collateral for the loan. If the borrower defaults on the loan, the Bank may need to repossess and sell the equipment to recover the outstanding debt. However, the value of the equipment may depreciate over time, or disappear, making it difficult for the Bank to recover the full amount of the loan. In equipment leasing, the residual value of the equipment is an important consideration. The residual value is the estimated value of the equipment at the end of the lease term. If the actual value of the equipment is lower than the residual value, the lessor may not be able to recover the full amount of the lease payments. Construction and Land Development. Risks common to construction loans are cost overruns, changes in market demand for property, supply chain interruption affecting construction materials, inadequate long-term financing arrangements and declines in real estate values. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values, and higher interest rates. Risks common to residential lot loans are those similar to other types of real estate construction loans, as many customers finance the purchase of improved lots in anticipation of constructing a 1 to 4 family residence. Accordingly, common risks are changes in market demand for property, supply chain interruption affecting construction materials, inadequate long-term financing arrangements and declines in real estate values. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values and higher interest rates. Consumer. These are loans to individuals for household, family, and other personal expenditures. Consumer loans generally have higher interest rates and shorter terms than residential loans but tend to have higher credit risk due to the type of collateral securing the loan or in some cases the absence of collateral. Residential Real Estate. These loans are generally secured by 1 to 4 family residential properties. The primary risk characteristics associated with residential mortgage loans typically involve: major living or lifestyle changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as for major medical issues or catastrophic events; and divorce or death. In addition, residential mortgage loans that have adjustable rates could expose the borrower to higher debt service requirements in a rising interest rate environment. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank. Residential Real Estate Multifamily. Risks common to multifamily loans are poor management, high vacancy rates and regulatory changes. The value of multi-family properties can be impacted by changes in the local real estate market. If property values decline, the Bank may not be able to recover the full amount of the loan if the property needs to be foreclosed. Strategic Program Loans. Unsecured consumer loans and secured or unsecured business loans issued by the Company through these programs generally follow and are limited to specific predetermined underwriting criteria. Strategic Program loans cover a wide range of borrower credit profiles, loan terms and interest rates. Strategic Program loans generally have higher interest rates and shorter terms similar to consumer loans and tend to have higher credit risk due to the type of collateral securing the loan or in most cases the absence of collateral. In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings and modifications. The Company adopted ASU 2022-02 on January 1, 2023. Effective January 1, 2023 loan modifications to borrowers experiencing financial difficulty are required to be disclosed by type of modification and by type of loan. Prior accounting guidance classified loans which were modified as troubled debt restructurings only if the modification reflected a concession from the lender in the form of a below market interest rate or other concession in addition to borrower financial difficulty. Under the new guidance, loans with modifications will be reported whether a concession is made or not. In the first half of 2023, there were no loan modifications which were subject to the new reporting. Enactment of the Inflation Reduction Act of 2022 On August 16, 2022, the U.S. government enacted the Inflation Reduction Act (IRA) which, among other changes, created a new corporate alternative minimum tax (AMT) based on adjusted financial statement income and imposes a 1% excise tax on corporate stock repurchases. The effective date of these provisions is January 1, 2023. The Company is aware of the effects that the enactment of the IRA will have on its consolidated financial statements. If expected stock repurchases are likely to be more than the exemption threshold, we will account for them in our tax provision.

SBA Servicing Asset - Narrative (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Transfers and Servicing [Abstract]
SBA loans serviced for others	$ 302.0	$ 318.6
SBA servicing asset	$ 5.2	$ 5.2
Weighted average prepayment rate	15.68%	14.24%
Weighted average term	4 years 2 months 26 days	4 years 5 months 12 days
Weighted average discount rate	14.33%	18.79%

Loans and Allowance for Credit Losses - Changes in Allowance for Loan Losses (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Total allowance for loan losses
Beginning Balance	$ 12,034,000	$ 9,987,000	$ 11,985,000	$ 9,855,000
Provision (Reversal) of Credit Losses	2,675,000	2,913,000	5,343,000	5,860,000
Charge-Offs	(2,722,000)	(2,662,000)	(5,887,000)	(5,571,000)
Recoveries	334,000	364,000	623,000	458,000
Ending Balance	12,321,000	10,602,000	12,321,000	10,602,000
Unfunded lending commitments
Beginning Balance	29,000		0
Provision (Reversal) of Credit Losses	13,000		16,000
Charge-Offs	0		0
Recoveries	0		0
Ending Balance	41,500		41,500
Total allowance for credit losses
Beginning Balance	12,063,000		11,985,000
Provision (Reversal) of Credit Losses	2,688,000		5,359,000
Charge-Offs	(2,722,000)		(5,887,000)
Recoveries	334,000		623,000
Ending Balance	12,363,000		12,363,000
Impact of ASU 2016-13 adoption
Total allowance for loan losses
Beginning Balance			257,000
Unfunded lending commitments
Beginning Balance			26,000
Total allowance for credit losses
Beginning Balance			283,000
Construction and land development
Total allowance for loan losses
Beginning Balance	285,000		424,000
Provision (Reversal) of Credit Losses	(6,000)		(78,000)
Charge-Offs	0		0
Recoveries	0		0
Ending Balance	279,000		279,000
Construction and land development \| Impact of ASU 2016-13 adoption
Total allowance for loan losses
Beginning Balance			(67,000)
Residential real estate
Total allowance for loan losses
Beginning Balance	799,000	411,000	876,000	352,000
Provision (Reversal) of Credit Losses	(51,000)	4,000	(73,000)	63,000
Charge-Offs	(121,000)	0	(121,000)	0
Recoveries	81,000	0	84,000	0
Ending Balance	708,000	415,000	708,000	415,000
Residential real estate \| Impact of ASU 2016-13 adoption
Total allowance for loan losses
Beginning Balance			(58,000)
Residential real estate multifamily
Total allowance for loan losses
Beginning Balance	5,000		3,000
Provision (Reversal) of Credit Losses	1,000		2,000
Charge-Offs	0		0
Recoveries	0		0
Ending Balance	6,000		6,000
Residential real estate multifamily \| Impact of ASU 2016-13 adoption
Total allowance for loan losses
Beginning Balance			1,000
Commercial real estate
Total allowance for loan losses
Beginning Balance	3,034,000	21,000	3,238,000	21,000
Provision (Reversal) of Credit Losses	133,000	1,000	625,000	1,000
Charge-Offs	0	0	(122,000)	0
Recoveries	0	0	0	0
Ending Balance	3,167,000	22,000	3,167,000	22,000
Commercial real estate \| Impact of ASU 2016-13 adoption
Total allowance for loan losses
Beginning Balance			(574,000)
Commercial and industrial
Total allowance for loan losses
Beginning Balance	277,000		339,000
Provision (Reversal) of Credit Losses	75,000		114,000
Charge-Offs	(66,000)		(84,000)
Recoveries	1,000		3,000
Ending Balance	287,000		287,000
Commercial and industrial \| Impact of ASU 2016-13 adoption
Total allowance for loan losses
Beginning Balance			(85,000)
Consumer
Total allowance for loan losses
Beginning Balance	82,000	62,000	65,000	62,000
Provision (Reversal) of Credit Losses	27,000	3,000	30,000	3,000
Charge-Offs	(19,000)	0	(19,000)	0
Recoveries	0	0	0	0
Ending Balance	90,000	65,000	90,000	65,000
Consumer \| Impact of ASU 2016-13 adoption
Total allowance for loan losses
Beginning Balance			14,000
Lease financing receivables
Total allowance for loan losses
Beginning Balance	325,000		339,000
Provision (Reversal) of Credit Losses	203,000		294,000
Charge-Offs	0		0
Recoveries	0		0
Ending Balance	528,000		528,000
Lease financing receivables \| Impact of ASU 2016-13 adoption
Total allowance for loan losses
Beginning Balance			(105,000)
Retained Strategic Program loans
Total allowance for loan losses
Beginning Balance	7,227,000	6,322,000	6,701,000	6,549,000
Provision (Reversal) of Credit Losses	2,293,000	2,365,000	4,429,000	4,923,000
Charge-Offs	(2,516,000)	(2,560,000)	(5,541,000)	(5,438,000)
Recoveries	252,000	315,000	536,000	408,000
Ending Balance	$ 7,256,000	6,442,000	7,256,000	6,442,000
Retained Strategic Program loans \| Impact of ASU 2016-13 adoption
Total allowance for loan losses
Beginning Balance			$ 1,131,000
SBA
Total allowance for loan losses
Beginning Balance		3,064,000		2,739,000
Provision (Reversal) of Credit Losses		374,000		730,000
Charge-Offs		(102,000)		(133,000)
Recoveries		48,000		48,000
Ending Balance		3,384,000		3,384,000
Commercial, non-real estate
Total allowance for loan losses
Beginning Balance		107,000		132,000
Provision (Reversal) of Credit Losses		166,000		140,000
Charge-Offs		0		0
Recoveries		1,000		2,000
Ending Balance		$ 274,000		$ 274,000

Fair Value of Financial Instruments - Narrative (Details) $ in Thousands	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2019
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investment in BFG	$ 4,500	$ 4,800	$ 4,600	$ 5,900
Measurement Input, Discount for Lack of Marketability
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investment, measurement input					0.20
Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investment, measurement input					0.0450

Commitments and Contingent Liabilities - Narrative (Details) - USD ($)	1 Months Ended	6 Months Ended
	Aug. 14, 2023	Jun. 30, 2023	Jun. 30, 2022	Mar. 31, 2023	Dec. 31, 2022	Apr. 20, 2020
Line of Credit Facility [Line Items]
PPP Liquidity Facility		$ 252,000			$ 314,000
Allowance for credit losses on unfunded commitments		41,500		$ 29,000	0
Paycheck Protection Program Liquidity Facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity		300,000			300,000
Fixed rate						0.35%
Average outstanding borrowings		300,000	$ 800,000
Line of Credit
Line of Credit Facility [Line Items]
PPP Liquidity Facility		0			0
Federal Reserve Bank borrowings on collateral		10,400,000			10,600,000
Term Funding Program
Line of Credit Facility [Line Items]
Federal Reserve Bank borrowings on collateral		800,000
Zion Bank \| Line of Credit
Line of Credit Facility [Line Items]
Unsecured line available					1,000,000
Zion Bank \| Line of Credit \| Subsequent Event
Line of Credit Facility [Line Items]
Unsecured line available	$ 5,000,000
Bank of the West \| Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity		1,050,000.00			1,050,000.00
Federal Home Loan Bank Secured Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity		2,500,000			2,600,000
PPP Liquidity Facility		0			0
Loans		$ 3,800,000			$ 4,000,000
Federal Home Loan Bank Secured Line of Credit \| Subsequent Event
Line of Credit Facility [Line Items]
Additional loans pledged	46,900,000
Increase in maximum borrowing capacity	$ 30,900,000

Investments - Held-to-Maturity Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	$ 14,403	$ 14,292
Unrealized Gain	0	5
Unrealized Loss	(1,673)	(1,569)
Estimated Fair Value	12,730	12,728
Mortgage-backed securities
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	7,511	8,087
Unrealized Gain	0	5
Unrealized Loss	(867)	(825)
Estimated Fair Value	6,644	7,267
Collateralized mortgage obligations
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	6,892	6,205
Unrealized Gain	0	0
Unrealized Loss	(806)	(744)
Estimated Fair Value	$ 6,086	$ 5,461

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Subparagraph (aaa)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Subparagraph (f)(1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Subparagraph (f)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Subparagraph (f)(3)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Subparagraph (f)(4)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5A
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5A

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5A
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5A

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5A
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5A

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5B

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5B
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5B

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5B
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5B

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5B
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5B

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5B
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5B

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5

+ Details

Fair Value of Financial Instruments - Assets Measured on Non-recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Level 3
Nonrecurring assets
Individually evaluated loans	$ 952	$ 450
Fair Value
Nonrecurring assets
Individually evaluated loans	952	450
Fair Value \| Level 1
Nonrecurring assets
Individually evaluated loans	0	0
Fair Value \| Level 2
Nonrecurring assets
Individually evaluated loans	0	0
Fair Value \| Level 3
Nonrecurring assets
Individually evaluated loans	$ 952	$ 450

Loans and Allowance for Credit Losses - Loans Summarized to Major Risk Category (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Loans and Leases Receivable Disclosure [Line Items]
Retained Strategic Program loans	$ 290,659		$ 236,601
Allowance for credit losses	(12,321)	$ (12,034)	(11,985)	$ (10,602)	$ (9,987)	$ (9,855)
Net loans	277,663		224,217
Financing Receivable, Incurred Loss Methodology
Loans and Leases Receivable Disclosure [Line Items]
Total Strategic Program loans	333,021		260,190
Loans held-for-sale	(42,362)		(23,589)
Retained Strategic Program loans	290,659		236,601
Deferred loan fees, net	(675)		(399)
Allowance for credit losses	(12,321)		(11,985)
Net loans	277,663		224,217
SBA
Loans and Leases Receivable Disclosure [Line Items]
Retained Strategic Program loans			145,172
Allowance for credit losses				(3,384)	(3,064)	(2,739)
SBA \| Financing Receivable, Incurred Loss Methodology
Loans and Leases Receivable Disclosure [Line Items]
Total Strategic Program loans	189,028		145,172
Retained Strategic Program loans			145,172
Allowance for credit losses			(4,294)
Commercial, non-real estate
Loans and Leases Receivable Disclosure [Line Items]
Retained Strategic Program loans			11,484
Allowance for credit losses				(274)	(107)	(132)
Commercial, non-real estate \| Financing Receivable, Incurred Loss Methodology
Loans and Leases Receivable Disclosure [Line Items]
Total Strategic Program loans	24,851		11,484
Retained Strategic Program loans			11,484
Allowance for credit losses			(401)
Residential real estate
Loans and Leases Receivable Disclosure [Line Items]
Retained Strategic Program loans	29,357		37,815
Allowance for credit losses	(708)	(799)	(876)	(415)	(411)	(352)
Residential real estate \| Financing Receivable, Incurred Loss Methodology
Loans and Leases Receivable Disclosure [Line Items]
Total Strategic Program loans	30,378		37,815
Retained Strategic Program loans			37,815
Allowance for credit losses			(497)
Strategic Program loans
Loans and Leases Receivable Disclosure [Line Items]
Total Strategic Program loans	63,094		47,848
Loans held-for-sale	(42,362)		(23,589)
Retained Strategic Program loans	20,732		24,259
Allowance for credit losses	(7,256)	(7,227)	(6,701)	(6,442)	(6,322)	(6,549)
Strategic Program loans \| Financing Receivable, Incurred Loss Methodology
Loans and Leases Receivable Disclosure [Line Items]
Total Strategic Program loans	63,094		47,848
Retained Strategic Program loans			24,259
Allowance for credit losses			(6,701)
Commercial real estate
Loans and Leases Receivable Disclosure [Line Items]
Retained Strategic Program loans	170,253		12,063
Allowance for credit losses	(3,167)	(3,034)	(3,238)	(22)	(21)	(21)
Commercial real estate \| Financing Receivable, Incurred Loss Methodology
Loans and Leases Receivable Disclosure [Line Items]
Total Strategic Program loans	18,677		12,063
Retained Strategic Program loans			12,063
Allowance for credit losses			(27)
Consumer
Loans and Leases Receivable Disclosure [Line Items]
Retained Strategic Program loans	6,180		5,808
Allowance for credit losses	(90)	$ (82)	(65)	$ (65)	$ (62)	$ (62)
Consumer \| Financing Receivable, Incurred Loss Methodology
Loans and Leases Receivable Disclosure [Line Items]
Total Strategic Program loans	$ 6,993		5,808
Retained Strategic Program loans			5,808
Allowance for credit losses			$ (65)

Fair Value of Financial Instruments - Quantitative Information for Level 3 Fair Value Measurements (Details) - Level 3 $ in Thousands	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Individually evaluated loans	$ 952	$ 450
Market comparable \| Adjustment to appraisal value
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Individually evaluated loans, measurement input	0.0034	0.0020

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

The Company measures and discloses certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, not a forced liquidation or distressed sale). GAAP establishes a consistent framework for measuring fair value and disclosure requirements about fair value measurements. Among other things, the standard requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s estimates for market assumptions. These two types of inputs create the following fair value hierarchy.

Level 1 – Quoted prices in active markets for identical instruments. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

Level 2 – Observable inputs other than Level 1 including quoted prices in active markets for similar instruments, quoted prices in less active markets for identical or similar instruments, or other observable inputs that can be corroborated by observable market data.

Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation also includes observable inputs from nonbinding single dealer quotes not corroborated by observable market data. In developing Level 3 measurements, management incorporates whatever market data might be available and uses discounted cash flow models where appropriate. These calculations include projections of future cash flows, including appropriate default and loss assumptions, and market-based discount rates.

The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize at a future date. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values. Transfers between levels of the fair value hierarchy are deemed to occur at the end of the reporting period.

The following methods were used to estimate the fair value of each class of financial instruments:

Cash and cash equivalents: The carrying amount of these items is a reasonable estimate of their fair value.

Investment securities held-to-maturity: The estimated fair values of investment securities are priced using current active market quotes, if available, which are considered Level 1 measurements. For most of the portfolio, matrix pricing based on the securities’ relationship to other benchmark quoted prices is used to establish the fair value. These measurements are considered Level 2.

Investment in Federal Home Loan Bank stock: The fair value is based upon the redemption value of the stock, which equates to the carrying value.

Strategic Program loans held-for-sale: The carrying amount of these items is a reasonable estimate of their fair value.

Loans held for investment: The fair value is estimated by discounting the future cash flows and estimated prepayments using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term. Some loan types’ fair value approximated carrying value because of their floating rate or expected maturity characteristics.

SBA servicing asset: The fair value of servicing assets is based on, in part, third -party valuations that project estimated future cash inflows that include servicing fees and outflows that include market rates for costs of servicing. The present value of the future cash flows are calculated utilizing market-based discount rates. The market-based discount rates represent risk spreads based on secondary market transactions utilizing calculated prepayment curves. Due to the fact that observable loan transactions are used to determine the risk spreads, the Company considers the measurement to be Level 2.

Investment in BFG: The Company purchased its ownership interest in BFG on December 31, 2019. The Company’s valuation technique utilized the average of the discounted cash flow method and the Guideline Public Company method. A 20% lack of marketability discount was applied to the valuation as well as a 4.50% discount to non-voting shares to arrive at fair value as of June 30, 2023 and December 31, 2022. The calculation of fair value utilized significant unobservable inputs, including projected cash flows, growth rates, and discount rates. The fair value of the investment in BFG was $4.5 million and $4.8 million as of June 30, 2023 and December 31, 2022, respectively. The following table summarizes investment in BFG activity for the periods indicated:


	For the Six Months Ended June 30,
($ in thousands)	2023		2022
Beginning balance	$	4,800	$	5,900
Distributions from BFG	(335)		(327)
Change in fair value of BFG	35		(973)
Ending balance	$	4,500	$	4,600

Deposits: The carrying amount of deposits with no stated maturity, such as savings and checking accounts, is a reasonable estimate of their fair value. The market value of certificates of deposit is based upon the discounted value of contractual cash flows. The discount rate is determined using the rates currently offered on comparable instruments.

Accrued interest receivable and payable: The fair value of accrued interest receivable and payable approximates their carrying amount.

PPP Liquidity Facility: The fair value of PPPLF is estimated using a discounted cash flow based on the remaining contractual term and current borrowing rates for similar terms.

The table below presents the carrying amount and fair value of the Company's financial instruments:


		June 30, 2023				December 31, 2022
($ in thousands)	Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	1	$	119,043	$	119,043	$	100,567	$	100,567
Investment securities held-to-maturity	2	14,403		12,730		14,292		12,728
Investment in FHLB stock	2	476		476		449		449
Loans held for investment	3	277,663		294,533		224,217		237,225
Loans held-for-sale	2	42,362		42,357		23,589		23,586
Accrued interest receivable	2	2,316		2,316		1,818		1,818
SBA servicing asset	2	5,233		5,233		5,210		5,210
Investment in BFG	3	4,500		4,500		4,800		4,800
Financial liabilities:
Total deposits	2	332,530		306,396		242,998		221,287
Accrued interest payable	2	466		466		54		54
PPP Liquidity Facility	2	252		252		314		314

Assets measured at fair value on a nonrecurring basis are summarized as follows:


($ in thousands)			Fair Value Measurements Using
Description of Financial Instrument	Fair Value		Level 1		Level 2		Level 3
June 30, 2023
Nonrecurring assets
Individually evaluated loans	$	952	$	—	$	—	$	952
December 31, 2022
Nonrecurring assets
Individually evaluated loans	$	450	$	—	$	—	$	450

Individually evaluated loans – The loan amount above represents loans individually evaluated as of year-end that have been adjusted to fair value. When collateral dependent loans are individually evaluated, they are measured using the current fair value of the collateral securing these loans, less selling costs. The fair value of real estate collateral is determined using collateral valuations or a discounted cash flow analysis using inputs such as discount rates, sale prices of similar assets, and term of expected disposition. Some appraised values are adjusted based on management’s review and analysis, which may include historical knowledge, changes in market conditions, estimated selling and other anticipated costs, and/or expertise and knowledge. The loss represents charge-offs on loans for adjustments made based on the fair value of the collateral.

