FinWise Bancorp (NASDAQ: FINW) (“FinWise” or the “Company”), parent
company of FinWise Bank (the “Bank”), today announced results for
the quarter ended March 31, 2023.
First Quarter
2023 Highlights
- Loan originations were $0.9
billion, compared to $1.2 billion for the quarter ended
December 31, 2022, and $2.5 billion for the first quarter of
the prior year
- Net interest income was $12.1
million, compared to $12.6 million for the quarter ended
December 31, 2022, and $13.0 million for the first quarter of
the prior year
- Net Income was $3.9 million,
compared to $6.5 million for the quarter ended December 31,
2022, and $9.4 million for the first quarter of the prior year
- Diluted earnings per share (“EPS”)
were $0.29 for the quarter, compared to $0.49 for the quarter ended
December 31, 2022, and $0.70 for the first quarter of the
prior year
- Efficiency ratio was 52.5%,
compared to 45.6% for the quarter ended December 31, 2022, and
36.7% for the first quarter of the prior year
- Annualized return on average equity
(ROAE) was 11.1%, compared to 19.1% in the quarter ended
December 31, 2022, and 31.4% in the first quarter of the prior
year
- Asset quality remained solid with a
non-performing loans to total loans ratio of 0.2%
“We continued to leverage our resilient,
differentiated and diverse business model to effectively navigate
the challenging macroeconomic backdrop,” said Kent Landvatter,
Chairman, Chief Executive Officer and President of FinWise. “We
remain laser focused on balancing the trade-off between loan growth
and credit quality while managing capital prudently. As we look
ahead, we anticipate industry-wide slowdown in loan originations to
persist as we move through 2023. We will also continue to source
new business opportunities, and invest for future growth while
striving to maintain a strong capital and liquidity position. While
this approach is expected to have an impact on our results in the
current year, we believe it will enable us to emerge even stronger
when the economy improves. We also believe these efforts will
result in the creation of shareholder value over time.”
Selected Financial
Data |
|
|
|
|
|
|
|
|
For the Three Months Ended |
($s in thousands, except per
share amounts) |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
|
|
|
|
|
|
Net Income |
|
$ |
3,861 |
|
|
$ |
6,545 |
|
|
$ |
9,434 |
|
Diluted EPS |
|
$ |
0.29 |
|
|
$ |
0.49 |
|
|
$ |
0.70 |
|
Return on average assets |
|
|
3.8 |
% |
|
|
6.6 |
% |
|
|
9.4 |
% |
Return on average equity |
|
|
11.1 |
% |
|
|
19.1 |
% |
|
|
31.4 |
% |
Yield on loans |
|
|
17.24 |
% |
|
|
19.04 |
% |
|
|
17.74 |
% |
Cost of deposits |
|
|
3.18 |
% |
|
|
1.98 |
% |
|
|
0.79 |
% |
Net interest margin |
|
|
12.51 |
% |
|
|
14.27 |
% |
|
|
13.37 |
% |
Efficiency ratio(1) |
|
|
52.5 |
% |
|
|
45.6 |
% |
|
|
36.7 |
% |
Tangible book value per
share(2) |
|
$ |
11.26 |
|
|
$ |
10.95 |
|
|
$ |
9.77 |
|
Tangible shareholders’ equity
to tangible assets(2) |
|
|
32.6 |
% |
|
|
34.9 |
% |
|
|
29.4 |
% |
Leverage Ratio (Bank under
CBLR) |
|
|
24.0 |
% |
|
|
25.1 |
% |
|
|
19.1 |
% |
(1) This measure is not a measure recognized
under United States generally accepted accounting principles, or
GAAP, and is therefore considered to be a non-GAAP financial
measure. See “Reconciliation of Non-GAAP to GAAP Financial
Measures” for a reconciliation of this measure to its most
comparable GAAP measure. The efficiency ratio is defined as total
noninterest expense divided by the sum of net interest income and
noninterest income. We believe this measure is important as an
indicator of productivity because it shows the amount of revenue
generated for each dollar spent.(2) This measure is not a measure
recognized under GAAP and is therefore considered to be a non-GAAP
financial measure. See “Reconciliation of Non-GAAP to GAAP
Financial Measures” for a reconciliation of this measure to its
most comparable GAAP measure. Tangible shareholders’ equity is
defined as total shareholders’ equity less goodwill and other
intangible assets. The most directly comparable GAAP financial
measure is total shareholder’s equity. We had no goodwill or other
intangible assets as of any of the dates indicated. We have not
considered loan servicing rights or loan trailing fee asset as
intangible assets for purposes of this calculation. As a result,
tangible shareholders’ equity is the same as total shareholders’
equity as of each of the dates indicated.
Net IncomeNet income was $3.9 million for the
first quarter of 2023, compared to $6.5 million for the fourth
quarter of 2022, and $9.4 million for the first quarter of 2022.
The decrease from the prior quarter and prior year period was
primarily due to lower gain on sale, lower strategic program fees,
and increased interest expense on deposits, partially offset by a
reduction in non-interest expense and lower provision for income
taxes.
Net Interest IncomeNet interest income was $12.1
million for the first quarter of 2023 compared to $12.6 million for
the fourth quarter of 2022, and $13.0 million for the first quarter
of 2022. The decrease from the prior quarter and prior year period
was primarily due to an increase in the Bank’s deposit rates being
paid to customers and lower average loans held for sale balances,
partially offset by a shift in the Company’s mix of loans held for
sale to those yielding higher rates, an increase in rates on our
variable rate loans, and a continued rise in interest rates being
paid on the Company’s cash balances at the Federal Reserve.
Loan originations totaled $0.9 billion for the
first quarter of 2023, down from $1.2 billion for the prior quarter
and $2.5 billion for the prior year period.