Quantitative information for Level 3 fair value measurements – The range and weighted average of the significant unobservable inputs used to fair value Level 3 nonrecurring assets as of June 30, 2023 and as of December 31, 2022, along with the valuation techniques used, are shown in the following table:

($ in thousands)

Fair Value

Valuation
Technique

Unobservable
Input

Range
(Weighted Average)

June 30, 2023

Individually evaluated loans

952

Market
comparable

Adjustment to
appraisal value

0.34

December 31, 2022

Individually evaluated loans

450

Market
comparable

Adjustment to
appraisal value

0.20

The range and weighted average of the significant unobservable inputs used to fair value the investment in BFG Level 3 recurring asset as of June 30, 2023 and as of December 31, 2022 are shown in the following table:


($ in thousands)	June 30, 2023 Range (Weighted Average)		December 31, 2022 Range (Weighted Average)
Discounted Cash Flows
Revenue growth rate	10.7	%	10.8	%
Expense growth rate	14.1	%	11.5	%
Discount rate	25.0	%	30.0	%

Guideline Public Company
Multiples of enterprise value	3.5x to 5.0x		3.0x to 5.0x

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Capital Requirements - Actual Capital Amounts and Ratios (Details) $ in Thousands	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Amount
Actual	$ 103,813	$ 91,674
Well-Capitalized Requirement	$ 41,718	$ 32,898
Ratio
Actual	0.224	0.251
Well-Capitalized Requirement	0.090	0.090

Investments (Tables)

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Amortized Cost, Unrealized Gains and Losses, and Estimated Fair Values of Held-to-Maturity Securities

The amortized cost, unrealized gains and losses, and estimated

fair values of the Company’s held-to-maturity securities at June 30, 2023 and December 31, 2022, are summarized as follows:


	June 30, 2023
($ in thousands)	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Mortgage-backed securities	$	7,511	$	—	$	(867)	$	6,644
Collateralized mortgage obligations	6,892		—		(806)		6,086
Total securities held-to-maturity	$	14,403	$	—	$	(1,673)	$	12,730


	December 31, 2022
($ in thousands)	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Mortgage-backed securities	$	8,087	$	5	$	(825)	$	7,267
Collateralized mortgage obligations	6,205		—		(744)		5,461
Total securities held-to-maturity	$	14,292	$	5	$	(1,569)	$	12,728

Fair Value and Unrealized Losses of Securities in Unrealized Loss Position

The Company had nineteen securities, consisting of nine collateralized mortgage obligations and ten mortgage-backed securities, in an unrealized loss position at June 30, 2023 and seventeen securities, consisting of eight collateralized mortgage obligations and nine mortgage-backed securities, in an unrealized loss position at December 31, 2022, as summarized in the following tables:


	June 30, 2023
	Less than 12 months				12 Months or More				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-backed securities	$	794	$	(16)	$	5,850	$	(851)	$	6,644	$	(867)
Collateralized mortgage obligations	2,631		(68)		3,455		(738)		6,086		(806)
Total securities held-to-maturity	$	3,425	$	(84)	$	9,305	$	(1,589)	$	12,730	$	(1,673)


	December 31, 2022
	Less than 12 months				12 Months or More				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-backed securities	$	2,374	$	(190)	$	3,962	$	(635)	$	6,336	$	(825)
Collateralized mortgage obligations	2,752		(96)		2,709		(648)		5,461		(744)
Total securities held-to-maturity	$	5,126	$	(286)	$	6,671	$	(1,283)	$	11,797	$	(1,569)

Amortized Cost and Estimated Market Value of Debt Securities

The amortized cost and estimated market value of debt securities at June 30, 2023 and December 31, 2022, by contractual maturity are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	June 30, 2023				December 31, 2022
($ in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Securities held-to-maturity
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years	—		—		—		—
Due after five years through ten years	3,070		2,868		3,388		3,202
Due after ten years	11,333		9,862		10,904		9,526
Total Securities held-to-maturity	$	14,403	$	12,730	$	14,292	$	12,728

- Definition

Tabular disclosure of information about investment in debt security measured at amortized cost (held-to-maturity).

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-5

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
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+ Details

SBA Servicing Asset

6 Months Ended

Jun. 30, 2023

Transfers and Servicing [Abstract]

SBA Servicing Asset

The Company periodically sells portions of SBA loans and retains rights to service the loans. Loans serviced for others are not included in the accompanying balance sheet. The unpaid principal balances of SBA loans serviced for others was $302.0 million and $318.6 million at June 30, 2023 and December 31, 2022, respectively.

The following table summarizes SBA servicing asset activity for the periods indicated:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Beginning balance	$	5,284	$	5,225	$	5,210	$	3,938
Additions to servicing asset	150		835		150		2,243
Recovery of SBA servicing asset	339		(1,135)		592		(1,076)
Amortization of servicing asset	(540)		(339)		(719)		(519)
Ending balance	$	5,233	$	4,586	$	5,233	$	4,586

The fair market value of the SBA servicing asset as of June 30, 2023 and December 31, 2022, was $5.2 million and $5.2 million, respectively. Recovery or impairment adjustments to servicing rights are mainly due to market-based assumptions

associated with discounted cash flows, loan prepayment speeds, and changes in interest rates. A significant change in prepayments of the loans in the servicing portfolio could result in significant changes in the valuation adjustments, thus creating potential volatility in the carrying amount of servicing rights.

The Company assumed a weighted average prepayment rate of 15.68%, weighted average term of 4.24 years, and a weighted average discount rate of 14.33% at June 30, 2023.

The Company assumed a weighted average prepayment rate of 14.24%, weighted average term of 4.45 years, and a weighted average discount rate of 18.79% at December 31, 2022.

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Loans and Allowance for Credit Losses - Collateral-Dependent Financial Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Total loans	$ 290,659	$ 236,601
Total
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Total loans	1,927
Real Estate
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Total loans	1,927
Personal Property
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Total loans	0
Commercial real estate \| Total
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Total loans	1,809	356
Commercial real estate \| Real Estate
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Total loans	1,809	356
Commercial real estate \| Personal Property
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Total loans	0	$ 0
Residential real estate \| Total
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Total loans	118
Residential real estate \| Real Estate
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Total loans	118
Residential real estate \| Personal Property
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Total loans	$ 0

Stock-Based Compensation - Assumptions Used in Option-Pricing Model for Stock Options (Details) - Stock options	6 Months Ended
	Jun. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expected dividend yield	0.00%
Minimum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Risk-free interest rate	3.60%
Expected term in years	5 years 6 months
Expected volatility	43.90%
Maximum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Risk-free interest rate	4.00%
Expected term in years	7 years 6 months
Expected volatility	44.90%

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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-Subparagraph (c)(2)(iii)(02)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)(2)(iii)(03)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)(1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 22: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)(1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 23: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 24: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (f)(2)(i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 25: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (f)(2)(ii)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 26: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (f)(2)(iii)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 27: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (f)(2)(iv)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 28: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (f)(2)(v)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

+ Details

Loans and Allowance for Credit Losses - Loans by Origination Year (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Financing Receivable, Credit Quality Indicator [Line Items]
2023	$ 98,491		$ 98,491
2022	124,118		124,118
2021	28,728		28,728
Prior	37,503		37,503
Revolving Loans	1,819		1,819
Total loans held for investment	290,659		290,659		$ 236,601
2023, Writeoff			(438)
2022, Writeoff			(4,600)
2021, Writeoff			(652)
Prior, Writeoff			(197)
Revolving Loans, Writeoff			0
Writeoff	(2,722)	$ (2,662)	(5,887)	$ (5,571)
Construction and land development
Financing Receivable, Credit Quality Indicator [Line Items]
2023	4,595		4,595
2022	15,789		15,789
2021	4,358		4,358
Prior	207		207
Revolving Loans	0		0
Total loans held for investment	24,949		24,949
2023, Writeoff			0
2022, Writeoff			0
2021, Writeoff			0
Prior, Writeoff			0
Revolving Loans, Writeoff			0
Writeoff	0		0
Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2023	1,661		1,661
2022	16,052		16,052
2021	3,521		3,521
Prior	6,305		6,305
Revolving Loans	1,818		1,818
Total loans held for investment	29,357		29,357		37,815
2023, Writeoff			0
2022, Writeoff			(121)
2021, Writeoff			0
Prior, Writeoff			0
Revolving Loans, Writeoff			0
Writeoff	(121)	0	(121)	0
Residential real estate multifamily
Financing Receivable, Credit Quality Indicator [Line Items]
2023	200		200
2022	266		266
2021	80		80
Prior	26		26
Revolving Loans	0		0
Total loans held for investment	572		572
2023, Writeoff			0
2022, Writeoff			0
2021, Writeoff			0
Prior, Writeoff			0
Revolving Loans, Writeoff			0
Writeoff	0		0
Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2023	58,053		58,053
2022	68,964		68,964
2021	15,928		15,928
Prior	27,308		27,308
Revolving Loans	0		0
Total loans held for investment	170,253		170,253		12,063
2023, Writeoff			0
2022, Writeoff			0
2021, Writeoff			0
Prior, Writeoff			(122)
Revolving Loans, Writeoff			0
Writeoff	0	0	(122)	0
Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2023	6,606		6,606
2022	5,518		5,518
2021	1,823		1,823
Prior	2,560		2,560
Revolving Loans	0		0
Total loans held for investment	16,507		16,507
2023, Writeoff			0
2022, Writeoff			0
2021, Writeoff			(13)
Prior, Writeoff			(71)
Revolving Loans, Writeoff			0
Writeoff	(66)		(84)
Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
2023	2,062		2,062
2022	2,463		2,463
2021	873		873
Prior	781		781
Revolving Loans	1		1
Total loans held for investment	6,180		6,180		5,808
2023, Writeoff			0
2022, Writeoff			(5)
2021, Writeoff			(12)
Prior, Writeoff			(2)
Revolving Loans, Writeoff			0
Writeoff	(19)	0	(19)	0
Lease financing receivables
Financing Receivable, Credit Quality Indicator [Line Items]
2023	14,178		14,178
2022	7,616		7,616
2021	0		0
Prior	315		315
Revolving Loans	0		0
Total loans held for investment	22,109		22,109
2023, Writeoff			0
2022, Writeoff			0
2021, Writeoff			0
Prior, Writeoff			0
Revolving Loans, Writeoff			0
Writeoff	0		0
Retained Strategic Program loans
Financing Receivable, Credit Quality Indicator [Line Items]
2023	11,136		11,136
2022	7,450		7,450
2021	2,145		2,145
Prior	1		1
Revolving Loans	0		0
Total loans held for investment	20,732		20,732		24,259
2023, Writeoff			(438)
2022, Writeoff			(4,474)
2021, Writeoff			(627)
Prior, Writeoff			(2)
Revolving Loans, Writeoff			0
Writeoff	(2,516)	$ (2,560)	(5,541)	$ (5,438)
Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans held for investment					211,319
Pass \| Construction and land development
Financing Receivable, Credit Quality Indicator [Line Items]
2023	4,595		4,595
2022	15,789		15,789
2021	4,358		4,358
Prior	207		207
Revolving Loans	0		0
Total loans held for investment	24,949		24,949
Pass \| Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2023	1,328		1,328
2022	8,765		8,765
2021	1,603		1,603
Prior	3,577		3,577
Revolving Loans	1,818		1,818
Total loans held for investment	17,091		17,091		37,815
Pass \| Residential real estate multifamily
Financing Receivable, Credit Quality Indicator [Line Items]
2023	200		200
2022	266		266
2021	80		80
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	546		546
Pass \| Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2023	41,966		41,966
2022	34,298		34,298
2021	859		859
Prior	14,220		14,220
Revolving Loans	0		0
Total loans held for investment	91,343		91,343		12,063
Pass \| Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2023	5,266		5,266
2022	2,869		2,869
2021	866		866
Prior	1,854		1,854
Revolving Loans	0		0
Total loans held for investment	10,855		10,855
Pass \| Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
2023	2,001		2,001
2022	2,463		2,463
2021	873		873
Prior	780		780
Revolving Loans	1		1
Total loans held for investment	6,118		6,118		5,808
Pass \| Lease financing receivables
Financing Receivable, Credit Quality Indicator [Line Items]
2023	14,178		14,178
2022	7,616		7,616
2021	0		0
Prior	315		315
Revolving Loans	0		0
Total loans held for investment	22,109		22,109
Pass \| Retained Strategic Program loans
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Watch \| Construction and land development
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Watch \| Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2023	333		333
2022	7,169		7,169
2021	1,918		1,918
Prior	2,716		2,716
Revolving Loans	0		0
Total loans held for investment	12,136		12,136
Watch \| Residential real estate multifamily
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	26		26
Revolving Loans	0		0
Total loans held for investment	26		26
Watch \| Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2023	16,087		16,087
2022	34,310		34,310
2021	15,069		15,069
Prior	12,260		12,260
Revolving Loans	0		0
Total loans held for investment	77,726		77,726
Watch \| Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2023	1,340		1,340
2022	2,649		2,649
2021	957		957
Prior	595		595
Revolving Loans	0		0
Total loans held for investment	5,541		5,541
Watch \| Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
2023	38		38
2022	0		0
2021	0		0
Prior	1		1
Revolving Loans	0		0
Total loans held for investment	39		39
Watch \| Lease financing receivables
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Watch \| Retained Strategic Program loans
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans held for investment					573
Special Mention \| Construction and land development
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Special Mention \| Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	12		12
Revolving Loans	0		0
Total loans held for investment	12		12		0
Special Mention \| Residential real estate multifamily
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Special Mention \| Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	444		444
Revolving Loans	0		0
Total loans held for investment	444		444		0
Special Mention \| Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	18		18
Revolving Loans	0		0
Total loans held for investment	18		18
Special Mention \| Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0		$ 0
Special Mention \| Lease financing receivables
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Special Mention \| Retained Strategic Program loans
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Substandard \| Construction and land development
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Substandard \| Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	118		118
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	118		118
Substandard \| Residential real estate multifamily
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Substandard \| Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	356		356
2021	0		0
Prior	384		384
Revolving Loans	0		0
Total loans held for investment	740		740
Substandard \| Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	93		93
Revolving Loans	0		0
Total loans held for investment	93		93
Substandard \| Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Substandard \| Lease financing receivables
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Substandard \| Retained Strategic Program loans
Financing Receivable, Credit Quality Indicator [Line Items]
2023	0		0
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	0		0
Not Rated \| Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
2023	23		23
2022	0		0
2021	0		0
Prior	0		0
Revolving Loans	0		0
Total loans held for investment	23		23
Not Rated \| Retained Strategic Program loans
Financing Receivable, Credit Quality Indicator [Line Items]
2023	11,136		11,136
2022	7,450		7,450
2021	2,145		2,145
Prior	1		1
Revolving Loans	0		0
Total loans held for investment	$ 20,732		$ 20,732

Lease Liabilities

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Lease Liabilities

The Company includes commercial operating leases with an original cost of $7.1 million and $2.8 million within premises and equipment, net as of June 30, 2023 and December 31, 2022, respectively. Net book value of the operating leases as of June 30, 2023 and December 31, 2022 was $6.7 million and $2.7 million. Rental income from operating leases for the three months ended June 30, 2023 was $0.2 million and for the three months ended June 30, 2022 was a de minimis amount. Rental income from operating leases for the six months ended June 30, 2023 was $0.3 million and for the six months ended June 30, 2022 was a de minimis amount. Depreciation expense for the related premises and equipment was $0.5 million and $0.1 million for the three months ended June 30, 2023 and 2022, respectively. Depreciation expense for the related premises and equipment was $0.9 million and $0.2 million for the six months ended June 30, 2023 and 2022, respectively.

The Company leases its facilities under noncancelable operating leases. Rent expense for the three months ended June 30, 2023 and 2022 was $0.2 million and $0.3 million, respectively. Rent expense for the six months ended June 30, 2023 and 2022 was $0.5 million and $0.6 million, respectively. Future minimum annual undiscounted rental payments for these operating leases are as follows ($ in thousands):


Six Months Ended December 31, 2023	$	558
Year Ended December 31, 2024	1,104
Year Ended December 31, 2025	1,086
Year Ended December 31, 2026	1,118
Year Ended December 31, 2027	1,152
Thereafter	2,203
Total	7,221
Less present value discount	(429)
Operating lease liabilities	$	6,792

The Company entered into one lease during the six months ended June 30, 2022 to provide additional space while the Murray office construction was completed. ASC 842 does not apply due to the short-term period of this lease and immateriality. The tables below present information regarding the Company’s lease assets and liabilities.


	Six Months Ended
	June 30, 2023		June 30, 2022

Weighted-average remaining lease term – operating leases (in years)	6.3		7.2
Weighted-average discount rate – operating leases	1.9	%	1.9	%

Supplemental cash flow information related to leases were as follows (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
($ in thousands)
Operating cash flows from operating leases	$	21	$	28	$	292	$	56
Right-of-use assets obtained in exchange for operating lease liabilities	—		—		—		7,380

The components of lease expense were as follows (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
(in thousands)
Operating leases
Operating lease cost	$	219	$	278	$	438	$	514
Variable lease cost	9		4		18		8
Operating lease expense	228		282		456		522
Short-term lease rent expense	—		28		—		28
Net rent expense	$	228	$	310	$	456	$	550

Lease Liabilities - Lease Assets and Liabilities (Details)	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Weighted-average remaining lease term – operating leases (in years)	6 years 3 months 18 days	7 years 2 months 12 days
Weighted-average discount rate – operating leases	1.90%	1.90%

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Investment in BFG Activity

The following table summarizes investment in BFG activity for the periods indicated:


	For the Six Months Ended June 30,
($ in thousands)	2023		2022
Beginning balance	$	4,800	$	5,900
Distributions from BFG	(335)		(327)
Change in fair value of BFG	35		(973)
Ending balance	$	4,500	$	4,600

Estimated Fair Value and Carrying Value of Financial Instrument

The table below presents the carrying amount and fair value of the Company's financial instruments:


		June 30, 2023				December 31, 2022
($ in thousands)	Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	1	$	119,043	$	119,043	$	100,567	$	100,567
Investment securities held-to-maturity	2	14,403		12,730		14,292		12,728
Investment in FHLB stock	2	476		476		449		449
Loans held for investment	3	277,663		294,533		224,217		237,225
Loans held-for-sale	2	42,362		42,357		23,589		23,586
Accrued interest receivable	2	2,316		2,316		1,818		1,818
SBA servicing asset	2	5,233		5,233		5,210		5,210
Investment in BFG	3	4,500		4,500		4,800		4,800
Financial liabilities:
Total deposits	2	332,530		306,396		242,998		221,287
Accrued interest payable	2	466		466		54		54
PPP Liquidity Facility	2	252		252		314		314

Assets Measured at Fair Value on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis are summarized as follows:


($ in thousands)			Fair Value Measurements Using
Description of Financial Instrument	Fair Value		Level 1		Level 2		Level 3
June 30, 2023
Nonrecurring assets
Individually evaluated loans	$	952	$	—	$	—	$	952
December 31, 2022
Nonrecurring assets
Individually evaluated loans	$	450	$	—	$	—	$	450

Quantitative Information for Level 3 Fair Value Measurements

The range and weighted average of the significant unobservable inputs used to fair value Level 3 nonrecurring assets as of June 30, 2023 and as of December 31, 2022, along with the valuation techniques used, are shown in the following table:

($ in thousands)

Fair Value

Valuation
Technique

Unobservable
Input

Range
(Weighted Average)

June 30, 2023

Individually evaluated loans

952

Market
comparable

Adjustment to
appraisal value

0.34

December 31, 2022

Individually evaluated loans

450

Market
comparable

Adjustment to
appraisal value

0.20

Significant Unobservable Inputs Used to Fair Value Investment in BFG on Recurring Asset


($ in thousands)	June 30, 2023 Range (Weighted Average)		December 31, 2022 Range (Weighted Average)
Discounted Cash Flows
Revenue growth rate	10.7	%	10.8	%
Expense growth rate	14.1	%	11.5	%
Discount rate	25.0	%	30.0	%

Guideline Public Company
Multiples of enterprise value	3.5x to 5.0x		3.0x to 5.0x

Commitments and Contingent Liabilities - Financial Instruments with Off-Balance Sheet Risk (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value, off-Balance-Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance-sheet risk	$ 24,854	$ 19,822
Commercial real estate
Fair Value, off-Balance-Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance-sheet risk	22,667	17,886
Revolving, open-end lines of credit
Fair Value, off-Balance-Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance-sheet risk	1,966	1,683
Other unused commitments
Fair Value, off-Balance-Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance-sheet risk	$ 221	$ 253

Investments

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investments

Investment securities held-to-maturity, at cost

The Company's held-to-maturity ("HTM") investment portfolio consists of Agency mortgage-backed securities and Agency collateralized mortgage obligations. The Company reports HTM securities on the Company's Consolidated Balance Sheets at carrying value which is amortized cost. The amortized cost, unrealized gains and losses, and estimated

fair values of the Company’s held-to-maturity securities at June 30, 2023 and December 31, 2022, are summarized as follows:


	June 30, 2023
($ in thousands)	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Mortgage-backed securities	$	7,511	$	—	$	(867)	$	6,644
Collateralized mortgage obligations	6,892		—		(806)		6,086
Total securities held-to-maturity	$	14,403	$	—	$	(1,673)	$	12,730


	December 31, 2022
($ in thousands)	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Mortgage-backed securities	$	8,087	$	5	$	(825)	$	7,267
Collateralized mortgage obligations	6,205		—		(744)		5,461
Total securities held-to-maturity	$	14,292	$	5	$	(1,569)	$	12,728

Credit Quality Indicators & Allowance for Credit Losses - HTM

On January 1, 2023, the Company adopted ASU 2016-13, which replaced the legacy GAAP other-than-temporary impairment ("OTTI") model with a credit loss model. ASU 2016-13 requires an allowance on lifetime expected credit losses on HTM debt securities but retains the concept from the OTTI model that credit losses are recognized once securities become impaired. For HTM securities, the Company evaluates the credit risk of its securities on at least a quarterly basis. The Company estimates expected credit losses on HTM debt securities on a collective basis by major security type. Accrued interest receivable on HTM debt securities is excluded from the estimate of credit losses. At June 30, 2023 and at adoption of CECL on January 1, 2023, there was no ACL related to HTM securities due to the composition of the portfolio which is generally considered not to have credit risk given the government guarantee associated with these agencies.