Net interest margin for the first quarter of
2023 was 12.51% compared to 14.27% for the prior quarter and 13.37%
for the prior year period. The decrease from the prior quarter and
prior year period was primarily due to a reduction in average
balances in the Company’s loans held for sale portfolio along with
a shift in the Company’s deposit portfolio mix from lower costing
deposits to higher costing deposits, partially offset by an
increase in average balances in the Company’s loans held for
investment portfolio.
Provision for Credit Losses
The Company’s provision for credit losses was
$2.7 million for the first quarter of 2023, compared to $3.2
million for the prior quarter and $2.9 million for the prior year
period. The decrease from the prior quarter and prior year period
was primarily due to a decrease in strategic program loans held for
investment and lower net charge-offs.
Non-interest Income
|
For the Three Months Ended |
($ in thousands) |
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
Noninterest income: |
|
|
|
|
|
Strategic Program fees |
$ |
3,685 |
|
|
$ |
4,487 |
|
$ |
6,623 |
|
Gain on sale of loans |
|
187 |
|
|
|
4,163 |
|
|
5,052 |
|
SBA loan servicing fees |
|
591 |
|
|
|
547 |
|
|
387 |
|
Change in fair value on investment in BFG |
|
(85 |
) |
|
|
430 |
|
|
(398 |
) |
Other miscellaneous income |
|
149 |
|
|
|
148 |
|
|
18 |
|
Total noninterest income |
$ |
4,527 |
|
|
$ |
9,775 |
|
$ |
11,682 |
|
Non-interest income was $4.5 million for the
first quarter of 2023, compared to $9.8 million for the prior
quarter and $11.7 million for the prior year period. The decrease
from the prior quarter and prior year period was partly due to a
reduction in gain on sale of loans primarily attributable to the
Company’s decision to focus on interest income from the guaranteed
portion of SBA loans the Company originates rather than on gain on
sale income and lower strategic program fees resulting from a
decline in loan origination volumes as well as a decrease in fair
value of the Company’s investment in Business Funding Group, LLC
(“BFG”). The prior quarter gain on sale of loans also included a
one time adjustment of $2.3 million for the establishment of a Loan
Trailing Fee asset.
Non-interest Expense
|
For the Three Months Ended |
($ in thousands) |
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
Non-interest expense |
|
|
|
|
|
Salaries and employee benefits |
$ |
5,257 |
|
|
$ |
5,805 |
|
$ |
6,953 |
|
Professional services |
|
1,474 |
|
|
|
1,609 |
|
|
633 |
|
Occupancy and equipment expenses |
|
712 |
|
|
|
843 |
|
|
352 |
|
(Recovery) impairment of SBA servicing asset |
|
(253 |
) |
|
|
779 |
|
|
(59 |
) |
Other operating expenses |
|
1,550 |
|
|
|
1,184 |
|
|
1,169 |
|
Total noninterest expense |
$ |
8,740 |
|
|
$ |
10,220 |
|
$ |
9,048 |
|
Non-interest expense was $8.7 million for the
first quarter of 2023, compared to $10.2 million for the prior
quarter and $9.0 million for the prior year period. The decrease
from the prior quarter was primarily due to a recovery on the
Company’s SBA servicing asset in the first quarter of 2023 which
did not occur in the prior quarter as well as a decrease in
salaries and employee benefits related to lower accruals for
performance bonuses. The decrease from the prior year period was
primarily due to the cessation in June 2022 of commission accruals
related to the Company’s strategic lending program and reduced
accruals for performance bonuses, partially offset by an increase
in professional services primarily from consulting fees.
The Company’s efficiency ratio was 52.5% for the
first quarter of 2023, compared to 45.6% for the prior quarter and
36.7% for the prior year period.Tax Rate
The Company’s effective tax rate was 26.1% for
the first quarter of 2023, compared to 27.3% for the prior quarter
and 25.4% for the prior year period.
Balance Sheet
The Company’s total assets were $442.3 million
as of March 31, 2023, an increase from $400.8 million as of
December 31, 2022 and $424.5 million as of March 31, 2022. The
increase from December 31, 2022 was primarily due to an increase in
certificates of deposits utilized to fund the Company’s loan
portfolio and cash. The increase in total assets compared to
March 31, 2022 was primarily due to an increase in deposits
utilized to fund the Company’s held for investment loan portfolio,
partially offset by a decrease in deposits and cash utilized to
fund the Company’s held for sale loan portfolio.
The following table shows the loan portfolio as of the dates
indicated:
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
($s in thousands) |
Amount |
|
% of total loans |
|
Amount |
|
% of total loans |
|
Amount |
|
% of total loans |
SBA |
$ |
178,663 |
|
60.0 |
% |
|
$ |
145,172 |
|
55.8 |
% |
|
$ |
127,778 |
|
46.9 |
% |
Commercial, non real estate |
|
17,890 |
|
6.0 |
% |
|
|
11,484 |
|
4.4 |
% |
|
|
3,285 |
|
1.2 |
% |
Residential real estate |
|
30,994 |
|
10.4 |
% |
|
|
37,815 |
|
14.5 |
% |
|
|
30,772 |
|
11.3 |
% |
Strategic Program loans |
|
46,806 |
|
15.7 |
% |
|
|
47,848 |
|
18.4 |
% |
|
|
101,819 |
|
37.4 |
% |
Commercial real estate |
|
17,022 |
|
5.7 |
% |
|
|
12,063 |
|
4.7 |
% |
|
|
4,187 |
|
1.5 |
% |
Consumer |
|
6,351 |
|
2.1 |
% |
|
|
5,808 |
|
2.2 |
% |
|
|
4,711 |
|
1.7 |
% |
Total period end loans |
$ |
297,726 |
|
100.00 |
% |
|
$ |
260,190 |
|
100.0 |
% |
|
$ |
272,552 |
|
100.0 |
% |
Note: SBA loans as of March 31, 2023, December 31, 2022 and
March 31, 2022 include $0.6 million, $0.6 million and $1.0 million
in PPP loans, respectively. SBA loans as of March 31, 2023,
December 31, 2022 and March 31, 2022 include $75.9 million, $49.5
million and $53.2 million, respectively, of SBA 7(a) loan balances
that are guaranteed by the SBA. The held for investment balance on
Strategic Programs with annual interest rates below 36% as of March
31, 2023, December 31, 2022 and March 31, 2022 was $6.9 million,
$8.5 million and $13.8 million, respectively.
Total loans receivable as of March 31, 2023
was $297.7 million, an increase from $260.2 million and $272.6
million as of December 31, 2022 and March 31, 2022,
respectively. The increase compared to December 31, 2022 and
March 31, 2022 was primarily due to increases in SBA 7(a) loan
balances, commercial loan balances and commercial real estate loan
balances, partially offset by decreases in Strategic Program loan
balances.
The following table shows the Company’s deposit composition as
of the dates indicated:
|
As of |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
($s in thousands) |
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
Noninterest-bearing demand deposits |
$ |
79,930 |
|
28.3 |
% |
|
$ |
78,817 |
|
32.5 |
% |
|
$ |
127,330 |
|
45.9 |
% |
Interest-bearing
deposits: |
|
|
|
|
|
|
|
|
|
|
|
Demand |
|
42,030 |
|
14.8 |
% |
|
|
50,746 |
|
20.8 |
% |
|
|
7,919 |
|
2.8 |
% |
Savings |
|
7,963 |
|
2.8 |
% |
|
|
8,289 |
|
3.4 |
% |
|
|
7,089 |
|
2.6 |
% |
Money market |
|
12,993 |
|
4.6 |
% |
|
|
10,882 |
|
4.5 |
% |
|
|
53,434 |
|
19.3 |
% |
Time certificates of deposit |
|
140,276 |
|
49.5 |
% |
|
|
94,264 |
|
38.8 |
% |
|
|
81,688 |
|
29.4 |
% |
Total period end deposits |
$ |
283,192 |
|
100.0 |
% |
|
$ |
242,998 |
|
100.0 |
% |
|
$ |
277,460 |
|
100.0 |
% |
Total deposits as of March 31, 2023
increased to $283.2 million from $243.0 million and $277.5 million
as of December 31, 2022 and March 31, 2022, respectively. The
increase is primarily due to increases in brokered CDs which were
primarily utilized for short term funding needs of the Company. The
increase in interest-bearing demand deposits as of March 31, 2023
compared to March 31, 2022 is primarily due to HSA deposits from
Lively, Inc., a technology focused Health Savings Account provider.
The decrease in noninterest-bearing demand deposits and money
markets as of March 31, 2023 compared to March 31, 2022 is
primarily due to decreases in deposit reserve account balances
related to the Company’s strategic programs.
Total shareholders’ equity as of March 31,
2023 increased $3.9 million to $144.4 million from $140.5 million
at December 31, 2022. Compared to March 31, 2022, total
shareholders’ equity as of March 31, 2023 increased $19.4
million from $125.0 million. The increase from December 31, 2022
and March 31, 2022 was primarily due to the Company’s net income,
partially offset by the repurchase of common stock under the
Company’s share repurchase program.
Bank Regulatory Capital Ratios
The following table presents the leverage ratios
for the Bank as of the dates indicated as determined under the
Community Bank Leverage Ratio Framework of the Federal Deposit
Insurance Corporation:
|
As of |
|
2022 |
|
Capital Ratios |
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
Well-Capitalized Requirement |
Leverage Ratio |
24.0 |
% |
|
25.1 |
% |
|
19.1 |
% |
|
9.0 |
% |
The Bank’s capital levels remain significantly above
well-capitalized guidelines as of March 31, 2023.
Share Repurchase Program
As of March 31, 2023, the Company has
repurchased a total of 143,573 shares for $1.4 million under the
Company’s share repurchase program announced in August 2022.
Asset Quality
The Company adopted FASB's Topic 326, Financial
Instruments - Credit Losses ("CECL") effective January 1, 2023. The
impact of adoption as required by the standard was a one-time
reduction to retained earnings of $0.2 million, net of the deferred
tax impact. The Allowance for Credit Losses (“ACL”), formerly
referred to as the Allowance for Loan Losses, increased on the
effective date by $0.3 million and the reserve for unfunded
commitments, included in other liabilities on the consolidated
balance sheets, increased by a de minimis amount, as a result of
the adoption of CECL. Subsequent to adoption, the Company records
adjustments to its ACL and reserve for unfunded commitments through
the provision for credit losses in the consolidated statements of
income. For the three months ended March 31, 2023, the Company
recorded a provision for credit losses of $2.7 million.
Nonperforming loans were $0.7 million or 0.2% of
total loans receivable, as of March 31, 2023, compared to $0.4
million or 0.1% of total loans receivable, as of December 31, 2022
and $0.7 million, or 0.2% of total loans receivable, as of March
31, 2022. As noted above, the provision for credit losses was $2.7
million for the first quarter of 2023, compared to the provision
for loan losses of $3.2 million for the prior quarter and $2.9
million for the prior year period. The Company’s allowance for
credit losses to total loans was 4.0% as of March 31, 2023 compared
to the Company’s allowance for loan losses to total loans of 4.6%
as of December 31, 2022 and 3.7% as of March 31, 2022.
For the first quarter of 2023, the Company’s net
charge-offs were $2.9 million, compared to $3.2 million for the
prior quarter and $2.8 million for the prior year period. The
decrease in net charge-offs compared to the prior quarter was
primarily due to lower net charge-offs related to retained
strategic programs. The change in net charge-offs compared to the
first quarter of 2022 was primarily due to higher net charge-offs
related to SBA loans.