	June 30, 2023
	Less than 12 months				12 Months or More				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-backed securities	$	794	$	(16)	$	5,850	$	(851)	$	6,644	$	(867)
Collateralized mortgage obligations	2,631		(68)		3,455		(738)		6,086		(806)
Total securities held-to-maturity	$	3,425	$	(84)	$	9,305	$	(1,589)	$	12,730	$	(1,673)


	December 31, 2022
	Less than 12 months				12 Months or More				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-backed securities	$	2,374	$	(190)	$	3,962	$	(635)	$	6,336	$	(825)
Collateralized mortgage obligations	2,752		(96)		2,709		(648)		5,461		(744)
Total securities held-to-maturity	$	5,126	$	(286)	$	6,671	$	(1,283)	$	11,797	$	(1,569)


	June 30, 2023				December 31, 2022
($ in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Securities held-to-maturity
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years	—		—		—		—
Due after five years through ten years	3,070		2,868		3,388		3,202
Due after ten years	11,333		9,862		10,904		9,526
Total Securities held-to-maturity	$	14,403	$	12,730	$	14,292	$	12,728

At June 30, 2023, held-to-maturity securities in the amount of $12.6 million were pledged as collateral for a credit line held by the Bank. There were no sales or transfers of investment securities and no realized gains or losses on these securities during the three and six months ended June 30, 2023 or 2022.

FHLB stock

The Bank is a member of the FHLB system. Members are required to own FHLB stock of at least the greater of 1% of FHLB membership asset value or 2.70% of outstanding FHLB advances. At June 30, 2023 and December 31, 2022, the Bank owned $0.5 million and $0.4 million, respectively, of FHLB stock, which is carried at cost. The Company evaluated the carrying value of its FHLB stock investment at June 30, 2023 and determined that it was not impaired. This evaluation considered the long-term nature of the investment, the current financial and liquidity position of the FHLB, repurchase activity of excess stock by the FHLB at its carrying value, the return on the investment from recurring and special dividends, and the Company’s intent and ability to hold this investment for a period of time sufficient to recover our recorded investment.

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Cash flows from operating activities:
Net Income	$ 4,638		$ 5,482	$ 8,499	$ 14,916
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization				1,648	754
Provision for credit losses	2,688		2,913	5,359	5,860
Noncash operating lease cost				373	445
Net amortization in securities discounts and premiums				1	18
Capitalized servicing assets				(150)	(2,243)
Gain on sale of loans, net		$ (2,100)		(887)	(7,464)
Originations of Strategic Program loans held-for-sale				(1,942,395)	(4,436,343)
Proceeds on Strategic Program loans held-for-sale				1,923,622	4,465,492
Change in fair value of BFG	(120)		575	(35)	973
(Recovery) impairment of SBA servicing asset	(339)		1,135	(592)	1,076
Stock-based compensation expense				1,050	139
Deferred income tax benefit				1,307	(195)
Net changes in:
Accrued interest receivable				(498)	126
Accrued interest payable				412	(14)
Other assets				(1,647)	(725)
Operating lease liabilities				(228)	13
Other liabilities				(1,938)	(5,337)
Net cash provided by (used in) operating activities				(6,099)	37,491
Cash flows from investing activities:
Net (increase) decrease in loans receivable				(45,742)	10,036
Purchase of lease pools				(12,386)	0
Investment in equity investment				(9)	0
Distributions from BFG				335	327
Purchase of bank premises and equipment, net				(4,605)	(2,784)
Proceeds from maturities and paydowns of securities held-to-maturity				879	917
Purchases of securities held to maturity				(992)	(1,975)
Purchase of FHLB stock				(27)	(71)
Net cash (used in) provided by investing activities				(62,547)	6,450
Cash flows from financing activities:
Net increase (decrease) in deposits				89,532	(32,533)
Common stock repurchased				(2,388)	0
Proceeds from exercise of stock options				40	40
Repayment of PPP Liquidity Facility				(62)	(674)
Net cash used in financing activities				87,122	(33,167)
Net change in cash and cash equivalents				18,476	10,774
Cash and cash equivalents, beginning of the period				100,567	85,754	$ 85,754
Cash and cash equivalents, end of the period	119,043	$ 100,567	96,528	119,043	96,528	$ 100,567
Cash paid during the period
Income taxes				5,050	7,257
Interest				3,077	520
Supplemental disclosures of noncash operating activities:
Right-of-use assets obtained in exchange for operating lease liabilities (ASC 842 adoption effective January 1, 2022)	$ 0		$ 0	$ 0	$ 7,380

Lease Liabilities - Minimum Future Rental Payments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Six Months Ended December 31, 2023	$ 558
Year Ended December 31, 2024	1,104
Year Ended December 31, 2025	1,086
Year Ended December 31, 2026	1,118
Year Ended December 31, 2027	1,152
Thereafter	2,203
Total	7,221
Less present value discount	(429)
Operating lease liabilities	$ 6,792	$ 7,020

Related Parties	6 Months Ended
Related Parties	Jun. 30, 2023
Related Party Transactions [Abstract]
Related Parties	Related Parties In the ordinary course of business, the Company may grant loans to certain executive officers and directors and the companies with which they are associated. The Company had de minimis loans outstanding to related parties as of June 30, 2023 and December 31, 2022. Total deposits from certain executive officers and directors and the companies with which they are associated were $1.3 million and $1.2 million as of June 30, 2023 and December 31, 2022, respectively. On October 21, 2022, Mr. Alan Weichselbaum, who was elected as a director of the Company on October 6, 2022, repaid in full the $0.1 million aggregate principal amount plus interest owed under a secured promissory note, dated as of June 1, 2022 (the “2022 Note”), between the Company and Mr. Weichselbaum in accordance with the terms of the 2022 Note. As such, the obligations of the parties under the 2022 Note and a related security agreement were discharged and the 2022 Note and the security agreement were terminated. BFG is a small business loan broker, primarily under the SBA’s 7(a) loan program. As noted in Note 9 Investments above, the Company has a 10% ownership in the outstanding membership units of BFG. The Company underwrites loans sourced by BFG in its normal course of business. If approved and funded, the Company pays BFG a commission fee based on the amount funded. There is no guarantee or commitment made by the Company to BFG to approve or fund loans referred by BFG. The Company is able to use its sole discretion in deciding to approve and fund loans referred by BFG.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(e))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

+ Details

Lease Liabilities - Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Operating leases
Operating lease cost	$ 219	$ 278	$ 438	$ 514
Variable lease cost	9	4	18	8
Operating lease expense	228	282	456	522
Short-term lease rent expense	0	28	0	28
Net rent expense	$ 228	$ 310	$ 456	$ 550

Related Parties (Details) - USD ($) $ in Millions	Oct. 21, 2022	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2019
Schedule of Equity Method Investments [Line Items]
Deposits		$ 1.3	$ 1.2
BFG
Schedule of Equity Method Investments [Line Items]
Membership interest		10.00%		10.00%
Mr. Alan Weichselbaum
Schedule of Equity Method Investments [Line Items]
Proceeds from collection of promissory note to related party	$ 0.1

Capital Requirements - Narrative (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Capital Requirements [Abstract]
Minimum bank reserve balance	$ 0	$ 0

Loans and Allowance for Credit Losses - Allowance for Credit Loss by Loan Segment (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Financing Receivable, Allowance for Credit Loss [Line Items]
Total loans	$ 290,659	$ 236,601
Construction and land development
Financing Receivable, Allowance for Credit Loss [Line Items]
Total loans	24,949
Residential real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Total loans	29,357	37,815
Residential real estate multifamily
Financing Receivable, Allowance for Credit Loss [Line Items]
Total loans	572
Commercial real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Total loans	170,253	12,063
Commercial and industrial
Financing Receivable, Allowance for Credit Loss [Line Items]
Total loans	16,507
Consumer
Financing Receivable, Allowance for Credit Loss [Line Items]
Total loans	6,180	5,808
Lease financing receivables
Financing Receivable, Allowance for Credit Loss [Line Items]
Total loans	22,109
Retained Strategic Program loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Total loans	$ 20,732	$ 24,259

Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2023

Loans and Leases Receivable Disclosure [Abstract]

Loans Outstanding by General Ledger Classification

Loans outstanding by general ledger classification as of June 30, 2023 and December 31, 2022, consisted of the following:


	June 30,		December 31,
	2023		2022
($ in thousands)
SBA	$	189,028	$	145,172
Commercial, non-real estate	24,851		11,484
Residential real estate	30,378		37,815
Strategic Program loans	63,094		47,848
Commercial real estate	18,677		12,063
Consumer	6,993		5,808
Total loans	$	333,021	$	260,190
Loans held-for-sale	(42,362)		(23,589)
Total loans held for investment	$	290,659	$	236,601
Deferred loan fees, net	(675)		(399)
Allowance for credit losses1	(12,321)		(11,985)
Net loans	$	277,663	$	224,217

(1) The Company adopted ASU 2016-13 as of January 1, 2023. The 2022 amounts presented are calculated under the prior accounting standard.

In determining an appropriate amount for the allowance, the Bank segmented and aggregated the loan portfolio based on the Federal Deposit Insurance Corporation ("FDIC") Consolidated Reports of Condition and Income ("Call Report") codes. The following pool segments identified as of June 30, 2023 are based on the CECL methodology:


($ in thousands)
Construction and land development	$	24,949
Residential real estate	29,357
Residential real estate multifamily	572
Commercial real estate	170,253
Commercial and industrial	16,507
Consumer	6,180
Lease financing receivables	22,109
Retained Strategic Program loans	20,732
Total loans	$	290,659

The portfolio classes identified as of December 31, 2022 are based on the incurred loss methodology and are segmented by general ledger classification as detailed below.


($ in thousands)
SBA	$	145,172
Commercial, non-real estate	11,484
Residential real estate	37,815
Retained Strategic Program loans	24,259
Commercial real estate	12,063
Consumer	5,808
Total loans	$	236,601

The following tables present the amortized cost basis of collateral-dependent loans by class of loans as of the dates indicated:


($ in thousands)	Collateral Type
As of June 30, 2023	Real Estate		Personal Property		Total
Commercial real estate	$	1,809	$	—	$	1,809
Residential real estate	118		—		118
Total	$	1,927	$	—	$	1,927


($ in thousands)	Collateral Type
As of December 31, 2022	Real Estate		Personal Property		Total
Commercial real estate	$	356	$	—	$	356

Strategic Program Loans Retained and Held-for-sale

Strategic Program loans retained and held-for-sale as of June 30, 2023 and December 31, 2022, are summarized as follows:


	June 30,		December 31,
	2023		2022
($ in thousands)
Retained Strategic Program loans	$	20,732	$	24,259
Strategic Program loans held-for-sale	42,362		23,589
Total Strategic Program loans	$	63,094	$	47,848

Changes in Allowance for Loan Losses

Activity in the ACL by common characteristic loan pools based on the CECL methodology was as follows:


	Three Months Ended June 30, 2023
($ in thousands)	Beginning Balance		Provision (Reversal) of Credit Losses		Charge-Offs		Recoveries		Ending Balance
Construction and land development	$	285	$	(6)	$	—	$	—	$	279
Residential real estate	799		(51)		(121)		81		708
Residential real estate multifamily	5		1		—		—		6
Commercial real estate	3,034		133		—		—		3,167
Commercial and industrial	277		75		(66)		1		287
Consumer	82		27		(19)		—		90
Lease financing receivables	325		203		—		—		528
Retained Strategic Program loans	7,227		2,293		(2,516)		252		7,256
Total allowance for loan losses	$	12,034	$	2,675	$	(2,722)	$	334	$	12,321

Unfunded lending commitments	29		13		—		—		42
Total allowance for credit losses	$	12,063	$	2,688	$	(2,722)	$	334	$	12,363


	Six Months Ended June 30, 2023
($ in thousands)	Beginning Balance		Impact of ASU 2016-13 adoption		Provision (Reversal) of Credit Losses		Charge-Offs		Recoveries		Ending Balance
Construction and land development	$	424	$	(67)	$	(78)	$	—	$	—	$	279
Residential real estate	876		(58)		(73)		(121)		84		708
Residential real estate multifamily	3		1		2		—		—		6
Commercial real estate	3,238		(574)		625		(122)		—		3,167
Commercial and industrial	339		(85)		114		(84)		3		287
Consumer	65		14		30		(19)		—		90
Lease financing receivables	339		(105)		294		—		—		528
Retained Strategic Program loans	6,701		1,131		4,429		(5,541)		536		7,256
Total allowance for loan losses	$	11,985	$	257	$	5,343	$	(5,887)	$	623	$	12,321

Unfunded lending commitments	—		26		16		—		—		42
Total allowance for credit losses	$	11,985	$	283	$	5,359	$	(5,887)	$	623	$	12,363

Activity in the allowance for loan losses by general ledger classification based on the incurred loss methodology was as follows:


	Three Months Ended June 30, 2022
($ in thousands)	Beginning Balance		Provision (Reversal) of Loan Losses		Charge-Offs		Recoveries		Ending Balance
SBA	$	3,064	$	374	$	(102)	$	48	$	3,384
Commercial, non-real estate	107		166		—		1		274
Residential real estate	411		4		—		—		415
Retained Strategic Program loans	6,322		2,365		(2,560)		315		6,442
Commercial real estate	21		1		—		—		22
Consumer	62		3		—		—		65
Total allowance for loan losses	$	9,987	$	2,913	$	(2,662)	$	364	$	10,602


	Six Months Ended June 30, 2022
($ in thousands)	Beginning Balance		Provision (Reversal) of Loan Losses		Charge-Offs		Recoveries		Ending Balance
SBA	$	2,739	$	730	$	(133)	$	48	$	3,384
Commercial, non-real estate	132		140		—		2		274
Residential real estate	352		63		—		—		415
Retained Strategic Program loans	6,549		4,923		(5,438)		408		6,442
Commercial real estate	21		1		—		—		22
Consumer	62		3		—		—		65
Total allowance for loan losses	$	9,855	$	5,860	$	(5,571)	$	458	$	10,602

The following table presents the loan balances by portfolio class, based on impairment method, and the corresponding balances in the allowance as of December 31, 2022. For the year ended December 31, 2022, the allowance was calculated based on the incurred loss methodology.


	Allowance for Loan Losses						Portfolio Loan Balances
($ in thousands)	Individually		Collectively		Total		Individually		Collectively		Total
SBA	$	—	$	4,294	$	4,294	$	450	$	144,722	$	145,172
Commercial, non-real estate	—		401		401		—		11,484		11,484
Residential real estate	—		497		497		—		37,815		37,815
Retained Strategic Program loans	—		6,701		6,701		—		24,259		24,259
Commercial real estate	—		27		27		—		12,063		12,063
Consumer	—		65		65		—		5,808		5,808
Total loans	$	—	$	11,985	$	11,985	$	450	$	236,151	$	236,601

Summary of Impaired Loans

The following table presents, under previously applicable GAAP, loans individually evaluated for impairment as of December 31, 2022:


	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
($ in thousands)
With no related allowance recorded
SBA	$	450	$	450	$	—	$	711	$	36
Commercial, non-real estate	—		—		—		—		—
Residential real estate	—		—		—		—		—
Retained Strategic Program loans	—		—		—		—		—
Commercial real estate	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	450	$	450	$	—	$	711	$	36

Summary of Nonaccrual and Past Due Loans

Nonaccrual and past due loans are summarized below as of June 30, 2023 and December 31, 2022:


June 30, 2023
($ in thousands)	Current		30-59 Days Due Due		60-89 Days Due Due		90+ Days Past Due & Still Accruing		Total Past Due		Non- Accrual		Total

Construction and land development	$	24,733	$	216	$	—	$	—	$	216	$	—	$	24,949
Residential real estate	29,239		—		—		—		—		118		29,357
Residential real estate multifamily	572		—		—		—		—		—		572
Commercial real estate	169,513		—		—		—		—		740		170,253
Commercial and industrial	16,458		28		21		—		49		—		16,507
Consumer	6,120		53		7		—		60		—		6,180
Lease financing receivables	22,109		—		—		—		—		—		22,109
Retained Strategic Program loans	19,022		935		638		137		1,710		—		20,732
Total	$	287,766	$	1,232	$	666	$	137	$	2,035	$	858	$	290,659


December 31, 2022
($ in thousands)	Current		30-59 Days Due Due		60-89 Days Due Due		90+ Days Past Due & Still Accruing		Total Past Due		Non- Accrual		Total
SBA	$	144,803	$	369	$	—	$	—	$	369	$	—	$	145,172
Commercial, non-real estate	11,484		—		—		—		—		—		11,484
Residential real estate	37,387		428		—		—		428		—		37,815
Retained Strategic Program loans	22,080		1,184		802		193		2,179		—		24,259
Commercial real estate	12,063		—		—		—		—		—		12,063
Consumer	5,776		32		—		—		32		—		5,808
Total	$	233,593	$	2,013	$	802	$	193	$	3,008	$	—	$	236,601

Outstanding Loan Balances Categorized by Credit Quality Indicators

The following table presents the ending balances of the Company's loan and lease portfolio including non-performing loans by class of receivable and originating year and considering certain credit quality indicators as of the date indicated along with gross chargeoffs for the six months ended June 30, 2023:


June 30, 2023	2023		2022		2021		Prior		Revolving Loans		Total
($ in thousands)

Construction and land development
Pass	$	4,595	$	15,789	$	4,358	$	207	$	—	$	24,949
Watch	—		—		—		—		—		—
Special Mention	—		—		—		—		—		—
Substandard	—		—		—		—		—		—
Total	4,595		15,789		4,358		207		—		24,949
Current period gross writeoff	—		—		—		—		—		—