The following table presents a summary of changes in the
allowance for loan losses and asset quality ratios for the periods
indicated:
|
For the Three Months Ended |
($s in thousands) |
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
Allowance for Credit
Losses: |
|
|
|
|
|
Beginning Balance |
$ |
11,985 |
|
|
$ |
11,968 |
|
|
$ |
9,855 |
|
Impact of ASU 2016-13
Adoption |
|
257 |
|
|
|
— |
|
|
|
— |
|
Adjusted Beginning
Balance |
|
12,242 |
|
|
|
11,968 |
|
|
|
9,855 |
|
Provision for Credit
Losses |
|
2,668 |
|
|
|
3,202 |
|
|
|
2,947 |
|
Charge
offs |
|
|
|
|
|
SBA |
|
(140 |
) |
|
|
— |
|
|
|
(31 |
) |
Commercial, non real estate |
|
— |
|
|
|
— |
|
|
|
— |
|
Residential real estate |
|
— |
|
|
|
— |
|
|
|
— |
|
Strategic Program loans |
|
(3,025 |
) |
|
|
(3,440 |
) |
|
|
(2,878 |
) |
Commercial real estate |
|
— |
|
|
|
— |
|
|
|
— |
|
Consumer |
|
— |
|
|
|
(62 |
) |
|
|
— |
|
Recoveries |
|
|
|
|
|
SBA |
|
5 |
|
|
|
9 |
|
|
|
— |
|
Commercial, non real estate |
|
— |
|
|
|
— |
|
|
|
1 |
|
Residential real estate |
|
— |
|
|
|
— |
|
|
|
— |
|
Strategic Program loans |
|
284 |
|
|
|
244 |
|
|
|
93 |
|
Commercial real estate |
|
— |
|
|
|
— |
|
|
|
— |
|
Consumer |
|
— |
|
|
|
64 |
|
|
|
— |
|
Ending Balance |
$ |
12,034 |
|
|
$ |
11,985 |
|
|
$ |
9,987 |
|
|
|
|
|
|
|
Asset Quality
Ratios |
As of and For the Three Months Ended |
($s in thousands, annualized
ratios) |
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
Nonperforming loans |
$ |
740 |
|
|
$ |
356 |
|
|
$ |
658 |
|
Nonperforming loans to total
loans |
|
0.2 |
% |
|
|
0.1 |
% |
|
|
0.2 |
% |
Net charge offs to average
loans |
|
4.0 |
% |
|
|
4.9 |
% |
|
|
3.8 |
% |
Allowance for credit losses to
loans held for investment |
|
4.4 |
% |
|
|
5.1 |
% |
|
|
5.0 |
% |
Allowance for credit losses to
total loans |
|
4.0 |
% |
|
|
4.6 |
% |
|
|
3.7 |
% |
Net charge offs |
$ |
2,876 |
|
|
$ |
3,185 |
|
|
$ |
2,815 |
|
Webcast and Conference Call Information
FinWise will host a conference call today at
5:30 PM ET to discuss its financial results for the first quarter
of 2023. A simultaneous audio webcast of the conference call will
be available on the Company’s investor relations section of the
website at
https://viavid.webcasts.com/starthere.jsp?ei=1601257&tp_key=beb6fa2e19.
The dial-in number for the conference call is
(877) 423-9813 (toll-free) or (201) 689-8573 (international).
Please dial the number 10 minutes prior to the scheduled start
time.
A webcast replay of the call will be available
at investors.finwisebancorp.com for six months following the
call.
Website Information
The Company intends to use its website,
www.finwisebancorp.com, as a means of disclosing material
non-public information and for complying with its disclosure
obligations under Regulation FD. Such disclosures will be included
in the Company’s website’s Investor Relations section. Accordingly,
investors should monitor the Investor Relations portion of the
Company’s website, in addition to following its press releases,
filings with the Securities and Exchange Commission (“SEC”), public
conference calls, and webcasts. To subscribe to the Company’s
e-mail alert service, please click the “Email Alerts” link in the
Investor Relations section of its website and submit your email
address. The information contained in, or that may be accessed
through, the Company’s website is not incorporated by reference
into or a part of this document or any other report or document it
files with or furnishes to the SEC, and any references to the
Company’s website are intended to be inactive textual references
only.
About FinWise Bancorp
FinWise Bancorp is a Utah bank holding company
headquartered in Murray, Utah. FinWise operates through its
wholly-owned subsidiary, FinWise Bank, a Utah state-chartered bank.
FinWise currently operates one full-service banking location in
Sandy, Utah. FinWise is a nationwide lender to and takes deposits
from consumers and small businesses. Learn more at
www.finwisebancorp.com.
Contacts
investors@finwisebank.com
media@finwisebank.com
"Safe Harbor" Statement Under the Private Securities
Litigation Reform Act of 1995
This release contains forward-looking statements
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements reflect the Company’s current views with respect to,
among other things, future events and its financial performance.
These statements are often, but not always, made through the use of
words or phrases such as “may,” “might,” “should,” “could,”
“predict,” “potential,” “believe,” “will likely result,” “expect,”
“continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,”
“plan,” “project,” “projection,” “forecast,” “budget,” “goal,”
“target,” “would,” “aim” and “outlook,” or the negative version of
those words or other comparable words or phrases of a future or
forward-looking nature. These forward-looking statements are not
historical facts, and are based on current expectations, estimates
and projections about the Company’s industry and management’s
beliefs and certain assumptions made by management, many of which,
by their nature, are inherently uncertain and beyond the Company’s
control. The inclusion of these forward-looking statements should
not be regarded as a representation by the Company or any other
person that such expectations, estimates and projections will be
achieved. Accordingly, the Company cautions you that any such
forward-looking statements are not guarantees of future performance
and are subject to risks, assumptions and uncertainties that are
difficult to predict. Although the Company believes that the
expectations reflected in these forward-looking statements are
reasonable as of the date made, actual results may prove to be
materially different from the results expressed or implied by the
forward-looking statements.
There are or will be important factors that
could cause the Company’s actual results to differ materially from
those indicated in these forward-looking statements, including, but
not limited to, the following: (a) the success of the financial
technology industry, the development and acceptance of which is
subject to a high degree of uncertainty, as well as the continued
evolution of the regulation of this industry; (b) the ability of
the Company’s Strategic Program service providers to comply with
regulatory regimes, including laws and regulations applicable to
consumer credit transactions, and the Company’s ability to
adequately oversee and monitor its Strategic Program service
providers; (c) the Company’s ability to maintain and grow its
relationships with its Strategic Program service providers; (d)
changes in the laws, rules, regulations, interpretations or
policies relating to financial institutions, accounting, tax,
trade, monetary and fiscal matters, including the application of
interest rate caps or maximums; (e) the Company’s ability to keep
pace with rapid technological changes in the industry or implement
new technology effectively; (f) conditions relating to the Covid-19
pandemic, including the severity and duration of the associated
economic slowdown either nationally or in the Company’s market
areas, and the response of governmental authorities to the Covid-19
pandemic and the Company’s participation in Covid-19-related
government programs such as the Paycheck Protection Program; (g)
system failure or cybersecurity breaches of the Company’s network
security; (h) the Company’s reliance on third-party service
providers for core systems support, informational website hosting,
internet services, online account opening and other processing
services; (i) general economic conditions, either nationally or in
the Company’s market areas (including interest rate environment,
government economic and monetary policies, the strength of global
financial markets and inflation and deflation), that impact the
financial services industry and/or the Company’s business; (j)
increased competition in the financial services industry,
particularly from regional and national institutions and other
companies that offer banking services; (k) the Company’s ability to
measure and manage its credit risk effectively and the potential
deterioration of the business and economic conditions in the
Company’s primary market areas; (l) the adequacy of the Company’s
risk management framework; (m) the adequacy of the Company’s
allowance for loan losses (“ALL”); (n) the financial soundness of
other financial institutions; (o) new lines of business or new
products and services; (p) changes in Small Business Administration
(“SBA”) rules, regulations and loan products, including
specifically the Section 7(a) program, changes in SBA standard
operating procedures or changes to the status of the Bank as an SBA
Preferred Lender; (q) changes in the value of collateral securing
the Company’s loans; (r) possible increases in the Company’s levels
of nonperforming assets; (s) potential losses from loan defaults
and nonperformance on loans; (t) the Company’s ability to protect
its intellectual property and the risks it faces with respect to
claims and litigation initiated against the Company; (u) the
inability of small- and medium-sized businesses to whom the Company
lends to weather adverse business conditions and repay loans; (v)
the Company’s ability to implement aspects of its growth strategy
and to sustain its historic rate of growth; (w) the Company’s
ability to continue to originate, sell and retain loans, including
through its Strategic Programs; (x) the concentration of the
Company’s lending and depositor relationships through Strategic
Programs in the financial technology industry generally; (y) the
Company’s ability to attract additional merchants and retain and
grow its existing merchant relationships; (z) interest rate risk
associated with the Company’s business, including sensitivity of
its interest earning assets and interest bearing liabilities to
interest rates, and the impact to its earnings from changes in
interest rates; (aa) the effectiveness of the Company’s internal
control over financial reporting and its ability to remediate any
future material weakness in its internal control over financial
reporting; (bb) potential exposure to fraud, negligence, computer
theft and cyber-crime and other disruptions in the Company’s
computer systems relating to its development and use of new
technology platforms; (cc) the Company’s dependence on its
management team and changes in management composition; (dd) the
sufficiency of the Company’s capital, including sources of capital
and the extent to which it may be required to raise additional
capital to meet its goals; (ee) compliance with laws and
regulations, supervisory actions, the Dodd-Frank Act, capital
requirements, the Bank Secrecy Act, anti-money laundering laws,
predatory lending laws, and other statutes and regulations; (ff)
the Company’s ability to maintain a strong core deposit base or
other low-cost funding sources; (gg) results of examinations of the
Company by its regulators, including the possibility that its
regulators may, among other things, require the Company to increase
its ALL or to write-down assets; (hh) the Company’s involvement
from time to time in legal proceedings, examinations and remedial
actions by regulators; (ii) further government intervention in the
U.S. financial system; (jj) natural disasters and adverse weather,
acts of terrorism, pandemics, an outbreak of hostilities or other
international or domestic calamities, and other matters beyond the
Company’s control; (kk) future equity and debt issuances; and (ll)
other factors listed from time to time in the Company’s filings
with the Securities and Exchange Commission, including, without
limitation, its Annual Report on Form 10-K for the year ended
December 31, 2022 and subsequent reports on Form 10-Q and Form
8-K.
The timing and amount of purchases under the
Company’s share repurchase program will be determined by management
based upon market conditions and other factors. Purchases may be
made pursuant to a program adopted under Rule 10b5-1 under the
Securities Exchange Act of 1934, as amended. The program does not
require the Company to purchase any specific number or amount of
shares and may be suspended or reinstated at any time in the
Company’s discretion and without notice.
Any forward-looking statement speaks only as of
the date of this release, and the Company does not undertake any
obligation to publicly update or review any forward-looking
statement, whether because of new information, future developments
or otherwise, except as required by law. New risks and
uncertainties may emerge from time to time, and it is not possible
for the Company to predict their occurrence. In addition, the
Company cannot assess the impact of each risk and uncertainty on
its business or the extent to which any risk or uncertainty, or
combination of risks and uncertainties, may cause actual results to
differ materially from those contained in any forward-looking
statements.