Residential real estate
Pass	1,328		8,765		1,603		3,577		1,818		17,091
Watch	333		7,169		1,918		2,716		—		12,136
Special Mention	—		—		—		12		—		12
Substandard	—		118		—		—		—		118
Total	1,661		16,052		3,521		6,305		1,818		29,357
Current period gross writeoff	—		(121)		—		—		—		(121)

Residential real estate multifamily
Pass	200		266		80		—		—		546
Watch	—		—		—		26		—		26
Special Mention	—		—		—		—		—		—
Substandard	—		—		—		—		—		—
Total	200		266		80		26		—		572
Current period gross writeoff	—		—		—		—		—		—

Commercial real estate
Pass	41,966		34,298		859		14,220		—		91,343


Watch	16,087	34,310	15,069	12,260	—	77,726
Special Mention	—	—	—	444	—	444
Substandard	—	356	—	384	—	740
Total	58,053	68,964	15,928	27,308	—	170,253
Current period gross writeoff	—	—	—	(122)	—	(122)

Commercial and industrial
Pass	5,266	2,869	866	1,854	—	10,855
Watch	1,340	2,649	957	595	—	5,541
Special Mention	—	—	—	18	—	18
Substandard	—	—	—	93	—	93
Total	6,606	5,518	1,823	2,560	—	16,507
Current period gross writeoff	—	—	(13)	(71)	—	(84)

Consumer
Pass	2,001	2,463	873	780	1	6,118
Watch	38	—	—	1	—	39
Special Mention	—	—	—	—	—	—
Substandard	—	—	—	—	—	—
Not Rated	23	—	—	—	—	23
Total	2,062	2,463	873	781	1	6,180
Current period gross writeoff	—	(5)	(12)	(2)	—	(19)

Lease financing receivables
Pass	14,178	7,616	—	315	—	22,109
Watch	—	—	—	—	—	—
Special Mention	—	—	—	—	—	—
Substandard	—	—	—	—	—	—
Total	14,178	7,616	—	315	—	22,109
Current-period gross writeoffs	—	—	—	—	—	—

Retained Strategic Program loans
Pass	—	—	—	—	—	—
Watch	—	—	—	—	—	—
Special Mention	—	—	—	—	—	—
Substandard	—	—	—	—	—	—
Not Rated	11,136	7,450	2,145	1	—	20,732
Total	11,136	7,450	2,145	1	—	20,732
Current-period gross writeoffs	(438)	(4,474)	(627)	(2)	—	(5,541)


Total portfolio loans receivable, gross	98,491	124,118	28,728	37,503	1,819	290,659
Total current-period gross writeoffs	(438)	(4,600)	(652)	(197)	—	(5,887)

The following table presents the ending balances of the Company's loan and lease portfolio including non-performing loans by class of receivable and considering certain credit quality indicators as of the date indicated:


December 31, 2022
($ in thousands)	Pass Grade 1-4		Special Mention Grade 5		Classified/ Doubtful/Loss Grade 6-8		Total
SBA	$	144,149	$	573	$	450	$	145,172
Commercial, non-real estate	11,484		—		—		11,484
Residential real estate	37,815		—		—		37,815
Commercial real estate	12,063		—		—		12,063
Consumer	5,808		—		—		5,808
Not Risk Graded
Retained Strategic Program loans							24,259
Total	$	211,319	$	573	$	450	$	236,601

Loans Modified and Recorded as TDR's

Loans modified and recorded as TDR’s at December 31, 2022, consist of the following:


($ in thousands)	Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
December 31, 2022
SBA	1	$	94	$	94
Total at December 31, 2022	1	$	94	$	94

Capital Requirements

6 Months Ended

Jun. 30, 2023

Capital Requirements [Abstract]

Capital Requirements

The Bank is subject to various regulatory capital requirements administered by federal and State of Utah banking agencies (the regulators). Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off -balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk -weighting, and other factors. Prompt corrective action provisions are not applicable to the bank holding company.

Beginning January 1, 2020, the bank qualified and elected to use the community bank leverage ratio (CBLR) framework for quantitative measures which requires the Bank to maintain minimum amounts and ratios of Tier 1 capital to average total consolidated assets. Management believes, as of June 30, 2023 and December 31, 2022, that the Bank meets all capital adequacy requirements to which it is subject.

As of June 30, 2023 and December 31, 2022, the most recent notification from the FDIC categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action (there are no conditions or events since that notification that management believes have changed the Bank’s category). The following table sets forth the actual capital amounts and ratios for the Bank and the minimum ratio and amount of capital required to be categorized as well-capitalized and adequately capitalized as of the dates indicated.

The Bank’s actual capital amounts and ratios are presented in the following table:


	Actual				Well-Capitalized Requirement
($ in thousands)	Amount		Ratio		Amount		Ratio
June 30, 2023
Leverage ratio (CBLR election)	$	103,813	22.4	%	$	41,718	9.0	%
December 31, 2022
Leverage ratio (CBLR election)	$	91,674	25.1	%	$	32,898	9.0	%

Federal Reserve Board Regulations require maintenance of certain minimum reserve balances based on certain average deposits. The Bank had no reserve requirements as of June 30, 2023 and December 31, 2022.

The Federal Reserve’s policy statement and supervisory guidance on the payment of cash dividends by a Bank Holding Company (“BHC”), such as FinWise Bancorp, expresses the view that a BHC should generally pay cash dividends on common stock only to the extent that (1) the BHC’s net income available over the past year is sufficient to cover the cash dividend, (2) the rate of earnings retention is consistent with the organization’s expected future needs and financial condition, and (3) the minimum regulatory capital adequacy ratios are met. Should an insured depository institution controlled by a bank holding company be “significantly undercapitalized” under the applicable federal bank capital ratios, or if the bank subsidiary is “undercapitalized” and has failed to submit an acceptable capital restoration plan or has materially failed to implement such a plan, federal banking regulators (in the case of the Bank, the FDIC) may choose to require prior Federal Reserve approval for any capital distribution by the BHC.

In addition, since FinWise Bancorp is a legal entity separate and distinct from the Bank and does not conduct stand-alone operations, an ability to pay dividends depends on the ability of the Bank to pay dividends to FinWise Bancorp and the FDIC and the Utah Department of Financial Institutions (“UDFI”) may, under certain circumstances, prohibit the payment

of dividends to FinWise Bancorp from the Bank. Utah corporate law also requires that dividends can only be paid out of funds legally available.

The Company has not paid any cash dividends on its common stock since inception and it currently has no plans to pay cash dividends in the foreseeable future. However, the Company’s Board of Directors may declare a cash or stock dividend out of retained earnings provided the regulatory minimum capital ratios are met. The Company plans to maintain capital ratios that meet the well-capitalized standards per the regulations and, therefore, would limit dividends to amounts that are appropriate to maintain those well-capitalized regulatory capital ratios.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

+ References + Details

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Interest income
Interest and fees on loans	$ 14,355	$ 12,864	$ 26,697	$ 26,020
Interest on securities	77	44	149	83
Other interest income	1,437	105	2,424	133
Total interest income	15,869	13,013	29,270	26,236
Interest expense
Interest on deposits	2,194	244	3,489	505
Interest on PPP Liquidity Facility	0	0	0	1
Total interest expense	2,194	244	3,489	506
Net interest income	13,675	12,769	25,781	25,730
Provision for credit losses	2,688	2,913	5,359	5,860
Net interest income after provision for loan losses	10,987	9,856	20,422	19,870
Non-interest income
Strategic Program fees	4,054	6,221	7,739	12,844
Gain on sale of loans, net	700	2,412	887	7,464
SBA loan servicing fees	226	342	817	729
Change in fair value on investment in BFG	120	(575)	35	(973)
Other miscellaneous income	188	31	337	49
Total non-interest income	5,288	8,431	9,815	20,113
Non-interest expense
Salaries and employee benefits	6,681	6,594	11,938	13,547
Professional services	1,305	1,511	2,779	2,145
Occupancy and equipment expenses	718	469	1,430	821
(Recovery) impairment of SBA servicing asset	(339)	1,135	(592)	1,076
Other operating expenses	1,634	1,310	3,181	2,478
Total non-interest expense	9,999	11,019	18,736	20,067
Income before income tax expense	6,276	7,268	11,501	19,916
Provision for income taxes	1,638	1,786	3,002	5,000
Net income	$ 4,638	$ 5,482	$ 8,499	$ 14,916
Earnings per share, basic (in dollars per share)	$ 0.36	$ 0.43	$ 0.66	$ 1.17
Earnings per share, diluted (in dollars per share)	$ 0.35	$ 0.41	$ 0.64	$ 1.10
Weighted average shares outstanding, basic (in shares)	12,603,463	12,716,010	12,655,605	12,698,714
Weighted average shares outstanding, diluted (in shares)	12,989,530	13,417,390	13,080,620	13,444,347

Loans and Allowance for Credit Losses - Portfolio Classes by Incurred Loss Methodology (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans	$ 290,659	$ 236,601
Financing Receivable, Incurred Loss Methodology
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans	290,659	236,601
SBA
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans		145,172
SBA \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans		145,172
Commercial, non-real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans		11,484
Commercial, non-real estate \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans		11,484
Residential real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans	29,357	37,815
Residential real estate \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans		37,815
Retained Strategic Program loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans	20,732	24,259
Retained Strategic Program loans \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans		24,259
Commercial real estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans	170,253	12,063
Commercial real estate \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans		12,063
Consumer
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans	$ 6,180	5,808
Consumer \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Allowance for Credit Loss [Line Items]
Retained Strategic Program loans		$ 5,808

Lease Liabilities (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Future Minimum Annual Undiscounted Rental Payments for Operating Leases

Future minimum annual undiscounted rental payments for these operating leases are as follows ($ in thousands):


Six Months Ended December 31, 2023	$	558
Year Ended December 31, 2024	1,104
Year Ended December 31, 2025	1,086
Year Ended December 31, 2026	1,118
Year Ended December 31, 2027	1,152
Thereafter	2,203
Total	7,221
Less present value discount	(429)
Operating lease liabilities	$	6,792

Information Regarding Lease Assets and Liabilities

The tables below present information regarding the Company’s lease assets and liabilities.


	Six Months Ended
	June 30, 2023		June 30, 2022

Weighted-average remaining lease term – operating leases (in years)	6.3		7.2
Weighted-average discount rate – operating leases	1.9	%	1.9	%

Supplemental Cash Flow Information and Components of Lease Expense

Supplemental cash flow information related to leases were as follows (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
($ in thousands)
Operating cash flows from operating leases	$	21	$	28	$	292	$	56
Right-of-use assets obtained in exchange for operating lease liabilities	—		—		—		7,380

The components of lease expense were as follows (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
(in thousands)
Operating leases
Operating lease cost	$	219	$	278	$	438	$	514
Variable lease cost	9		4		18		8
Operating lease expense	228		282		456		522
Short-term lease rent expense	—		28		—		28
Net rent expense	$	228	$	310	$	456	$	550

Loans and Allowance for Credit Losses - Outstanding Loan Balances Categorized by Credit Quality Indicators (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	$ 290,659	$ 236,601
Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		211,319
Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		573
Classified/Doubtful/Loss
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		450
SBA
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		145,172
SBA \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		144,149
SBA \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		573
SBA \| Classified/Doubtful/Loss
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		450
Commercial, non-real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		11,484
Commercial, non-real estate \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		11,484
Commercial, non-real estate \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		0
Commercial, non-real estate \| Classified/Doubtful/Loss
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		0
Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	29,357	37,815
Residential real estate \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	17,091	37,815
Residential real estate \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	12	0
Residential real estate \| Classified/Doubtful/Loss
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		0
Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	170,253	12,063
Commercial real estate \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	91,343	12,063
Commercial real estate \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	444	0
Commercial real estate \| Classified/Doubtful/Loss
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		0
Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	6,180	5,808
Consumer \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	6,118	5,808
Consumer \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	0	0
Consumer \| Classified/Doubtful/Loss
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans		0
Retained Strategic Program loans
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	20,732	$ 24,259
Retained Strategic Program loans \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	0
Retained Strategic Program loans \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Total loans	$ 0

Loans and Allowance for Credit Losses - Narrative (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2022 loan	Jun. 30, 2022 USD ($) loan	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Commitments to lend \| $				$ 0
Number of principal charge-offs related to TDRs \| loan	0	1
Charge-offs related to TDRs \| $		$ 10,000.00
Number of new loans modification \| loan	0	0
Number of restructured loans \| loan		1
Strategic Program loans
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Cash held in reserve by strategic programs \| $			$ 29,800,000	$ 16,600,000

Loans and Allowance for Credit Losses - Strategic Program Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Retained Strategic Program loans	$ 290,659	$ 236,601
Retained Strategic Program loans
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Retained Strategic Program loans	20,732	24,259
Strategic Program loans held-for-sale	42,362	23,589
Total Strategic Program loans	$ 63,094	$ 47,848

Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Basic and Diluted EPS

The following table is a reconciliation of the components used to derive basic and diluted EPS for the three and six months ended June 30, 2023 and 2022 ($ in thousands, except share and per share amounts):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Numerator:
Net income	$	4,638	$	5,482	$	8,499	$	14,916
Amount allocated to participating common shareholders(1)	(88)		(41)		(122)		(112)
Net income allocate to common shareholders	$	4,550	$	5,441	$	8,377	$	14,804
Denominator:
Weighted average shares outstanding, basic	12,603,463		12,716,010		12,655,605		12,698,714
Weighted average effect of dilutive securities:
Stock options	327,786		558,855		359,632		589,091
Warrants	58,281		142,525		65,383		156,542
Weighted average shares outstanding, diluted	12,989,530		13,417,390		13,080,620		13,444,347
Earnings per share, basic	$	0.36	$	0.43	$	0.66	$	1.17
Earnings per share, diluted	$	0.35	$	0.41	$	0.64	$	1.10

(1)Represents earnings attributable to holders of unvested restricted stock issued outside of the Plan to the Company’s employees.

Stock-Based Compensation - Narrative (Details) - USD ($)			6 Months Ended		8 Months Ended
	Jun. 20, 2019	Apr. 20, 2017	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2017
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Weighted average grant date fair value (in dollars per share)			$ 4.12	$ 6.26
Options exercised (in shares)			$ 111,656	$ 200,000
2019 Plan \| Share-Based Payment Arrangement, Employee
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expiration period	10 years
Number of shares available for grant (in shares)			335,353
2016 Plan \| Share-Based Payment Arrangement, Employee
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expiration period		10 years
Number of shares available for grant (in shares)			1,550
Number of shares authorized (in shares)		299,628
Shares granted (in shares)					0
2019 Plan and 2016 Plan \| Share-Based Payment Arrangement, Employee \| Minimum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Award vesting period			1 year
2019 Plan and 2016 Plan \| Share-Based Payment Arrangement, Employee \| Maximum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expiration period			10 years
Award vesting period			5 years
Stock options
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unrecognized stock-based compensation expense			$ 700,000
Weighted average recognition period			1 year 9 months 18 days
Restricted Stock
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unrecognized stock-based compensation expense			$ 1,700,000
Weighted average recognition period			1 year 7 months 6 days

Commitments and Contingent Liabilities (Tables)

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Financial Instruments with Off-Balance Sheet Risk

At June 30, 2023 and December 31, 2022, financial instruments with off-balance-sheet risk were as follows:


	June 30,		December 31,
($ in thousands)	2023		2022
Revolving, open-end lines of credit	$	1,966	$	1,683
Commercial real estate	22,667		17,886
Other unused commitments	221		253
	$	24,854	$	19,822

Investments - Unrealized Loss Position (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Schedule of Held-to-Maturity Securities [Line Items]
Less than 12 months, Fair Value	$ 3,425	$ 5,126
Less than 12 months, Unrealized Losses	(84)	(286)
12 Months or More, Fair Value	9,305	6,671
12 Months or More, Unrealized Losses	(1,589)	(1,283)
Total, Fair Value	12,730	11,797
Total, Unrealized Losses	(1,673)	(1,569)
Mortgage-backed securities
Schedule of Held-to-Maturity Securities [Line Items]
Less than 12 months, Fair Value	794	2,374
Less than 12 months, Unrealized Losses	(16)	(190)
12 Months or More, Fair Value	5,850	3,962
12 Months or More, Unrealized Losses	(851)	(635)
Total, Fair Value	6,644	6,336
Total, Unrealized Losses	(867)	(825)
Collateralized mortgage obligations
Schedule of Held-to-Maturity Securities [Line Items]
Less than 12 months, Fair Value	2,631	2,752
Less than 12 months, Unrealized Losses	(68)	(96)
12 Months or More, Fair Value	3,455	2,709
12 Months or More, Unrealized Losses	(738)	(648)
Total, Fair Value	6,086	5,461
Total, Unrealized Losses	$ (806)	$ (744)

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Earnings per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Numerator:

Net Income

$ 4,638

$ 5,482

$ 8,499

$ 14,916

Amount allocated to participating common shareholders

(88)

(41)

(122)

^[1]

(112)

^[1]

Net income allocate to common shareholders

4,550

5,441

8,377

14,804

Net income allocate to common shareholders

$ 4,550

$ 5,441

$ 8,377

$ 14,804

Denominator:

Weighted average shares outstanding, basic (in shares)

12,603,463

12,716,010

12,655,605

12,698,714

Weighted average effect of dilutive securities:

Stock options (in shares)

327,786

558,855

359,632

589,091

Warrants (in shares)

58,281

142,525

65,383

156,542

Weighted average shares outstanding, diluted (in shares)

12,989,530

13,417,390

13,080,620

13,444,347

Earnings per share, basic (in dollars per share)

$ 0.36

$ 0.43

$ 0.66

$ 1.17

Earnings per share, diluted (in dollars per share)

$ 0.35

$ 0.41

$ 0.64

$ 1.10

[1]	Represents earnings attributable to holders of unvested restricted stock issued outside of the Plan to the Company’s employees.

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Cash and cash equivalents
Cash and due from banks	$ 369	$ 386
Interest-bearing deposits	118,674	100,181
Total cash and cash equivalents	119,043	100,567
Investment securities held-to-maturity, at cost	14,403	14,292
Investment in Federal Home Loan Bank (FHLB) stock, at cost	476	449
Strategic Program loans held-for-sale, at lower of cost or fair value	42,362	23,589
Loans receivable, net	277,663	224,217
Premises and equipment, net	13,154	9,478
Accrued interest receivable	2,316	1,818
Deferred taxes, net	0	1,167
SBA servicing asset, net	5,233	5,210
Investment in Business Funding Group (BFG), at fair value	4,500	4,800
Operating lease right-of-use (“ROU”) assets	4,668	5,041
Income taxes receivable, net	2,355	0
Other assets	9,452	10,152
Total assets	495,625	400,780
Deposits
Noninterest-bearing	93,347	78,817
Interest-bearing	239,183	164,181
Total deposits	332,530	242,998
Accrued interest payable	466	54
Income taxes payable, net	0	1,077
Deferred taxes, net	140	0
PPP Liquidity Facility	252	314
Operating lease liabilities	6,792	7,020
Other liabilities	7,997	8,858
Total liabilities	348,177	260,321
Commitments and contingencies (Note 7)
Shareholders’ equity
Preferred stock, $0.001 par value, 4,000,000 authorized; no shares issued and outstanding as of June 30, 2023 and December 31, 2022	0	0
Common stock, $0.001 par value, 40,000,000 shares authorized; 12,723,703 and 12,831,345 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	13	13
Additional paid-in-capital	52,625	54,614
Retained earnings	94,810	85,832
Total shareholders’ equity	147,448	140,459
Total liabilities and shareholders’ equity	$ 495,625	$ 400,780

Commitments and Contingent Liabilities

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingent Liabilities

Federal Home Loan Bank Secured Line of Credit

As of June 30, 2023 and December 31, 2022, the Bank’s available line of credit with the FHLB to borrow in overnight funds was $2.5 million and $2.6 million, respectively. All borrowings are short-term and the interest rate is equal to the correspondent bank’s daily federal funds purchase rate. As of June 30, 2023 and December 31, 2022, no amounts were outstanding under the line of credit. Loans totaling $3.8 million and $4.0 million were pledged to secure the FHLB line of credit as of June 30, 2023 and December 31, 2022, respectively.

Subsequent to June 30, 2023, the Bank pledged additional loans to the FHLB of $46.9 million resulting in an increase to the available line of credit of $30.9 million. No funds had been advanced utilizing the line increase during the period beginning July 1, 2023 through the date of this report.

Lines of Credit

At June 30, 2023 and December 31, 2022, the Bank had the ability to access $10.4 million and $10.6 million from the Federal Reserve Bank’s Discount Window on a collateralized basis. At June 30, 2023, the Bank had the ability to access $0.8 million from the Federal Reserve Bank’s Bank Term Funding Program on a collateralized basis. Through Zions Bank, the Bank had an available unsecured line available of $1.0 million at December 31, 2022. The Bank had an available line of credit with Bankers’ Bank of the West to borrow up to $1.05 million in overnight funds at June 30, 2023 and December 31, 2022. The Bank had no outstanding balances on such unsecured or secured lines of credit as of June 30, 2023 and December 31, 2022.

In April 2023, Zions Bank notified the Bank that due to the banking industry disruptions, Zions Bank was limiting its Fed Funds line advances to secured arrangements and would continue to do so for the foreseeable future, thereby eliminating the unsecured line the Bank had previously maintained with Zions Bank. In August 2023, the Bank was notified that Zions Bank was reinstating the unsecured Fed Funds line advance and increasing the Bank's borrowing capacity to $5.0 million.

Paycheck Protection Program Liquidity Facility

On April 20, 2020, the Bank was approved by the Federal Reserve to access its SBA Paycheck Protection Program Liquidity Facility (“PPPLF”) through the discount window. The PPPLF enables the Company to fund Paycheck Protection Program ("PPP") loans without taking on additional liquidity or funding risks because the Company is able to pledge PPP loans as collateral to secure extensions of credit under the PPPLF on a non-recourse basis. Borrowings under the PPPLF have a fixed-rate of 0.35%, with a term that matches the underlying loans. The Bank pledged $0.3 million of PPP loans as eligible collateral under the PPPLF borrowing arrangement at June 30, 2023. The Bank pledged $0.3 million of PPP loans as eligible collateral under the PPPLF borrowing arrangement at December 31, 2022. The average outstanding borrowings were $0.3 million during the six months ended June 30, 2023 and $0.8 million during the six months ended June 30, 2022.

Commitments to Extend Credit

In the ordinary course of business, the Bank has entered into commitments to extend credit to customers which have not yet been exercised. These financial instruments include commitments to extend credit in the form of loans. Those instruments involve to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets.

At June 30, 2023 and December 31, 2022, financial instruments with off-balance-sheet risk were as follows:


	June 30,		December 31,
($ in thousands)	2023		2022
Revolving, open-end lines of credit	$	1,966	$	1,683
Commercial real estate	22,667		17,886
Other unused commitments	221		253
	$	24,854	$	19,822

Allowance for Credit Losses on Unfunded Commitments

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancelable by the Company. The allowance for credit losses on unfunded commitments is included in other liabilities on the consolidated balance sheets and is adjusted through a charge to provision for credit loss expense on the consolidated statements of income. The allowance for credit losses on unfunded commitments estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The allowance for credit losses on unfunded commitments was $41.5 thousand as of June 30, 2023.

Lease Liabilities - Narrative (Details) $ in Thousands	3 Months Ended		6 Months Ended
Lease Liabilities - Narrative (Details) $ in Thousands	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($) Lease	Dec. 31, 2022 USD ($)
Lessee, Lease, Description [Line Items]
Net book value	$ 13,154		$ 13,154		$ 9,478
Rental income	200		300
Depreciation	500	$ 100	900	$ 200
Net rent expense	228	$ 310	456	$ 550
Number of leases entered into during period \| Lease				1
Commercial Operating Leases
Lessee, Lease, Description [Line Items]
Commercial operating leases	7,100		7,100		2,800
Net book value	$ 6,700		$ 6,700		$ 2,700

SBA Servicing Asset - Summary of SBA Servicing Asset Activity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Beginning balance	$ 5,284	$ 5,225	$ 5,210	$ 3,938
Additions to servicing asset	150	835	150	2,243
Recovery of SBA servicing asset	339	(1,135)	592	(1,076)
Amortization of servicing asset	(540)	(339)	(719)	(519)
Ending balance	$ 5,233	$ 4,586	$ 5,233	$ 4,586

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Pre-tax stock-based compensation expense	$ 629	$ 100	$ 1,050	$ 139
After-tax stock-based compensation expense	658	99	995	137
Stock options
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Pre-tax stock-based compensation expense	142	54	237	93
After-tax stock-based compensation expense	126	53	218	91
Restricted shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Pre-tax stock-based compensation expense	487	46	813	46
After-tax stock-based compensation expense	$ 532	$ 46	$ 777	$ 46

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Subsequent Events	6 Months Ended
Subsequent Events	Jun. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsSubsequent events are events or transactions that occur after the date of the most recent balance sheet but before the financial statements are available to be issued. The Company recognizes in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing of the financial statements. The Company’s financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the date of the balance sheet and before the financial statements are available to be issued. The Company has evaluated subsequent events through August 14, 2023, which is the date the consolidated financial statements are available to be issued. On July 25, 2023, the Company entered into a definitive agreement with BFG and four members of BFG to acquire an additional 10% of its membership interests in exchange for 372,132 shares of the Company’s stock, subject to regulatory approval and other customary closing conditions. For further details, refer to Note 8 – Investment in Business Funding Group, LLC.

Investment in Business Funding Group, LLC (Details) $ / shares in Units, $ in Millions		2 Months Ended	6 Months Ended
	Dec. 31, 2019 USD ($) $ / shares shares	Sep. 30, 2023 $ / shares shares	Jun. 30, 2023 USD ($) $ / shares	Jun. 30, 2022 USD ($)	Jul. 25, 2023 d $ / shares	Dec. 31, 2022 $ / shares	Mar. 31, 2020 $ / shares shares
Schedule of Equity Method Investments [Line Items]
Common stock, par or stated value per share (in dollars per share)			$ 0.001			$ 0.001
Business Funding Group, LLC
Schedule of Equity Method Investments [Line Items]
Membership interest	10.00%		10.00%
Aggregate value of shares exchanged (in shares) \| shares	950,784
Common stock, par or stated value per share (in dollars per share)	$ 0.001
Fair value of Company's shares \| $	$ 3.5
Membership interests held by other existing members	90.00%
Distributions received \| $			$ 0.3	$ 0.1
Number of warrants (in shares) \| shares							270,000
Warrant exercise price (in dollars per share)							$ 6.67
Fair value of warrants issued per share (in dollars per share)							$ 0.19
Business Funding Group, LLC \| Forecast
Schedule of Equity Method Investments [Line Items]
Membership interest		20.00%
Aggregate value of shares exchanged (in shares) \| shares		372,132
Common stock, par or stated value per share (in dollars per share)		$ 0.001
Additional ownership percentage		0.10
Consecutive trading days \| d					10
Business Funding Group, LLC \| Minimum
Schedule of Equity Method Investments [Line Items]
Earnings multiplier							10
Business Funding Group, LLC \| Minimum \| Forecast
Schedule of Equity Method Investments [Line Items]
Average share price threshold (in dollars per share)					$ 6.00
Business Funding Group, LLC \| Maximum
Schedule of Equity Method Investments [Line Items]
Earnings multiplier							15
Business Funding Group, LLC \| Maximum \| Forecast
Schedule of Equity Method Investments [Line Items]
Average share price threshold (in dollars per share)					$ 12.63
Business Funding Group, LLC \| Class A Voting Units
Schedule of Equity Method Investments [Line Items]
Membership interest	4.96%		4.90%
Business Funding Group, LLC \| Class B Non-Voting Units
Schedule of Equity Method Investments [Line Items]
Membership interest	5.04%		5.10%

Subsequent Events (Details) - Business Funding Group, LLC		2 Months Ended
	Dec. 31, 2019 shares	Sep. 30, 2023 shares
Subsequent Event [Line Items]
Aggregate value of shares exchanged (in shares)	950,784
Forecast
Subsequent Event [Line Items]
Additional ownership percentage		0.10
Aggregate value of shares exchanged (in shares)		372,132

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Summary of Assumptions Used

The table below summarizes the assumptions used for

the options granted during the six months ended June 30, 2023. No options were granted during the first three months of 2022.


			For the Six Months Ended June 30,
			2023
Risk-free interest rate			3.6% - 4.0%
Expected term in years			5.5 – 7.5
Expected volatility			43.9% – 44.9%
Expected dividend yield			—

Stock Option Activity

The following summarizes stock option activity for the three months and six months ended June 30, 2023:


	Stock Options	Weighted Average Exercise Price		Weighted Average Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2022	881,625	$	5.27	7.5	$	3,871,667
Options granted	124,906	8.64		9.6	—
Options exercised	(16,800)	2.37		0.0	111,656
Options forfeited	(8,264)	9.25		0.0	11,765
Outstanding at June 30 2023	981,467	$	5.72	7.4	$	3,546,581
Options vested and exercisable at June 30 2023	689,418	$	4.78	6.9	$	3,000,920


	Stock Options	Weighted Average Exercise Price		Weighted Average Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at March 31 2023	863,429	$	5.32	7.3	$	3,407,917
Options granted	123,806	8.63		9.6	—
Options forfeited	(5,768)	8.94		0	7,884
Outstanding at June 30 2023	981,467	$	5.72	7.4	$	3,546,581
Options vested and exercisable at June 30 2023	689,418	$	4.78	6.9	$	3,000,920

Pre-Tax and After-Tax Stock-Based Compensation Expense

The following tables present pre-tax and after-tax stock-based compensation expense recognized:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Pre-tax
Stock options	$	142	$	54	$	237	$	93
Restricted shares	487		46		813		46
Total	$	629	$	100	$	1,050	$	139
After-tax
Stock options	$	126	$	53	$	218	$	91
Restricted shares	532		46		777		46
Total	$	658	$	99	$	995	$	137

Loans and Allowance for Credit Losses - Allowance for Loan Losses on Impaired Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Allowance for Loan Losses
Total	$ 12,321	$ 12,034	$ 11,985	$ 10,602	$ 9,987	$ 9,855
Portfolio Loan Balances
Total loans held for investment	290,659		236,601
Financing Receivable, Incurred Loss Methodology
Allowance for Loan Losses
Individually			0
Collectively			11,985
Total	12,321		11,985
Portfolio Loan Balances
Individually			450
Collectively			236,151
Total loans held for investment	290,659		236,601
SBA
Allowance for Loan Losses
Total				3,384	3,064	2,739
Portfolio Loan Balances
Total loans held for investment			145,172
SBA \| Financing Receivable, Incurred Loss Methodology
Allowance for Loan Losses
Individually			0
Collectively			4,294
Total			4,294
Portfolio Loan Balances
Individually			450
Collectively			144,722
Total loans held for investment			145,172
Commercial, non-real estate
Allowance for Loan Losses
Total				274	107	132
Portfolio Loan Balances
Total loans held for investment			11,484
Commercial, non-real estate \| Financing Receivable, Incurred Loss Methodology
Allowance for Loan Losses
Individually			0
Collectively			401
Total			401
Portfolio Loan Balances
Individually			0
Collectively			11,484
Total loans held for investment			11,484
Residential real estate
Allowance for Loan Losses
Total	708	799	876	415	411	352
Portfolio Loan Balances
Total loans held for investment	29,357		37,815
Residential real estate \| Financing Receivable, Incurred Loss Methodology
Allowance for Loan Losses
Individually			0
Collectively			497
Total			497
Portfolio Loan Balances
Individually			0
Collectively			37,815
Total loans held for investment			37,815
Retained Strategic Program loans
Allowance for Loan Losses
Total	7,256	7,227	6,701	6,442	6,322	6,549
Portfolio Loan Balances
Total loans held for investment	20,732		24,259
Retained Strategic Program loans \| Financing Receivable, Incurred Loss Methodology
Allowance for Loan Losses
Individually			0
Collectively			6,701
Total			6,701
Portfolio Loan Balances
Individually			0
Collectively			24,259
Total loans held for investment			24,259
Commercial real estate
Allowance for Loan Losses
Total	3,167	3,034	3,238	22	21	21
Portfolio Loan Balances
Total loans held for investment	170,253		12,063
Commercial real estate \| Financing Receivable, Incurred Loss Methodology
Allowance for Loan Losses
Individually			0
Collectively			27
Total			27
Portfolio Loan Balances
Individually			0
Collectively			12,063
Total loans held for investment			12,063
Consumer
Allowance for Loan Losses
Total	90	$ 82	65	$ 65	$ 62	$ 62
Portfolio Loan Balances
Total loans held for investment	$ 6,180		5,808
Consumer \| Financing Receivable, Incurred Loss Methodology
Allowance for Loan Losses
Individually			0
Collectively			65
Total			65
Portfolio Loan Balances
Individually			0
Collectively			5,808
Total loans held for investment			$ 5,808

Stock-Based Compensation

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock option plans

The Company utilizes stock-based compensation plans, as well as discretionary grants, for employees, directors and consultants to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives and to promote the success of the Company’s business.

The 2019 Stock Option Plan (“2019 Plan”) was adopted on June 20, 2019 following approval by the Company’s Board of Directors and shareholders. The 2019 Plan provides for the issuance of non-statutory stock options and restricted stock to employees, directors and consultants. The 2019 Plan also provides for the issuance of incentive stock options only to employees.

The 2019 Plan will terminate as to future awards 10 years from the later of the effective date or the earlier of the most recent Board or stockholder approval of an increase in the number of shares reserved for issuance under the 2019 Plan. At June 30, 2023, 335,353 shares are available for future issuance.

The 2016 Stock Option Plan (“2016 Plan”) was adopted on April 20, 2017 following approval by the Company’s Board of Directors and shareholders. The 2016 Plan provides for the issuance of non-statutory stock options and restricted stock to employees, directors and consultants. The 2016 Plan also provides for the issuance of incentive stock options only to employees. The 2016 Plan authorizes the issuance of 299,628 common shares. The 2016 Plan will terminate as to future awards 10 years from the later of the effective date or the earlier of the most recent Board or stockholder approval of an increase in the number of shares reserved for issuance under the 2016 Plan. At June 30, 2023, 1,550 shares under 2016 Plan are available for future issuance.

The stock-based incentive awards for both the 2019 Plan and the 2016 Plan (collectively, the “Plans”) are granted at an exercise price not less than the fair market value of the shares on the date of grant, which is based on a Black-Scholes valuation model, in the case of options, or based on the fair value of the stock at the grant date, in the case of restricted stock. Vesting of the options vary by employee or director and can have a term no more than 10 years, with the options generally having vesting periods ranging from 1 to 5 years. No shares had been granted under the 2016 Plan prior to 2018.

Under both Plans, if an award expires or becomes un-exercisable without having been exercised in full, or is surrendered pursuant to an exchange program, the unpurchased shares that were subject thereto shall become available for future grant or sale under the Plans. However, shares that have actually been issued under the Plans, upon exercise of an award, shall not be returned to the Plans and shall not become available for future distribution under the Plans, except that if unvested shares of restricted stock are repurchased by the Company at their original purchase price, such shares shall become available for future grant under the Plans.

Stock options

The grant date fair value is determined using the Black-Scholes option valuation model.

The assumptions for expected life reflected management’s judgment and include consideration of historical experience. Expected volatility is based on data from comparable public companies for the expected option term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. Expected forfeitures are estimated based on the Company’s historical forfeiture experience. Management believes that the assumptions used in the option-pricing model are highly subjective and represent only one estimate of possible value, as there is no active market for the options granted. The table below summarizes the assumptions used for

the options granted during the six months ended June 30, 2023. No options were granted during the first three months of 2022.


			For the Six Months Ended June 30,
			2023
Risk-free interest rate			3.6% - 4.0%
Expected term in years			5.5 – 7.5
Expected volatility			43.9% – 44.9%
Expected dividend yield			—

The following summarizes stock option activity for the three months and six months ended June 30, 2023:


	Stock Options	Weighted Average Exercise Price		Weighted Average Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2022	881,625	$	5.27	7.5	$	3,871,667
Options granted	124,906	8.64		9.6	—
Options exercised	(16,800)	2.37		0.0	111,656
Options forfeited	(8,264)	9.25		0.0	11,765
Outstanding at June 30 2023	981,467	$	5.72	7.4	$	3,546,581
Options vested and exercisable at June 30 2023	689,418	$	4.78	6.9	$	3,000,920


	Stock Options	Weighted Average Exercise Price		Weighted Average Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at March 31 2023	863,429	$	5.32	7.3	$	3,407,917
Options granted	123,806	8.63		9.6	—
Options forfeited	(5,768)	8.94		0	7,884
Outstanding at June 30 2023	981,467	$	5.72	7.4	$	3,546,581
Options vested and exercisable at June 30 2023	689,418	$	4.78	6.9	$	3,000,920

The weighted average grant-date fair value of options per share granted during the six months ended June 30, 2023 was $4.12. The aggregate intrinsic value of options exercised during the six months ended June 30, 2023 was a de minimis amount. During the six months ended June 30, 2023, the Company received de minimis proceeds from the exercise of stock options and recognized a de minimis tax benefit from the exercise of stock options. Upon exercise of the stock options, the Company will issue new authorized shares.

The weighted average grant-date fair value of options per share granted during the six months ended June 30, 2022 was $6.26. The aggregate intrinsic value of options exercised during the six months ended June 30, 2022 was $0.2 million. During the six months ended June 30, 2022, the Company received de minimis proceeds from the exercise of stock options and recognized a de minimis tax benefit from the exercise of stock options.

Stock-based compensation expense

The following tables present pre-tax and after-tax stock-based compensation expense recognized:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Pre-tax
Stock options	$	142	$	54	$	237	$	93
Restricted shares	487		46		813		46
Total	$	629	$	100	$	1,050	$	139
After-tax
Stock options	$	126	$	53	$	218	$	91
Restricted shares	532		46		777		46
Total	$	658	$	99	$	995	$	137

As of June 30, 2023, the Company had unrecognized stock-based compensation expense related to stock options and restricted stock of approximately $0.7 million and $1.7 million, respectively, which is expected to be recognized over the remaining weighted average recognition period of 1.8 years and 1.6 years.

Loans and Allowance for Credit Losses - Impaired Loans (Details) - Financing Receivable, Incurred Loss Methodology $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
With no related allowance recorded
Recorded Investment	$ 450
Unpaid Principal Balance	450
Related Allowance	0
Average Recorded Investment	711
Interest Income Recognized	36
SBA
With no related allowance recorded
Recorded Investment	450
Unpaid Principal Balance	450
Related Allowance	0
Average Recorded Investment	711
Interest Income Recognized	36
Commercial, non-real estate
With no related allowance recorded
Recorded Investment	0
Unpaid Principal Balance	0
Related Allowance	0
Average Recorded Investment	0
Interest Income Recognized	0
Residential real estate
With no related allowance recorded
Recorded Investment	0
Unpaid Principal Balance	0
Related Allowance	0
Average Recorded Investment	0
Interest Income Recognized	0
Retained Strategic Program loans
With no related allowance recorded
Recorded Investment	0
Unpaid Principal Balance	0
Related Allowance	0
Average Recorded Investment	0
Interest Income Recognized	0
Commercial real estate
With no related allowance recorded
Recorded Investment	0
Unpaid Principal Balance	0
Related Allowance	0
Average Recorded Investment	0
Interest Income Recognized	0
Consumer
With no related allowance recorded
Recorded Investment	0
Unpaid Principal Balance	0
Related Allowance	0
Average Recorded Investment	0
Interest Income Recognized	$ 0

Investments - FHLB Stock (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract]
FHLB stock to be held as percentage of membership asset value	1.00%
FHLB stock to be held as percentage of FHLB advances outstanding	2.70%
Investment in Federal Home Loan Bank (FHLB) stock, at cost	$ 476	$ 449

Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2023

Loans and Leases Receivable Disclosure [Abstract]

Loans and Allowance for Credit Losses

Loans outstanding by general ledger classification as of June 30, 2023 and December 31, 2022, consisted of the following:


	June 30,		December 31,
	2023		2022
($ in thousands)
SBA	$	189,028	$	145,172
Commercial, non-real estate	24,851		11,484
Residential real estate	30,378		37,815
Strategic Program loans	63,094		47,848
Commercial real estate	18,677		12,063
Consumer	6,993		5,808
Total loans	$	333,021	$	260,190
Loans held-for-sale	(42,362)		(23,589)
Total loans held for investment	$	290,659	$	236,601
Deferred loan fees, net	(675)		(399)
Allowance for credit losses1	(12,321)		(11,985)
Net loans	$	277,663	$	224,217

(1) The Company adopted ASU 2016-13 as of January 1, 2023. The 2022 amounts presented are calculated under the prior accounting standard.