FINWISE BANCORP CONSOLIDATED STATEMENTS
OF FINANCIAL CONDITION($s in
thousands)
|
As of |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
(Unaudited) |
|
|
|
(Unaudited) |
ASSETS |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
Cash and due from banks |
$ |
384 |
|
$ |
386 |
|
$ |
414 |
Interest-bearing deposits |
|
105,225 |
|
|
100,181 |
|
|
116,232 |
Total cash and cash equivalents |
|
105,609 |
|
|
100,567 |
|
|
116,646 |
Investment securities held-to-maturity, at cost |
|
13,880 |
|
|
14,292 |
|
|
10,986 |
Investment in Federal Home Loan Bank (FHLB) stock, at cost |
|
449 |
|
|
449 |
|
|
449 |
Strategic Program loans held-for-sale, at lower of cost or fair
value |
|
25,413 |
|
|
23,589 |
|
|
73,805 |
Loans receivable, net |
|
260,221 |
|
|
224,217 |
|
|
189,549 |
Premises and equipment, net |
|
9,198 |
|
|
9,478 |
|
|
4,531 |
Accrued interest receivable |
|
2,174 |
|
|
1,818 |
|
|
1,347 |
Deferred taxes, net |
|
1,319 |
|
|
1,167 |
|
|
1,788 |
SBA servicing asset, net |
|
5,284 |
|
|
5,210 |
|
|
5,225 |
Investment in Business Funding Group (BFG), at fair value |
|
4,500 |
|
|
4,800 |
|
|
5,400 |
Operating lease right-of-use (“ROU”) assets |
|
4,855 |
|
|
5,041 |
|
|
7,178 |
Other assets |
|
9,397 |
|
|
10,152 |
|
|
7,580 |
Total
assets |
$ |
442,299 |
|
$ |
400,780 |
|
$ |
424,484 |
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
Liabilities |
|
|
|
|
|
Deposits |
|
|
|
|
|
Noninterest-bearing |
$ |
79,930 |
|
$ |
78,817 |
|
$ |
127,330 |
Interest-bearing |
|
203,262 |
|
|
164,181 |
|
|
150,130 |
Total deposits |
|
283,192 |
|
|
242,998 |
|
|
277,460 |
Accrued interest payable |
|
117 |
|
|
54 |
|
|
39 |
Income taxes payable, net |
|
2,511 |
|
|
1,077 |
|
|
3,411 |
PPP Liquidity Facility |
|
283 |
|
|
314 |
|
|
952 |
Operating lease liabilities |
|
6,781 |
|
|
7,020 |
|
|
7,386 |
Other liabilities |
|
5,062 |
|
|
8,858 |
|
|
10,281 |
Total
liabilities |
|
297,946 |
|
|
260,321 |
|
|
299,529 |
|
|
|
|
|
|
Shareholders’
equity |
|
|
|
|
|
Common Stock |
|
13 |
|
|
13 |
|
|
13 |
Additional paid-in-capital |
|
54,827 |
|
|
54,614 |
|
|
54,915 |
Retained earnings |
|
89,513 |
|
|
85,832 |
|
|
70,027 |
Total shareholders’
equity |
|
144,353 |
|
|
140,459 |
|
|
124,955 |
Total liabilities and
shareholders’ equity |
$ |
442,299 |
|
$ |
400,780 |
|
$ |
424,484 |
FINWISE BANCORPCONSOLIDATED STATEMENTS
OF INCOME ($s in thousands, except per share
amounts; Unaudited)
|
For the Three Months
Ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
Interest
income |
|
|
|
|
|
Interest and fees on loans |
$ |
12,342 |
|
|
$ |
12,440 |
|
$ |
13,156 |
|
Interest on securities |
|
72 |
|
|
|
73 |
|
|
39 |
|
Other interest income |
|
987 |
|
|
|
757 |
|
|
28 |
|
Total interest income |
|
13,401 |
|
|
|
13,270 |
|
|
13,223 |
|
|
|
|
|
|
|
Interest
expense |
|
|
|
|
|
Interest on deposits |
|
1,295 |
|
|
|
624 |
|
|
261 |
|
Interest on PPP Liquidity Facility |
|
— |
|
|
|
— |
|
|
1 |
|
Total interest expense |
|
1,295 |
|
|
|
624 |
|
|
262 |
|
Net interest
income |
|
12,106 |
|
|
|
12,646 |
|
|
12,961 |
|
|
|
|
|
|
|
Provision for credit
losses(1) |
|
2,668 |
|
|
|
3,202 |
|
|
2,947 |
|
Net interest income after
provision for loan losses |
|
9,438 |
|
|
|
9,444 |
|
|
10,014 |
|
|
|
|
|
|
|
Non-interest
income |
|
|
|
|
|
Strategic Program fees |
|
3,685 |
|
|
|
4,487 |
|
|
6,623 |
|
Gain on sale of loans, net |
|
187 |
|
|
|
4,163 |
|
|
5,052 |
|
SBA loan servicing fees |
|
591 |
|
|
|
547 |
|
|
387 |
|
Change in fair value on investment in BFG |
|
(85 |
) |
|
|
430 |
|
|
(398 |
) |
Other miscellaneous income |
|
149 |
|
|
|
148 |
|
|
18 |
|
Total non-interest income |
|
4,527 |
|
|
|
9,775 |
|
|
11,682 |
|
|
|
|
|
|
|
Non-interest
expense |
|
|
|
|
|
Salaries and employee benefits |
|
5,257 |
|
|
|
5,805 |
|
|
6,953 |
|
Professional services |
|
1,474 |
|
|
|
1,609 |
|
|
633 |
|
Occupancy and equipment expenses |
|
712 |
|
|
|
843 |
|
|
352 |
|
(Recovery) impairment of SBA servicing asset |
|
(253 |
) |
|
|
779 |
|
|
(59 |
) |
Other operating expenses |