Strategic Program Loans – In 2016, the Company began originating loans with various third-party loan origination platforms that use technology and other innovative systems to streamline the origination of unsecured consumer and secured or unsecured business loans to a wide array of borrowers within certain approved credit profiles. Loans issued by the Company through these programs generally follow and are limited to specific predetermined underwriting criteria. The Company earns monthly minimum program fees from these third parties. Based on the volume of loans originated by the Company related to each Strategic Program, an additional fee equal to a percentage of the loans generated under the Strategic Program may be collected. The program fee is included within non-interest income on the Consolidated Statements of Income.

The Company generally retains the loans and/or receivables for a number of business days after origination before selling the loans and/or receivables to the Strategic Program platform or another investor. Interest income is recognized by the Company while holding the loans. These loans are classified as held-for-sale on the balance sheet.

The Company may also hold a portion of the loans or receivable and sell the remainder directly to the Strategic Programs or other investors. The Company generally services the loans originated through the Strategic Programs in consideration of servicing fees equal to a percentage of the loans generated under the Strategic Programs. In turn, the Strategic Program service providers, subject to the Company’s approval and oversight, serve as sub-servicer and perform typical primary servicing duties including loan collections, modifications, charging-off, reporting and monitoring.

Each Strategic Program establishes a “reserve” deposit account with the Company. The agreements generally require that the reserve account deposit balance does not fall below an agreed upon dollar or percentage threshold related to the total loans currently outstanding as held for sale by the Company for the specific Strategic Program. If necessary, the Company has the right to withdraw amounts from the reserve account to fulfill loan purchaser obligations created under the program agreements. Total cash held in reserve by Strategic Programs at the Company at June 30, 2023 and December 31, 2022, was $29.8 million and $16.6 million, respectively.

Strategic Program loans retained and held-for-sale as of June 30, 2023 and December 31, 2022, are summarized as follows:


	June 30,		December 31,
	2023		2022
($ in thousands)
Retained Strategic Program loans	$	20,732	$	24,259
Strategic Program loans held-for-sale	42,362		23,589
Total Strategic Program loans	$	63,094	$	47,848

Allowance for Credit Losses


($ in thousands)
Construction and land development	$	24,949
Residential real estate	29,357
Residential real estate multifamily	572
Commercial real estate	170,253
Commercial and industrial	16,507
Consumer	6,180
Lease financing receivables	22,109
Retained Strategic Program loans	20,732
Total loans	$	290,659

The portfolio classes identified as of December 31, 2022 are based on the incurred loss methodology and are segmented by general ledger classification as detailed below.


($ in thousands)
SBA	$	145,172
Commercial, non-real estate	11,484
Residential real estate	37,815
Retained Strategic Program loans	24,259
Commercial real estate	12,063
Consumer	5,808
Total loans	$	236,601

Activity in the ACL by common characteristic loan pools based on the CECL methodology was as follows:


	Three Months Ended June 30, 2023
($ in thousands)	Beginning Balance		Provision (Reversal) of Credit Losses		Charge-Offs		Recoveries		Ending Balance
Construction and land development	$	285	$	(6)	$	—	$	—	$	279
Residential real estate	799		(51)		(121)		81		708
Residential real estate multifamily	5		1		—		—		6
Commercial real estate	3,034		133		—		—		3,167
Commercial and industrial	277		75		(66)		1		287
Consumer	82		27		(19)		—		90
Lease financing receivables	325		203		—		—		528
Retained Strategic Program loans	7,227		2,293		(2,516)		252		7,256
Total allowance for loan losses	$	12,034	$	2,675	$	(2,722)	$	334	$	12,321

Unfunded lending commitments	29		13		—		—		42
Total allowance for credit losses	$	12,063	$	2,688	$	(2,722)	$	334	$	12,363


	Six Months Ended June 30, 2023
($ in thousands)	Beginning Balance		Impact of ASU 2016-13 adoption		Provision (Reversal) of Credit Losses		Charge-Offs		Recoveries		Ending Balance
Construction and land development	$	424	$	(67)	$	(78)	$	—	$	—	$	279
Residential real estate	876		(58)		(73)		(121)		84		708
Residential real estate multifamily	3		1		2		—		—		6
Commercial real estate	3,238		(574)		625		(122)		—		3,167
Commercial and industrial	339		(85)		114		(84)		3		287
Consumer	65		14		30		(19)		—		90
Lease financing receivables	339		(105)		294		—		—		528
Retained Strategic Program loans	6,701		1,131		4,429		(5,541)		536		7,256
Total allowance for loan losses	$	11,985	$	257	$	5,343	$	(5,887)	$	623	$	12,321

Unfunded lending commitments	—		26		16		—		—		42
Total allowance for credit losses	$	11,985	$	283	$	5,359	$	(5,887)	$	623	$	12,363

Activity in the allowance for loan losses by general ledger classification based on the incurred loss methodology was as follows:


	Three Months Ended June 30, 2022
($ in thousands)	Beginning Balance		Provision (Reversal) of Loan Losses		Charge-Offs		Recoveries		Ending Balance
SBA	$	3,064	$	374	$	(102)	$	48	$	3,384
Commercial, non-real estate	107		166		—		1		274
Residential real estate	411		4		—		—		415
Retained Strategic Program loans	6,322		2,365		(2,560)		315		6,442
Commercial real estate	21		1		—		—		22
Consumer	62		3		—		—		65
Total allowance for loan losses	$	9,987	$	2,913	$	(2,662)	$	364	$	10,602


	Six Months Ended June 30, 2022
($ in thousands)	Beginning Balance		Provision (Reversal) of Loan Losses		Charge-Offs		Recoveries		Ending Balance
SBA	$	2,739	$	730	$	(133)	$	48	$	3,384
Commercial, non-real estate	132		140		—		2		274
Residential real estate	352		63		—		—		415
Retained Strategic Program loans	6,549		4,923		(5,438)		408		6,442
Commercial real estate	21		1		—		—		22
Consumer	62		3		—		—		65
Total allowance for loan losses	$	9,855	$	5,860	$	(5,571)	$	458	$	10,602


	Allowance for Loan Losses						Portfolio Loan Balances
($ in thousands)	Individually		Collectively		Total		Individually		Collectively		Total
SBA	$	—	$	4,294	$	4,294	$	450	$	144,722	$	145,172
Commercial, non-real estate	—		401		401		—		11,484		11,484
Residential real estate	—		497		497		—		37,815		37,815
Retained Strategic Program loans	—		6,701		6,701		—		24,259		24,259
Commercial real estate	—		27		27		—		12,063		12,063
Consumer	—		65		65		—		5,808		5,808
Total loans	$	—	$	11,985	$	11,985	$	450	$	236,151	$	236,601

The following table presents, under previously applicable GAAP, loans individually evaluated for impairment as of December 31, 2022:


	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
($ in thousands)
With no related allowance recorded
SBA	$	450	$	450	$	—	$	711	$	36
Commercial, non-real estate	—		—		—		—		—
Residential real estate	—		—		—		—		—
Retained Strategic Program loans	—		—		—		—		—
Commercial real estate	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	450	$	450	$	—	$	711	$	36

Nonaccrual and past due loans are summarized below as of June 30, 2023 and December 31, 2022:


June 30, 2023
($ in thousands)	Current		30-59 Days Due Due		60-89 Days Due Due		90+ Days Past Due & Still Accruing		Total Past Due		Non- Accrual		Total

Construction and land development	$	24,733	$	216	$	—	$	—	$	216	$	—	$	24,949
Residential real estate	29,239		—		—		—		—		118		29,357
Residential real estate multifamily	572		—		—		—		—		—		572
Commercial real estate	169,513		—		—		—		—		740		170,253
Commercial and industrial	16,458		28		21		—		49		—		16,507
Consumer	6,120		53		7		—		60		—		6,180
Lease financing receivables	22,109		—		—		—		—		—		22,109
Retained Strategic Program loans	19,022		935		638		137		1,710		—		20,732
Total	$	287,766	$	1,232	$	666	$	137	$	2,035	$	858	$	290,659


December 31, 2022
($ in thousands)	Current		30-59 Days Due Due		60-89 Days Due Due		90+ Days Past Due & Still Accruing		Total Past Due		Non- Accrual		Total
SBA	$	144,803	$	369	$	—	$	—	$	369	$	—	$	145,172
Commercial, non-real estate	11,484		—		—		—		—		—		11,484
Residential real estate	37,387		428		—		—		428		—		37,815
Retained Strategic Program loans	22,080		1,184		802		193		2,179		—		24,259
Commercial real estate	12,063		—		—		—		—		—		12,063
Consumer	5,776		32		—		—		32		—		5,808
Total	$	233,593	$	2,013	$	802	$	193	$	3,008	$	—	$	236,601

The amount of interest income for the six months ended June 30, 2023 and 2022, that was not recorded on nonaccrual loans was de minimis.

The allowance for credit losses represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date. The allowance for credit losses is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The Bank measures expected credit losses for loans on a pooled basis when similar risk characteristics exist. Generally, collectively assessed loans are grouped by Call Report code and then risk grade grouping.

In addition to past due and nonaccrual status criteria, the Company also evaluates loans using a loan grading system. Internal loan grades are based on current financial information, historical payment experience, and credit documentation, among other factors. Performance-based grades are summarized below:

Pass – A Pass asset is higher quality and does not fit any of the other categories described below. The likelihood of loss is believed to be remote.

Watch – A Watch asset may be a larger loan or one that places a heavier reliance on collateral due to the relative financial strength of the borrower. The assets may be maintenance intensive requiring closer monitoring. The obligor is believed to have an adequate primary source of repayment.

Special Mention – A Special Mention asset has potential weaknesses that may be temporary or, if left uncorrected, may result in a loss. While concerns exist, the Company believes that it is currently protected against a default and loss is considered unlikely and not imminent.

Substandard – A Substandard asset is believed to be inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have identified weaknesses and are characterized by the possibility that the Company may sustain some loss if deficiencies are not corrected.

Not Rated – For certain Strategic Program and consumer loans, the Company does not evaluate and risk rate the loans in the same manner as other loans in the Company’s portfolio. The Not Rated loans are typically homogenous, smaller dollar balances approved using abridged underwriting methods that allow the Company to streamline the loan approval process and increase efficiency. Credit quality for Strategic Program loans is highly correlated with delinquency levels.


June 30, 2023	2023		2022		2021		Prior		Revolving Loans		Total
($ in thousands)

Construction and land development
Pass	$	4,595	$	15,789	$	4,358	$	207	$	—	$	24,949
Watch	—		—		—		—		—		—
Special Mention	—		—		—		—		—		—
Substandard	—		—		—		—		—		—
Total	4,595		15,789		4,358		207		—		24,949
Current period gross writeoff	—		—		—		—		—		—

Residential real estate
Pass	1,328		8,765		1,603		3,577		1,818		17,091
Watch	333		7,169		1,918		2,716		—		12,136
Special Mention	—		—		—		12		—		12
Substandard	—		118		—		—		—		118
Total	1,661		16,052		3,521		6,305		1,818		29,357
Current period gross writeoff	—		(121)		—		—		—		(121)

Residential real estate multifamily
Pass	200		266		80		—		—		546
Watch	—		—		—		26		—		26
Special Mention	—		—		—		—		—		—
Substandard	—		—		—		—		—		—
Total	200		266		80		26		—		572
Current period gross writeoff	—		—		—		—		—		—

Commercial real estate
Pass	41,966		34,298		859		14,220		—		91,343


Watch	16,087	34,310	15,069	12,260	—	77,726
Special Mention	—	—	—	444	—	444
Substandard	—	356	—	384	—	740
Total	58,053	68,964	15,928	27,308	—	170,253
Current period gross writeoff	—	—	—	(122)	—	(122)

Commercial and industrial
Pass	5,266	2,869	866	1,854	—	10,855
Watch	1,340	2,649	957	595	—	5,541
Special Mention	—	—	—	18	—	18
Substandard	—	—	—	93	—	93
Total	6,606	5,518	1,823	2,560	—	16,507
Current period gross writeoff	—	—	(13)	(71)	—	(84)

Consumer
Pass	2,001	2,463	873	780	1	6,118
Watch	38	—	—	1	—	39
Special Mention	—	—	—	—	—	—
Substandard	—	—	—	—	—	—
Not Rated	23	—	—	—	—	23
Total	2,062	2,463	873	781	1	6,180
Current period gross writeoff	—	(5)	(12)	(2)	—	(19)

Lease financing receivables
Pass	14,178	7,616	—	315	—	22,109
Watch	—	—	—	—	—	—
Special Mention	—	—	—	—	—	—
Substandard	—	—	—	—	—	—
Total	14,178	7,616	—	315	—	22,109
Current-period gross writeoffs	—	—	—	—	—	—

Retained Strategic Program loans
Pass	—	—	—	—	—	—
Watch	—	—	—	—	—	—
Special Mention	—	—	—	—	—	—
Substandard	—	—	—	—	—	—
Not Rated	11,136	7,450	2,145	1	—	20,732
Total	11,136	7,450	2,145	1	—	20,732
Current-period gross writeoffs	(438)	(4,474)	(627)	(2)	—	(5,541)


Total portfolio loans receivable, gross	98,491	124,118	28,728	37,503	1,819	290,659
Total current-period gross writeoffs	(438)	(4,600)	(652)	(197)	—	(5,887)


December 31, 2022
($ in thousands)	Pass Grade 1-4		Special Mention Grade 5		Classified/ Doubtful/Loss Grade 6-8		Total
SBA	$	144,149	$	573	$	450	$	145,172
Commercial, non-real estate	11,484		—		—		11,484
Residential real estate	37,815		—		—		37,815
Commercial real estate	12,063		—		—		12,063
Consumer	5,808		—		—		5,808
Not Risk Graded
Retained Strategic Program loans							24,259
Total	$	211,319	$	573	$	450	$	236,601

Effective January 1, 2023 loan modifications to borrowers experiencing financial difficulty are required to be disclosed by type of modification and by type of loan. Prior accounting guidance classified loans which were modified as troubled debt restructurings ("TDRs") only if the modification reflected a concession from the lender in the form of a below market interest rate or other concession in addition to borrower financial difficulty. Under the new guidance (ASU 2022-02), loans with modifications made after January 1, 2023, will be reported under the new loan modification guidance whether a concession is made or not. As of January 1, 2023, the Company has ceased to recognize or measure new TDRs but those existing at December 31, 2022 will remain until settled.

In the six months ended June 30, 2023 there were no material loan modifications reportable under the new guidance.

Loans modified and recorded as TDR’s at December 31, 2022, consist of the following:


($ in thousands)	Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
December 31, 2022
SBA	1	$	94	$	94
Total at December 31, 2022	1	$	94	$	94

At December 31, 2022, there were no commitments to lend additional funds to debtors whose loan terms have been modified in a TDR. There was one principal charge-off recorded related to TDRs during the six months ended June 30, 2022 for $0.01 million. There was no principal charge-off recorded related to TDRs during the three months ended June 30, 2022.

During the three and six months ended June 30, 2022, there were no loan modifications to TDRs. Separately, one restructured loan incurred a default within 12 months of the restructure date during the six months ended June 30, 2022. This same loan was paid in full with interest on June 2, 2022.

Collateral-Dependent Financial Loans

A collateral-dependent financial loan relies substantially on the operation or sale of the collateral for repayment. In evaluating the overall risk associated with a loan, the Company considers (1) character, overall financial condition and resources, and payment record of the borrower; (2) the prospects for support from any financially responsible guarantors;

and (3) the nature and degree of protection provided by the cash flow and value of any underlying collateral. The loan may become collateral-dependent when foreclosure is probable or the borrower is experiencing financial difficulty and its sources of repayment become inadequate over time. At such time, the Company develops an expectation that repayment will be provided substantially through the operation or sale of the collateral.

The following tables present the amortized cost basis of collateral-dependent loans by class of loans as of the dates indicated:


($ in thousands)	Collateral Type
As of June 30, 2023	Real Estate		Personal Property		Total
Commercial real estate	$	1,809	$	—	$	1,809
Residential real estate	118		—		118
Total	$	1,927	$	—	$	1,927


($ in thousands)	Collateral Type
As of December 31, 2022	Real Estate		Personal Property		Total
Commercial real estate	$	356	$	—	$	356