|
1,550 |
|
|
|
1,184 |
|
|
1,169 |
|
Total non-interest
expense |
|
8,740 |
|
|
|
10,220 |
|
|
9,048 |
|
Income before income
tax expense |
|
5,225 |
|
|
|
8,999 |
|
|
12,648 |
|
|
|
|
|
|
|
Provision for income
taxes |
|
1,364 |
|
|
|
2,454 |
|
|
3,214 |
|
Net
income |
$ |
3,861 |
|
|
$ |
6,545 |
|
$ |
9,434 |
|
|
|
|
|
|
|
Earnings per share, basic |
$ |
0.30 |
|
|
$ |
0.51 |
|
$ |
0.74 |
|
Earnings per share,
diluted |
$ |
0.29 |
|
|
$ |
0.49 |
|
$ |
0.70 |
|
|
|
|
|
|
|
Weighted average shares
outstanding, basic |
|
12,708,326 |
|
|
|
12,740,933 |
|
|
12,777,237 |
|
Weighted average shares
outstanding, diluted |
|
13,172,288 |
|
|
|
13,218,403 |
|
|
13,567,311 |
|
Shares outstanding at end of
period |
|
12,824,572 |
|
|
|
12,831,345 |
|
|
12,788,810 |
|
|
|
|
|
|
|
(1) The Company
adopted ASU 2016-13 as of January 1, 2023. The 2022 amounts
presented are calculated under the prior accounting standard. |
FINWISE BANCORPAVERAGE BALANCES,
YIELDS, AND RATES ($s in thousands;
Unaudited)
|
For the Three Months Ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
Average Balance |
|
Interest |
|
Average Yield/Rate |
|
Average Balance |
|
Interest |
|
Average Yield/Rate |
|
Average Balance |
|
Interest |
|
Average Yield/Rate |
Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
$ |
88,038 |
|
$ |
987 |
|
4.55 |
% |
|
$ |
78,619 |
|
$ |
757 |
|
3.85 |
% |
|
$ |
79,855 |
|
$ |
28 |
|
0.14 |
% |
Investment securities |
|
14,142 |
|
|
72 |
|
2.07 |
% |
|
|
14,414 |
|
|
73 |
|
2.03 |
% |
|
|
11,263 |
|
|
39 |
|
1.39 |
% |
Loans held for sale |
|
31,041 |
|
|
3,061 |
|
39.99 |
% |
|
|
43,751 |
|
|
3,990 |
|
36.48 |
% |
|
|
94,610 |
|
|
6,765 |
|
28.60 |
% |
Loans held for investment |
|
259,383 |
|
|
9,281 |
|
14.51 |
% |
|
|
217,619 |
|
|
8,450 |
|
15.53 |
% |
|
|
202,052 |
|
|
6,391 |
|
12.65 |
% |
Total interest earning assets |
|
392,604 |
|
|
13,401 |
|
13.84 |
% |
|
|
354,403 |
|
|
13,270 |
|
14.98 |
% |
|
|
387,780 |
|
|
13,223 |
|
13.64 |
% |
Non-interest earning
assets |
|
22,813 |
|
|
|
|
|
|
21,208 |
|
|
|
|
|
|
13,794 |
|
|
|
|
Total assets |
$ |
415,417 |
|
|
|
|
|
$ |
375,611 |
|
|
|
|
|
$ |
401,574 |
|
|
|
|
Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand |
$ |
41,532 |
|
$ |
385 |
|
3.76 |
% |
|
$ |
44,115 |
|
$ |
375 |
|
3.40 |
% |
|
$ |
6,344 |
|
$ |
14 |
|
0.88 |
% |
Savings |
|
8,313 |
|
|
10 |
|
0.50 |
% |
|
|
7,605 |
|
|
5 |
|
0.26 |
% |
|
|
6,678 |
|
|
1 |
|
0.06 |
% |
Money market accounts |
|
12,089 |
|
|
58 |
|
1.96 |
% |
|
|
15,109 |
|
|
45 |
|
1.19 |
% |
|
|
31,889 |
|
|
22 |
|
0.28 |
% |
Certificates of deposit |
|
103,225 |
|
|
842 |
|
3.31 |
% |
|
|
59,273 |
|
|
199 |
|
1.34 |
% |
|
|
87,626 |
|
|
224 |
|
1.02 |
% |
Total deposits |
|
165,159 |
|
|
1,295 |
|
3.18 |
% |
|
|
126,102 |
|
|
624 |
|
1.98 |
% |
|
|
132,537 |
|
|
261 |
|
0.79 |
% |
Other borrowings |
|
297 |
|
|
— |
|
0.35 |
% |
|
|
330 |
|
|
— |
|
0.35 |
% |
|
|
985 |
|
|
1 |
|
0.41 |
% |
Total interest bearing liabilities |
|
165,456 |
|
|
1,295 |
|
3.18 |
% |
|
|
126,432 |
|
|
624 |
|
1.97 |
% |
|
|
133,522 |
|
|
262 |
|
0.79 |
% |
Non-interest bearing
deposits |
|
91,701 |
|
|
|
|
|
|
96,581 |
|
|
|
|
|
|
137,750 |
|
|
|
|
Non-interest bearing
liabilities |
|
16,602 |
|
|
|
|
|
|
17,164 |
|
|
|
|
|
|
11,553 |
|
|
|
|
Shareholders’ equity |
|
141,658 |
|
|
|
|
|
|
135,434 |
|
|
|
|
|
|
118,749 |
|
|
|
|
Total liabilities and
shareholders’ equity |
$ |
415,417 |
|
|
|
|
|
|
375,611 |
|
|
|
|
|
|
$ |
401,574 |
|
|
|
|
Net interest income and
interest rate spread |
|
|
$ |
12,106 |
|
10.67 |
% |
|
|
|
$ |
12,646 |
|
13.01 |
% |
|
|
|
|
$ |
12,961 |
|
12.85 |
% |
Net interest margin |
|
|
|
|
12.51 |
% |
|
|
|
|
|
14.27 |
% |
|
|
|
|
|
13.37 |
% |
Ratio of average
interest-earning assets to average interest- bearing
liabilities |
|
|
|
|
237.29 |
% |
|
|
|
|
|
280.31 |
% |
|
|
|
|
|
290.42 |
% |
Note: Average PPP loans for the three months ended
March 31, 2023, December 31, 2022 and March 31, 2022
were $0.6 million, $0.6 million and $1.0 million, respectively.