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2023
Accounting Policies [Abstract]
Nature of business and organization	Nature of business and organization – FinWise Bancorp is a Utah Corporation headquartered in Murray, Utah and operates all business activities through its wholly-owned subsidiaries FinWise Bank, f/k/a Utah Community Bank and FinWise Investment, LLC. FinWise Bank was incorporated in the state of Utah on May 7, 1999. FinWise Bancorp, f/k/a All West Bancorp, was incorporated in the state of Utah on October 22, 2002, after which, it acquired 100% of FinWise Bank. As of March 4, 2016, FinWise Bank’s articles of incorporation were amended to rename the entity FinWise Bank. As of March 15, 2021, FinWise Bancorp’s articles of incorporation were amended and restated to rename the entity FinWise Bancorp. References herein to “FinWise Bancorp,” “Bancorp” or the “holding company,” refer to FinWise Bancorp on a standalone basis. The word “Company” refers to FinWise Bancorp, FinWise Investment, LLC, and FinWise Bank collectively and on a consolidated basis. References to the “Bank” refer to FinWise Bank on a standalone basis. The Bank provides a full range of banking services to individual and commercial customers. The Bank’s primary source of revenue is from loans including consumer, Small Business Administration (SBA), commercial, commercial real estate, and residential real estate. The Bank also has established Strategic Programs with various third-party loan origination platforms that use technology to streamline the origination of unsecured consumer and secured or unsecured business loans to borrowers within certain approved credit profiles. The Bank earns monthly program fees based on the volume of loans originated in these Strategic Programs, as well as interest during the time the Bank holds the loans. The Company is subject to competition from other financial institutions and to the regulations of certain federal and state agencies and undergoes periodic examinations by those agencies.
Basis of Presentation	Basis of Presentation – The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with rules and regulations of the Securities and Exchange Commission ("SEC") and include the activity of the Company and its wholly owned subsidiaries, FinWise Investments, LLC and the Bank. The statements do not include all of the information and footnotes required by GAAP for complete financial statements. All significant inter-company transactions have been eliminated in consolidation. In the opinion of management, all the adjustments (consisting of normal and recurring adjustments) necessary for the fair presentation of the consolidated financial condition and the consolidated results of operations for the periods presented have been included. The results of operations and other data presented for the three and six months ended June 30, 2023 are not necessarily indicative of the results of operations that may be expected for subsequent periods or the full year results. The unaudited consolidated financial statements presented should be read in conjunction with the Company’s audited consolidated financial statements and notes to the audited consolidated financial statements included in the Company’s December 31, 2022 Annual Report on Form 10-K. Certain prior period amounts have been reclassified to conform to current period presentation. The Company has evaluated subsequent events for potential recognition and/or disclosure in this Quarterly Report on Form 10-Q through the date these consolidated financial statements were issued.
Out-of-period adjustment	Out-of-period adjustments – During the first quarter of 2022, we recognized a $(0.8) million ($(0.6) million net of tax) reduction of interest and fees on loans and loans receivable, net as an out-of-period adjustment. The impact associated with this correction was not considered material to the interim unaudited consolidated financial statements for the three and six months ended June 30, 2022, year ended December 31, 2022, or the financial statements of any previously filed interim or annual periods. During the third quarter of 2022, the Company identified an error in the calculation of the Company’s tax provision which understated income tax expense for previously reported financial statements. The error was related to an incorrect application of Section 162(m) of the Internal Revenue Code, which limits tax deductions relating to executive compensation of certain executives of publicly held companies. The Company recorded an out-of-period adjustment during the third quarter of 2022 to correct the previously understated income tax expense. The adjustment resulted in a decrease to after-tax income of $(0.9) million for the year ended December 31, 2022. The impact associated with this correction was not considered material to the interim unaudited consolidated financial statements for the three months ended September 30, 2022, year ended December 31, 2022, or the financial statements of any previously filed interim or annual periods. During the fourth quarter of 2022, the Company established a new loan trailing fee asset which is included in “Other assets” on the Consolidated Balance Sheets of approximately $2.3 million and recognized $2.1 million in gain on sale of loans ($1.5 million net of tax) as an out-of-period adjustment of which $1.2 million ($0.9 million net of tax) would have been recorded in the first three quarters of 2022 with the remaining $0.9 million ($0.6 million net of tax) associated with years prior to 2022. Before this correction, the loan trailing fees had been recognized in revenue during the month payment was owed by the Strategic Program rather than as a gain to be recognized upon sale of the loan receivables. The impact associated with this correction was not considered material to the interim unaudited consolidated financial statements for the three and six months ended December 31, 2022, year ended December 31, 2022, or the financial statements of any previously filed interim or annual periods.
Cash and Cash Equivalents	Cash and Cash Equivalents – For purposes of reporting cash flows, the Company defines cash and cash equivalents as cash, cash due from banks, interest-bearing deposits in other banks, other interest-bearing deposits, and federal funds sold.
Loans Receivable	Loans Receivable – Loans receivable are reported at their outstanding principal adjusted for any charge-offs, the allowance for credit losses, and deferred fees and costs. Loan origination fees, net of certain direct origination costs, if any, are deferred and recognized on an adjustment of the related loan yield using an effective-yield method over the contractual life of the loan. Interest income on loans is recognized on an accrual basis commencing in the month of origination using the interest method. Delinquency fees are recognized in income when chargeable and when collectability is reasonably assured. The Company requires most loans to be substantially collateralized by real estate, equipment, vehicles, accounts receivable, inventories or other tangible or intangible assets. Real estate collateral is in the form of first and second mortgages on various types of property. The Company also originates unsecured loans to consumers and businesses. The Company may change its intent from holding loans for investment and reclassify them as held-for-sale.
Loans Held for Sale	Loans Held For Sale - Loans held-for-sale are carried at the lower of aggregate cost and fair value. Gains and losses are recorded in non-interest income based on the difference between sales proceeds and carrying value.
Nonaccrual Loans	Nonaccrual Loans – The Company's policy is to place loans on a nonaccrual status when: 1) payment is in default for 90 days or more unless the loan is well secured and in the process of collection; or 2) full repayment of principal and interest is not foreseen. When a loan is placed on nonaccrual status, all accrued and uncollected interest on that loan is reversed. Past-due interest received on nonaccrual loans is not recognized in interest income but is applied as a reduction of the outstanding principal of the loan. A loan is relieved of its nonaccrual status when all principal and interest payments are brought current, the loan is well secured, and an analysis of the borrower's financial condition provides reasonable assurance that the borrower can repay the loan as scheduled.
Stock Repurchase Program	Stock Repurchase Program – On August 18, 2022, the Company announced that its Board of Directors (the “Board”) has authorized, effective August 16, 2022, a common stock repurchase program to purchase up to 644,241 shares of the Company’s common stock in the aggregate. The repurchase program expires on August 31, 2024, but may be limited or terminated at any time without prior notice. The repurchase program authorizes the repurchase by the Company of its common stock in open market transactions, including pursuant to a trading plan in accordance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or privately negotiated transactions. The authorization permits management to repurchase shares of the Company’s common stock from time to time at management’s discretion. Repurchases may also be made pursuant to a trading plan under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The actual means and timing of any shares purchased under the program will depend on a variety of factors, including the market price of the Company’s common stock, general market and economic conditions, and applicable legal and regulatory requirements. The repurchase program does not obligate the Company to purchase any particular number of shares. Since commencement of the repurchase program, the Company has repurchased 413,263 shares for approximately $3.5 million as of June 30, 2023 and retired them at cost.
Revenue from Contracts with Customers	Revenue from Contracts with Customers – The Company applies the provisions of ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of this standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Services that the Company reports as part of non-interest income are subject to ASC 606 and include fees from its deposit customers for transaction-based activities, account maintenance charges and overdraft services. Transaction-based fees, such as ACH and wire transfer fees, overdraft, return and stop payment charges, are recognized at the time such transactions are executed and the services have been fulfilled by the Company. The fees are typically withdrawn from the customer’s deposit account balance. The Company also receives fees from third-parties in its Strategic Programs for setting up systems and procedures to efficiently originate loans in a convenient, compliant and safe manner. Because the third-party simultaneously receives and benefits from the services, revenue is recognized evenly over the term of the loan program. Program Fees received in connection with the Company’s Strategic Programs are recorded at the time services are provided.
Segment Reporting	Segment Reporting – Operating segments are components of a business where separate financial information is available and evaluated regularly by the chief operating decision makers ("CODMs") in deciding how to allocate resources and in assessing performance. ASC Topic 280, Segment Reporting, requires information to be reported about a company's operating segments using a "management approach", meaning it is based on the way management organizes segments internally to make operating decisions and assess performance. Based on this guidance, the Company has one reportable operating segment, the Bank.
Recently adopted accounting pronouncements	Recently adopted accounting pronouncements Allowance for Credit Losses: On January 1, 2023, the Company adopted ASU 2016-13, Topic 326 which replaced the incurred loss methodology with CECL for financial instruments measured at amortized cost and other commitments to extend credit. CECL requires the immediate recognition of estimated credit losses expected to occur over the estimated remaining life of the asset. The forward-looking concept of CECL requires loss estimates to consider historical experience, current conditions and reasonable and supportable economic forecasts of future events and circumstances. The allowance for credit losses (“ACL”) on loans held for investment is the combination of the allowance for loan losses and the reserve for unfunded loan commitments. The allowance for loan losses is reported as a reduction of the amortized cost basis of loans, while the reserve for unfunded loan commitments is included within "other liabilities" on the Consolidated Balance Sheets. The estimate of credit loss incorporates assumptions for both the likelihood and amount of funding over the estimated life of the commitments, including adjustments for current conditions and reasonable and supportable forecasts. Management periodically reviews and updates its assumptions for estimated funding rates. The amortized cost basis of loans does not include accrued interest receivable, which is included in "accrued interest receivable" on the Consolidated Balance Sheets. The "Provision for credit losses" on the Consolidated Statements of Income is a combination of the provision for credit losses and the provision for unfunded loan commitments. ACL in accordance with CECL methodology With respect to the Bank's core portfolio which consists of SBA 7(a), local lending, retail point of sale, and equipment finance and leasing, the Bank pools similar loans that are collectively evaluated and determines an appropriate level of general allowance by portfolio segment using a non-discounted cash flow model taking into account probability of default, loss in the event of default, and prepayment speed estimates based on industry specific collected data. The model captures losses over the historical charge-off and prepayment cycle and applies those losses at a loan level over the remaining maturity of the loan. The model then calculates a historical loss rate using the average losses over the reporting period, which is then applied to each segment utilizing a standard reversion rate. With respect to the Bank's active retained Strategic Program loan portfolio, the Bank is using a methodology that compares the actual loan performance of a vintage to the worst performing loans within that vintage, known as the high-water mark. The Bank records the expected credit losses based on the high-water mark loss rate. With respect to the Bank's inactive retained Strategic Program loan portfolio, performance data at the summary level provided by the Strategic Programs is banded by credit profile and original loan term and compared to actual loan performance on a quarterly basis. The expected loss rate is supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, including but not limited to national unemployment rate forecasts. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. Also included in the ACL are qualitative factors based on the risks present for each portfolio segment. These qualitative factors include the following that are derived from the Interagency Policy Statement on Allowance for Credit Losses: changes in lending policies and procedures; changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the loan portfolio; changes in the nature and volume of the loan portfolio and in the terms of loans; changes in the experience, ability, and depth of lending management and staff; changes in the volume and severity of past due loans, nonaccrual loans, and classified or graded loans; changes in the quality of the Bank's loan review system; changes in the value of underlying collateral for loans that are not collateral-dependent; changes in the level of concentration of credit; changes in the effect of competition, legal, and regulatory requirements on the level of estimated credit losses; and, if applicable, changes in the composition and volume of the loan portfolio due to mergers, acquisitions, and other significant transactions not considered elsewhere. The Bank also considers as an additional qualitative factor any lingering "ripple" effects of the Covid-19 pandemic, including lasting changes to consumer behavior, lending, and society at large. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. When management identifies loans that do not share common risk characteristics (i.e., are not similar to other loans within a pool) they are evaluated on an individual basis. These loans are not included in the collective evaluation. For loans identified as having a likelihood of foreclosure or that the borrower is experiencing financial difficulty, a collateral dependent approach is used. These are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. Under CECL, for collateral dependent loans, the Company has adopted the practical expedient method to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. The CECL methodology requires a significant amount of management judgment in determining the appropriate allowance for credit losses. Several of the steps in the methodology involve judgment and are subjective in nature including, among other things: segmenting the loan portfolio; determining the amount of loss history to consider; selecting predictive econometric regression models that use appropriate macroeconomic variables; determining the methodology to forecast prepayments; selecting the most appropriate economic forecast scenario; determining the length of the reasonable and supportable forecast and reversion periods; estimating expected utilization rates on unfunded loan commitments; and assessing relevant and appropriate qualitative factors. In addition, the CECL methodology is dependent on economic forecasts, which are inherently imprecise and will change from period to period. Although the allowance for credit losses is considered appropriate, there can be no assurance that it will be sufficient to absorb future losses. In determining an appropriate amount for the allowance, the Bank segments and aggregates the loan portfolio based on common characteristics. The following segments have been identified: Commercial Real Estate. These loans are generally secured by owner-occupied nonfarm, nonresidential properties, or by other nonfarm, nonresidential properties. Owner-occupied commercial real estate loans are typically repaid first by the cash flows generated by the underlying business. Factors that may influence a business' cash flows include, but are not limited to, demand for its products or services, quality and depth of management, degree of competition, regulatory changes, and general economic conditions. Non-owner occupied commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions. Commercial and Industrial. These loans are generally secured by business assets such as furniture, fixtures, equipment. accounts receivable, inventory, business vehicles, and other business personal property. Commercial and industrial loans are typically repaid first by the cash flows generated by the borrower's business operations. The primary risk characteristics are specific to the underlying business and its ability to generate sustainable profitability and resulting positive cash flows. Factors that may influence a business' profitability include, but are not limited to, demand for its products or services, quality and depth of management, degree of competition, regulatory changes, and general economic conditions. Lease Financing Receivables. Equipment financing and leasing typically involve the use of equipment as collateral for the loan. If the borrower defaults on the loan, the Bank may need to repossess and sell the equipment to recover the outstanding debt. However, the value of the equipment may depreciate over time, or disappear, making it difficult for the Bank to recover the full amount of the loan. In equipment leasing, the residual value of the equipment is an important consideration. The residual value is the estimated value of the equipment at the end of the lease term. If the actual value of the equipment is lower than the residual value, the lessor may not be able to recover the full amount of the lease payments. Construction and Land Development. Risks common to construction loans are cost overruns, changes in market demand for property, supply chain interruption affecting construction materials, inadequate long-term financing arrangements and declines in real estate values. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values, and higher interest rates. Risks common to residential lot loans are those similar to other types of real estate construction loans, as many customers finance the purchase of improved lots in anticipation of constructing a 1 to 4 family residence. Accordingly, common risks are changes in market demand for property, supply chain interruption affecting construction materials, inadequate long-term financing arrangements and declines in real estate values. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values and higher interest rates. Consumer. These are loans to individuals for household, family, and other personal expenditures. Consumer loans generally have higher interest rates and shorter terms than residential loans but tend to have higher credit risk due to the type of collateral securing the loan or in some cases the absence of collateral. Residential Real Estate. These loans are generally secured by 1 to 4 family residential properties. The primary risk characteristics associated with residential mortgage loans typically involve: major living or lifestyle changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as for major medical issues or catastrophic events; and divorce or death. In addition, residential mortgage loans that have adjustable rates could expose the borrower to higher debt service requirements in a rising interest rate environment. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank. Residential Real Estate Multifamily. Risks common to multifamily loans are poor management, high vacancy rates and regulatory changes. The value of multi-family properties can be impacted by changes in the local real estate market. If property values decline, the Bank may not be able to recover the full amount of the loan if the property needs to be foreclosed. Strategic Program Loans. Unsecured consumer loans and secured or unsecured business loans issued by the Company through these programs generally follow and are limited to specific predetermined underwriting criteria. Strategic Program loans cover a wide range of borrower credit profiles, loan terms and interest rates. Strategic Program loans generally have higher interest rates and shorter terms similar to consumer loans and tend to have higher credit risk due to the type of collateral securing the loan or in most cases the absence of collateral. In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings and modifications. The Company adopted ASU 2022-02 on January 1, 2023. Effective January 1, 2023 loan modifications to borrowers experiencing financial difficulty are required to be disclosed by type of modification and by type of loan. Prior accounting guidance classified loans which were modified as troubled debt restructurings only if the modification reflected a concession from the lender in the form of a below market interest rate or other concession in addition to borrower financial difficulty. Under the new guidance, loans with modifications will be reported whether a concession is made or not. In the first half of 2023, there were no loan modifications which were subject to the new reporting.
Allowance for Credit Losses	The allowance for credit losses (“ACL”) on loans held for investment is the combination of the allowance for loan losses and the reserve for unfunded loan commitments. The allowance for loan losses is reported as a reduction of the amortized cost basis of loans, while the reserve for unfunded loan commitments is included within "other liabilities" on the Consolidated Balance Sheets. The estimate of credit loss incorporates assumptions for both the likelihood and amount of funding over the estimated life of the commitments, including adjustments for current conditions and reasonable and supportable forecasts. Management periodically reviews and updates its assumptions for estimated funding rates. The amortized cost basis of loans does not include accrued interest receivable, which is included in "accrued interest receivable" on the Consolidated Balance Sheets. The "Provision for credit losses" on the Consolidated Statements of Income is a combination of the provision for credit losses and the provision for unfunded loan commitments. ACL in accordance with CECL methodology With respect to the Bank's core portfolio which consists of SBA 7(a), local lending, retail point of sale, and equipment finance and leasing, the Bank pools similar loans that are collectively evaluated and determines an appropriate level of general allowance by portfolio segment using a non-discounted cash flow model taking into account probability of default, loss in the event of default, and prepayment speed estimates based on industry specific collected data. The model captures losses over the historical charge-off and prepayment cycle and applies those losses at a loan level over the remaining maturity of the loan. The model then calculates a historical loss rate using the average losses over the reporting period, which is then applied to each segment utilizing a standard reversion rate. With respect to the Bank's active retained Strategic Program loan portfolio, the Bank is using a methodology that compares the actual loan performance of a vintage to the worst performing loans within that vintage, known as the high-water mark. The Bank records the expected credit losses based on the high-water mark loss rate. With respect to the Bank's inactive retained Strategic Program loan portfolio, performance data at the summary level provided by the Strategic Programs is banded by credit profile and original loan term and compared to actual loan performance on a quarterly basis. The expected loss rate is supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, including but not limited to national unemployment rate forecasts. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. Also included in the ACL are qualitative factors based on the risks present for each portfolio segment. These qualitative factors include the following that are derived from the Interagency Policy Statement on Allowance for Credit Losses: changes in lending policies and procedures; changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the loan portfolio; changes in the nature and volume of the loan portfolio and in the terms of loans; changes in the experience, ability, and depth of lending management and staff; changes in the volume and severity of past due loans, nonaccrual loans, and classified or graded loans; changes in the quality of the Bank's loan review system; changes in the value of underlying collateral for loans that are not collateral-dependent; changes in the level of concentration of credit; changes in the effect of competition, legal, and regulatory requirements on the level of estimated credit losses; and, if applicable, changes in the composition and volume of the loan portfolio due to mergers, acquisitions, and other significant transactions not considered elsewhere. The Bank also considers as an additional qualitative factor any lingering "ripple" effects of the Covid-19 pandemic, including lasting changes to consumer behavior, lending, and society at large. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. When management identifies loans that do not share common risk characteristics (i.e., are not similar to other loans within a pool) they are evaluated on an individual basis. These loans are not included in the collective evaluation. For loans identified as having a likelihood of foreclosure or that the borrower is experiencing financial difficulty, a collateral dependent approach is used. These are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. Under CECL, for collateral dependent loans, the Company has adopted the practical expedient method to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. The CECL methodology requires a significant amount of management judgment in determining the appropriate allowance for credit losses. Several of the steps in the methodology involve judgment and are subjective in nature including, among other things: segmenting the loan portfolio; determining the amount of loss history to consider; selecting predictive econometric regression models that use appropriate macroeconomic variables; determining the methodology to forecast prepayments; selecting the most appropriate economic forecast scenario; determining the length of the reasonable and supportable forecast and reversion periods; estimating expected utilization rates on unfunded loan commitments; and assessing relevant and appropriate qualitative factors. In addition, the CECL methodology is dependent on economic forecasts, which are inherently imprecise and will change from period to period. Although the allowance for credit losses is considered appropriate, there can be no assurance that it will be sufficient to absorb future losses. In determining an appropriate amount for the allowance, the Bank segments and aggregates the loan portfolio based on common characteristics. The following segments have been identified: Commercial Real Estate. These loans are generally secured by owner-occupied nonfarm, nonresidential properties, or by other nonfarm, nonresidential properties. Owner-occupied commercial real estate loans are typically repaid first by the cash flows generated by the underlying business. Factors that may influence a business' cash flows include, but are not limited to, demand for its products or services, quality and depth of management, degree of competition, regulatory changes, and general economic conditions. Non-owner occupied commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions. Commercial and Industrial. These loans are generally secured by business assets such as furniture, fixtures, equipment. accounts receivable, inventory, business vehicles, and other business personal property. Commercial and industrial loans are typically repaid first by the cash flows generated by the borrower's business operations. The primary risk characteristics are specific to the underlying business and its ability to generate sustainable profitability and resulting positive cash flows. Factors that may influence a business' profitability include, but are not limited to, demand for its products or services, quality and depth of management, degree of competition, regulatory changes, and general economic conditions. Lease Financing Receivables. Equipment financing and leasing typically involve the use of equipment as collateral for the loan. If the borrower defaults on the loan, the Bank may need to repossess and sell the equipment to recover the outstanding debt. However, the value of the equipment may depreciate over time, or disappear, making it difficult for the Bank to recover the full amount of the loan. In equipment leasing, the residual value of the equipment is an important consideration. The residual value is the estimated value of the equipment at the end of the lease term. If the actual value of the equipment is lower than the residual value, the lessor may not be able to recover the full amount of the lease payments. Construction and Land Development. Risks common to construction loans are cost overruns, changes in market demand for property, supply chain interruption affecting construction materials, inadequate long-term financing arrangements and declines in real estate values. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values, and higher interest rates. Risks common to residential lot loans are those similar to other types of real estate construction loans, as many customers finance the purchase of improved lots in anticipation of constructing a 1 to 4 family residence. Accordingly, common risks are changes in market demand for property, supply chain interruption affecting construction materials, inadequate long-term financing arrangements and declines in real estate values. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values and higher interest rates. Consumer. These are loans to individuals for household, family, and other personal expenditures. Consumer loans generally have higher interest rates and shorter terms than residential loans but tend to have higher credit risk due to the type of collateral securing the loan or in some cases the absence of collateral. Residential Real Estate. These loans are generally secured by 1 to 4 family residential properties. The primary risk characteristics associated with residential mortgage loans typically involve: major living or lifestyle changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as for major medical issues or catastrophic events; and divorce or death. In addition, residential mortgage loans that have adjustable rates could expose the borrower to higher debt service requirements in a rising interest rate environment. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank. Residential Real Estate Multifamily. Risks common to multifamily loans are poor management, high vacancy rates and regulatory changes. The value of multi-family properties can be impacted by changes in the local real estate market. If property values decline, the Bank may not be able to recover the full amount of the loan if the property needs to be foreclosed. Strategic Program Loans. Unsecured consumer loans and secured or unsecured business loans issued by the Company through these programs generally follow and are limited to specific predetermined underwriting criteria. Strategic Program loans cover a wide range of borrower credit profiles, loan terms and interest rates. Strategic Program loans generally have higher interest rates and shorter terms similar to consumer loans and tend to have higher credit risk due to the type of collateral securing the loan or in most cases the absence of collateral.
Fair Value of Financial Instruments	The Company measures and discloses certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, not a forced liquidation or distressed sale). GAAP establishes a consistent framework for measuring fair value and disclosure requirements about fair value measurements. Among other things, the standard requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s estimates for market assumptions. These two types of inputs create the following fair value hierarchy. Level 1 – Quoted prices in active markets for identical instruments. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available. Level 2 – Observable inputs other than Level 1 including quoted prices in active markets for similar instruments, quoted prices in less active markets for identical or similar instruments, or other observable inputs that can be corroborated by observable market data. Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation also includes observable inputs from nonbinding single dealer quotes not corroborated by observable market data. In developing Level 3 measurements, management incorporates whatever market data might be available and uses discounted cash flow models where appropriate. These calculations include projections of future cash flows, including appropriate default and loss assumptions, and market-based discount rates. The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize at a future date. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values. Transfers between levels of the fair value hierarchy are deemed to occur at the end of the reporting period. The following methods were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents: The carrying amount of these items is a reasonable estimate of their fair value. Investment securities held-to-maturity: The estimated fair values of investment securities are priced using current active market quotes, if available, which are considered Level 1 measurements. For most of the portfolio, matrix pricing based on the securities’ relationship to other benchmark quoted prices is used to establish the fair value. These measurements are considered Level 2. Investment in Federal Home Loan Bank stock: The fair value is based upon the redemption value of the stock, which equates to the carrying value. Strategic Program loans held-for-sale: The carrying amount of these items is a reasonable estimate of their fair value. Loans held for investment: The fair value is estimated by discounting the future cash flows and estimated prepayments using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term. Some loan types’ fair value approximated carrying value because of their floating rate or expected maturity characteristics. SBA servicing asset: The fair value of servicing assets is based on, in part, third -party valuations that project estimated future cash inflows that include servicing fees and outflows that include market rates for costs of servicing. The present value of the future cash flows are calculated utilizing market-based discount rates. The market-based discount rates represent risk spreads based on secondary market transactions utilizing calculated prepayment curves. Due to the fact that observable loan transactions are used to determine the risk spreads, the Company considers the measurement to be Level 2. Deposits: The carrying amount of deposits with no stated maturity, such as savings and checking accounts, is a reasonable estimate of their fair value. The market value of certificates of deposit is based upon the discounted value of contractual cash flows. The discount rate is determined using the rates currently offered on comparable instruments. Accrued interest receivable and payable: The fair value of accrued interest receivable and payable approximates their carrying amount. Individually evaluated loans – The loan amount above represents loans individually evaluated as of year-end that have been adjusted to fair value. When collateral dependent loans are individually evaluated, they are measured using the current fair value of the collateral securing these loans, less selling costs. The fair value of real estate collateral is determined using collateral valuations or a discounted cash flow analysis using inputs such as discount rates, sale prices of similar assets, and term of expected disposition. Some appraised values are adjusted based on management’s review and analysis, which may include historical knowledge, changes in market conditions, estimated selling and other anticipated costs, and/or expertise and knowledge. The loss represents charge-offs on loans for adjustments made based on the fair value of the collateral.

Investments - Amortized Cost and Estimated Market Value of Debt Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Amortized Cost
Due in one year or less	$ 0	$ 0
Due after one year through five years	0	0
Due after five years through ten years	3,070	3,388
Due after ten years	11,333	10,904
Amortized Cost	14,403	14,292
Estimated Fair Value
Due in one year or less	0	0
Due after one year through five years	0	0
Due after five years through ten years	2,868	3,202
Due after ten years	9,862	9,526
Estimated fair value	$ 12,730	$ 12,728

Stock-Based Compensation - Stock Option Activity (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Stock Options
Outstanding, beginning of year (in shares)	863,429	881,625	881,625
Options granted (in shares)	123,806		124,906
Options exercised (in shares)			(16,800)
Options forfeited (in shares)	(5,768)		(8,264)
Outstanding, end of period (in shares)	981,467	863,429	981,467		881,625
Options vested and exercisable, end of period (in shares)	689,418		689,418
Weighted Average Exercise Price
Outstanding, beginning of year (in dollars per share)	$ 5.32	$ 5.27	$ 5.27
Options granted (in dollars per share)	8.63		8.64
Options exercised (in dollars per share)			2.37
Options forfeited (in dollars per share)	8.94		9.25
Outstanding, end of period (in dollars per share)	5.72	$ 5.32	5.72		$ 5.27
Options vested and exercisable, end of period (in dollars per share)	$ 4.78		$ 4.78
Weighted Average Contractual Life (in years)
Outstanding		7 years 3 months 18 days	7 years 4 months 24 days		7 years 6 months
Options granted	9 years 7 months 6 days		9 years 7 months 6 days
Options vested and exercisable			6 years 10 months 24 days
Aggregate Intrinsic Value
Outstanding, beginning of year	$ 3,407,917	$ 3,871,667	$ 3,871,667
Options granted	0		0
Options exercised			111,656	$ 200,000
Options forfeited	7,884		11,765
Outstanding, end of period	3,546,581	$ 3,407,917	3,546,581		$ 3,871,667
Options vested and exercisable	$ 3,000,920		$ 3,000,920

Earnings per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Earnings per Share


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Numerator:
Net income	$	4,638	$	5,482	$	8,499	$	14,916
Amount allocated to participating common shareholders(1)	(88)		(41)		(122)		(112)
Net income allocate to common shareholders	$	4,550	$	5,441	$	8,377	$	14,804
Denominator:
Weighted average shares outstanding, basic	12,603,463		12,716,010		12,655,605		12,698,714
Weighted average effect of dilutive securities:
Stock options	327,786		558,855		359,632		589,091
Warrants	58,281		142,525		65,383		156,542
Weighted average shares outstanding, diluted	12,989,530		13,417,390		13,080,620		13,444,347
Earnings per share, basic	$	0.36	$	0.43	$	0.66	$	1.17
Earnings per share, diluted	$	0.35	$	0.41	$	0.64	$	1.10

(1)Represents earnings attributable to holders of unvested restricted stock issued outside of the Plan to the Company’s employees.

There were 621,835 and 336,192 anti-dilutive options for the six months ended June 30, 2023 and 2022, respectively, reported in the table above. There were 204,617 shares and 113,458 anti-dilutive warrants for the six months ended June 30, 2023 and 2022, respectively, reported in the table above.

Capital Requirements (Tables)

6 Months Ended

Jun. 30, 2023

Capital Requirements [Abstract]

Capital Amounts and Ratios

The Bank’s actual capital amounts and ratios are presented in the following table:


	Actual				Well-Capitalized Requirement
($ in thousands)	Amount		Ratio		Amount		Ratio
June 30, 2023
Leverage ratio (CBLR election)	$	103,813	22.4	%	$	41,718	9.0	%
December 31, 2022
Leverage ratio (CBLR election)	$	91,674	25.1	%	$	32,898	9.0	%

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Impact of ASU 2016-13 adoption	Common Stock	Additional Paid-In Capital	Retained Earnings	Retained Earnings Impact of ASU 2016-13 adoption
Beginning balance (in shares) at Dec. 31, 2021			12,772,010
Beginning balance at Dec. 31, 2021	$ 115,442		$ 13	$ 54,836	$ 60,593
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense (in shares)			96,011
Stock-based compensation expense	139			139
Stock options exercised (in shares)			16,800
Stock options exercised	40			40
Net Income	14,916				14,916
Ending balance (in shares) at Jun. 30, 2022			12,884,821
Ending balance at Jun. 30, 2022	130,537		$ 13	55,015	75,509
Beginning balance (in shares) at Dec. 31, 2021			12,772,010
Beginning balance at Dec. 31, 2021	$ 115,442		$ 13	54,836	60,593
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Accounting Standards Update [Extensible Enumeration]	Accounting Standards Update 2016-13 [Member]
Ending balance (in shares) at Dec. 31, 2022			12,831,345
Ending balance at Dec. 31, 2022	$ 140,459	$ (212)	$ 13	54,614	85,832	$ (212)
Beginning balance (in shares) at Mar. 31, 2022			12,788,810
Beginning balance at Mar. 31, 2022	124,955		$ 13	54,915	70,027
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense (in shares)			96,011
Stock-based compensation expense	100			100
Net Income	5,482				5,482
Ending balance (in shares) at Jun. 30, 2022			12,884,821
Ending balance at Jun. 30, 2022	130,537		$ 13	55,015	75,509
Beginning balance (in shares) at Dec. 31, 2022			12,831,345
Beginning balance at Dec. 31, 2022	140,459	$ (212)	$ 13	54,614	85,832	$ (212)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense (in shares)			168,821
Stock-based compensation expense	$ 1,050			1,050
Stock options exercised (in shares)	16,800		16,800
Stock options exercised	$ 40			40
Common stock repurchased (in shares)			(293,263)
Common stock repurchased	(2,388)			(3,079)	691
Net Income	8,499			0	8,499
Ending balance (in shares) at Jun. 30, 2023			12,723,703
Ending balance at Jun. 30, 2023	147,448		$ 13	52,625	94,810
Beginning balance (in shares) at Mar. 31, 2023			12,824,572
Beginning balance at Mar. 31, 2023	144,353		$ 13	54,827	89,513
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense (in shares)			168,821
Stock-based compensation expense	629			629
Common stock repurchased (in shares)			(269,690)
Common stock repurchased	(2,173)			(2,831)	659
Net Income	4,638			0	4,638
Ending balance (in shares) at Jun. 30, 2023			12,723,703
Ending balance at Jun. 30, 2023	$ 147,448		$ 13	$ 52,625	$ 94,810

Fair Value of Financial Instruments - Estimated Fair Value and Carrying Value of Financial Instrument (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Financial assets:
Investment securities held-to-maturity	$ 12,730	$ 12,728
SBA servicing asset	5,200	5,200
Investment in BFG	4,500	4,800	$ 4,600	$ 5,900
Level 1 \| Carrying Amount
Financial assets:
Cash and cash equivalents	119,043	100,567
Level 1 \| Estimated Fair Value
Financial assets:
Cash and cash equivalents	119,043	100,567
Level 2 \| Carrying Amount
Financial assets:
Investment securities held-to-maturity	14,403	14,292
Investment in FHLB stock	476	449
Loans held-for-sale	42,362	23,589
Accrued interest receivable	2,316	1,818
SBA servicing asset	5,233	5,210
Financial liabilities:
Total deposits	332,530	242,998
Accrued interest payable	466	54
PPP Liquidity Facility	252	314
Level 2 \| Estimated Fair Value
Financial assets:
Investment securities held-to-maturity	12,730	12,728
Investment in FHLB stock	476	449
Loans held-for-sale	42,357	23,586
Accrued interest receivable	2,316	1,818
SBA servicing asset	5,233	5,210
Financial liabilities:
Total deposits	306,396	221,287
Accrued interest payable	466	54
PPP Liquidity Facility	252	314
Level 3 \| Carrying Amount
Financial assets:
Loans held for investment	277,663	224,217
Investment in BFG	4,500	4,800
Level 3 \| Estimated Fair Value
Financial assets:
Loans held for investment	294,533	237,225
Investment in BFG	$ 4,500	$ 4,800

SBA Servicing Asset (Tables)

6 Months Ended

Jun. 30, 2023

Transfers and Servicing [Abstract]

SBA Servicing Asset Activity

The following table summarizes SBA servicing asset activity for the periods indicated:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Beginning balance	$	5,284	$	5,225	$	5,210	$	3,938
Additions to servicing asset	150		835		150		2,243
Recovery of SBA servicing asset	339		(1,135)		592		(1,076)
Amortization of servicing asset	(540)		(339)		(719)		(519)
Ending balance	$	5,233	$	4,586	$	5,233	$	4,586

Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Decrease in deferred tax assets			$ 1,307,000	$ (195,000)
Income tax expense	$ 1,638,000	$ 1,786,000	$ 3,002,000	$ 5,000,000
Effective income tax rate			26.10%	25.10%
Statutory income tax rate			24.90%	24.90%
Unrecognized tax benefits	$ 0		$ 0

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2023	Aug. 10, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-40721
Entity Registrant Name	FINWISE BANCORP
Entity Incorporation, State or Country Code	UT
Entity Tax Identification Number	83-0356689
Entity Address, Address Line One	756 East Winchester, Suite 100
Entity Address, City or Town	Murray
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84107
City Area Code	801
Local Phone Number	501-7200
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	FINW
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		12,719,773
Entity Central Index Key	0001856365
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par or stated value per share (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	4,000,000	4,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par or stated value per share (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares, issued (in shares)	12,723,703	12,831,345
Common stock, shares, outstanding (in shares)	12,723,703	12,831,345

Investments - Narrative (Details)	3 Months Ended		6 Months Ended
Investments - Narrative (Details)	Jun. 30, 2023 USD ($) security	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) security	Jun. 30, 2022 USD ($)	Jan. 01, 2023 USD ($)	Dec. 31, 2022 USD ($) security
Schedule of Held-to-Maturity Securities [Line Items]
Allowance for credit losses related to HTM securities	$ 0		$ 0		$ 0
Number of securities in unrealized loss position \| security	19		19			17
Investment securities held-to-maturity, at cost	$ 14,403,000		$ 14,403,000			$ 14,292,000
Sales or transfers of investment securities	0	$ 0	0	$ 0
Realized gains or losses on investment securities	$ 0	$ 0	$ 0	$ 0
Collateralized mortgage obligations
Schedule of Held-to-Maturity Securities [Line Items]
Number of securities in unrealized loss position \| security	9		9			8
Investment securities held-to-maturity, at cost	$ 6,892,000		$ 6,892,000			$ 6,205,000
Mortgage-backed securities
Schedule of Held-to-Maturity Securities [Line Items]
Number of securities in unrealized loss position \| security	10		10			9
Investment securities held-to-maturity, at cost	$ 7,511,000		$ 7,511,000			$ 8,087,000
Asset Pledged as Collateral \| Federal Reserve Bank Advances
Schedule of Held-to-Maturity Securities [Line Items]
Investment securities held-to-maturity, at cost	$ 12,600,000		$ 12,600,000

Earnings per Share - Narrative (Details) - shares	6 Months Ended
Earnings per Share - Narrative (Details) - shares	Jun. 30, 2023	Jun. 30, 2022
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount	621,835	336,192
Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount	204,617	113,458

Loans and Allowance for Credit Losses - TDR's (Details) - SBA $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) contract
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts \| contract	1
Pre- Modification Outstanding Recorded Investment	$ 94
Post- Modification Outstanding Recorded Investment	$ 94

Lease Liabilities - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Operating cash flows from operating leases	$ 21	$ 28	$ 292	$ 56
Right-of-use assets obtained in exchange for operating lease liabilities	$ 0	$ 0	$ 0	$ 7,380

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company accounts for income taxes by recognizing deferred tax assets and liabilities based upon temporary differences between the amounts for financial reporting purposes and tax basis of its assets and liabilities. Deferred tax assets decreased $1.3 million to a deferred tax liability during the six months ended June 30, 2023 as a result of changes to temporary timing differences associated with accelerated tax depreciation. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary. Based on this analysis, management has determined that a valuation allowance for deferred tax assets was not required at June 30, 2023. For the six months ended June 30, 2023 and 2022, income tax expense was $3.0 million and $5.0 million, respectively, resulting in an effective income tax rate of 26.1% and 25.1%, respectively. The effective tax rate differs from the statutory rate of 24.9% during the six months ended June 30, 2023 due primarily to nondeductible wages, state taxes and the tax effect of stock-based compensation. The effective tax rate differs from the statutory rate of 24.9% during the six months ended June 30, 2022 due primarily to the tax effect of stock-based compensation. The Company had no unrecognized tax benefits at June 30, 2023.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//740/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-21

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482526/740-270-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-17

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
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-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

Loans and Allowance for Credit Losses - Nonaccrual and Past Due Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	$ 290,659	$ 236,601
Non- Accrual	858
Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	290,659	236,601
Non- Accrual		0
Current
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	287,766
Current \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		233,593
Total Past Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	2,035
Total Past Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		3,008
30-59 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	1,232
30-59 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		2,013
60-89 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	666
60-89 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		802
90+ Days Past Due & Still Accruing
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	137
90+ Days Past Due & Still Accruing \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		193
Construction and land development
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	24,949
Non- Accrual	0
Construction and land development \| Current
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	24,733
Construction and land development \| Total Past Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	216
Construction and land development \| 30-59 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	216
Construction and land development \| 60-89 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Construction and land development \| 90+ Days Past Due & Still Accruing
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Residential real estate
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	29,357	37,815
Non- Accrual	118
Residential real estate \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		37,815
Non- Accrual		0
Residential real estate \| Current
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	29,239
Residential real estate \| Current \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		37,387
Residential real estate \| Total Past Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Residential real estate \| Total Past Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		428
Residential real estate \| 30-59 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Residential real estate \| 30-59 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		428
Residential real estate \| 60-89 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Residential real estate \| 60-89 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Residential real estate \| 90+ Days Past Due & Still Accruing
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Residential real estate \| 90+ Days Past Due & Still Accruing \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Residential real estate multifamily
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	572
Non- Accrual	0
Residential real estate multifamily \| Current
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	572
Residential real estate multifamily \| Total Past Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Residential real estate multifamily \| 30-59 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Residential real estate multifamily \| 60-89 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Residential real estate multifamily \| 90+ Days Past Due & Still Accruing
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Commercial real estate
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	170,253	12,063
Non- Accrual	740
Commercial real estate \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		12,063
Non- Accrual		0
Commercial real estate \| Current
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	169,513
Commercial real estate \| Current \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		12,063
Commercial real estate \| Total Past Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Commercial real estate \| Total Past Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Commercial real estate \| 30-59 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Commercial real estate \| 30-59 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Commercial real estate \| 60-89 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Commercial real estate \| 60-89 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Commercial real estate \| 90+ Days Past Due & Still Accruing
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Commercial real estate \| 90+ Days Past Due & Still Accruing \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Commercial and industrial
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	16,507
Non- Accrual	0
Commercial and industrial \| Current
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	16,458
Commercial and industrial \| Total Past Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	49
Commercial and industrial \| 30-59 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	28
Commercial and industrial \| 60-89 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	21
Commercial and industrial \| 90+ Days Past Due & Still Accruing
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Consumer
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	6,180	5,808
Non- Accrual	0
Consumer \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		5,808
Non- Accrual		0
Consumer \| Current
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	6,120
Consumer \| Current \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		5,776
Consumer \| Total Past Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	60
Consumer \| Total Past Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		32
Consumer \| 30-59 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	53
Consumer \| 30-59 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		32
Consumer \| 60-89 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	7
Consumer \| 60-89 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Consumer \| 90+ Days Past Due & Still Accruing
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Consumer \| 90+ Days Past Due & Still Accruing \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Lease financing receivables
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	22,109
Non- Accrual	0
Lease financing receivables \| Current
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	22,109
Lease financing receivables \| Total Past Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Lease financing receivables \| 30-59 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Lease financing receivables \| 60-89 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Lease financing receivables \| 90+ Days Past Due & Still Accruing
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	0
Retained Strategic Program loans
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	20,732	24,259
Non- Accrual	0
Retained Strategic Program loans \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		24,259
Non- Accrual		0
Retained Strategic Program loans \| Current
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	19,022
Retained Strategic Program loans \| Current \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		22,080
Retained Strategic Program loans \| Total Past Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	1,710
Retained Strategic Program loans \| Total Past Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		2,179
Retained Strategic Program loans \| 30-59 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	935
Retained Strategic Program loans \| 30-59 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		1,184
Retained Strategic Program loans \| 60-89 Days Due Due
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	638
Retained Strategic Program loans \| 60-89 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		802
Retained Strategic Program loans \| 90+ Days Past Due & Still Accruing
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans	$ 137
Retained Strategic Program loans \| 90+ Days Past Due & Still Accruing \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		193
SBA
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		145,172
SBA \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		145,172
Non- Accrual		0
SBA \| Current \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		144,803
SBA \| Total Past Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		369
SBA \| 30-59 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		369
SBA \| 60-89 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
SBA \| 90+ Days Past Due & Still Accruing \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Commercial, non-real estate
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		11,484
Commercial, non-real estate \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		11,484
Non- Accrual		0
Commercial, non-real estate \| Current \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		11,484
Commercial, non-real estate \| Total Past Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Commercial, non-real estate \| 30-59 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Commercial, non-real estate \| 60-89 Days Due Due \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		0
Commercial, non-real estate \| 90+ Days Past Due & Still Accruing \| Financing Receivable, Incurred Loss Methodology
Financing Receivable, Past Due [Line Items]
Retained Strategic Program loans		$ 0