FINWISE BANCORPSELECTED HISTORICAL
CONSOLIDATED FINANCIAL AND OTHER DATA ($s in
thousands, except per share amounts; Unaudited)
|
As of and for the Three Months Ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
Selected Loan Metrics |
|
|
|
|
|
Amount of loans originated |
$ |
908,190 |
|
|
$ |
1,219,851 |
|
|
$ |
2,511,306 |
|
Selected Income Statement Data |
|
|
|
|
|
Interest income |
$ |
13,401 |
|
|
$ |
13,270 |
|
|
$ |
13,223 |
|
Interest expense |
|
1,295 |
|
|
|
624 |
|
|
|
262 |
|
Net interest income |
|
12,106 |
|
|
|
12,646 |
|
|
|
12,961 |
|
Provision for credit losses |
|
2,668 |
|
|
|
3,202 |
|
|
|
2,947 |
|
Net interest income after provision for loan losses |
|
9,438 |
|
|
|
9,444 |
|
|
|
10,014 |
|
Non-interest income |
|
4,527 |
|
|
|
9,775 |
|
|
|
11,682 |
|
Non-interest expense |
|
8,740 |
|
|
|
10,220 |
|
|
|
9,048 |
|
Provision for income taxes |
|
1,364 |
|
|
|
2,454 |
|
|
|
3,214 |
|
Net income |
|
3,861 |
|
|
|
6,545 |
|
|
|
9,434 |
|
Selected Balance Sheet Data |
|
|
|
|
|
Total Assets |
$ |
442,299 |
|
|
$ |
400,779 |
|
|
$ |
424,484 |
|
Cash and cash equivalents |
|
105,609 |
|
|
|
100,567 |
|
|
|
116,646 |
|
Investment securities held-to-maturity, at cost |
|
13,880 |
|
|
|
14,292 |
|
|
|
10,986 |
|
Loans receivable, net |
|
260,221 |
|
|
|
224,217 |
|
|
|
189,549 |
|
Strategic Program loans held-for-sale, at lower of cost or fair
value |
|
25,413 |
|
|
|
23,589 |
|
|
|
73,805 |
|
SBA servicing asset, net |
|
5,284 |
|
|
|
5,210 |
|
|
|
5,225 |
|
Investment in Business Funding Group, at fair value |
|
4,500 |
|
|
|
4,800 |
|
|
|
5,400 |
|
Deposits |
|
283,192 |
|
|
|
242,998 |
|
|
|
277,460 |
|
PPP Liquidity Facility |
|
283 |
|
|
|
314 |
|
|
|
952 |
|
Total shareholders'
equity |
|
144,353 |
|
|
|
140,459 |
|
|
|
124,955 |
|
Tangible shareholders’ equity (1) |
|
144,353 |
|
|
|
140,459 |
|
|
|
124,955 |
|
Share and Per Share Data |
|
|
|
|
|
Earnings per share -
basic |
$ |
0.30 |
|
|
$ |
0.51 |
|
|
$ |
0.74 |
|
Earnings per share -
diluted |
$ |
0.29 |
|
|
$ |
0.49 |
|
|
$ |
0.70 |
|
Book value per share |
$ |
11.26 |
|
|
$ |
10.95 |
|
|
$ |
9.77 |
|
Tangible book value per share
(1) |
$ |
11.26 |
|
|
$ |
10.95 |
|
|
$ |
9.77 |
|
Weighted avg outstanding
shares - basic |
|
12,708,326 |
|
|
|
12,740,933 |
|
|
|
12,777,237 |
|
Weighted avg outstanding
shares - diluted |
|
13,172,288 |
|
|
|
13,218,403 |
|
|
|
13,567,311 |
|
Shares outstanding at end of
period |
|
12,824,572 |
|
|
|
12,831,345 |
|
|
|
12,788,810 |
|
Capital
Ratios |
|
|
|
|
|
Total shareholders' equity to
total assets |
|
32.6 |
% |
|
|
34.9 |
% |
|
|
29.4 |
% |
Tangible shareholders’ equity
to tangible assets (1) |
|
32.6 |
% |
|
|
34.9 |
% |
|
|
29.4 |
% |
Leverage Ratio (Bank under
CBLR) |
|
24.0 |
% |
|
|
25.1 |
% |
|
|
19.1 |
% |
(1) This measure is not a measure recognized under United States
generally accepted accounting principles, or GAAP, and is therefore
considered to be a non-GAAP financial measure. See “Reconciliation
of Non-GAAP to GAAP Financial Measures” for a reconciliation of
this measure to its most comparable GAAP measure. Tangible
shareholders’ equity is defined as total shareholders’ equity less
goodwill and other intangible assets. The most directly comparable
GAAP financial measure is total shareholder’s equity. We had no
goodwill or other intangible assets as of any of the dates
indicated. We have not considered loan servicing rights or loan
trailing fee asset as intangible assets for purposes of this
calculation. As a result, tangible shareholders’ equity is the same
as total shareholders’ equity as of each of the dates
indicated.
Reconciliation of Non-GAAP to GAAP Financial
Measures
Efficiency
ratio |
Three Months Ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
($s in thousands) |
|
|
|
|
|
Non-interest expense |
$ |
8,740 |
|
|
$ |
10,220 |
|
|
$ |
9,048 |
|
Net
interest income |
|
12,106 |
|
|
|
12,646 |
|
|
|
12,961 |
|
Total
non-interest income |
|
4,527 |
|
|
|
9,775 |
|
|
|
11,682 |
|
Adjusted operating revenue |
$ |
16,633 |
|
|
$ |
22,421 |
|
|
$ |
24,643 |
|
Efficiency ratio |
|
52.5 |
% |
|
|
45.6 |
% |
|
|
36.7 |
% |
FinWise Bancorp (NASDAQ:FINW)
Historical Stock Chart
From Jun 2024 to Jul 2024
FinWise Bancorp (NASDAQ:FINW)
Historical Stock Chart
From Jul 2023 to Jul 2024