– Loan Originations of $5.0 Billion for 2024, including $1.3 Billion for Fourth Quarter –
– Net Income of $12.7 Million for 2024, including $2.8 Million for Fourth Quarter –
– Diluted Earnings Per Share of $0.93 for 2024, including $0.20 for Fourth Quarter –
MURRAY, Utah, Jan. 30, 2025 (GLOBE NEWSWIRE) — FinWise Bancorp (NASDAQ: FINW) (“FinWise” or the “Company”), parent company of FinWise Bank (the “Bank”), today announced results for the quarter and fiscal year ended December 31, 2024.
Fourth Quarter 2024 Highlights
- Loan originations totaled $1.3 billion, compared to $1.4 billion for the quarter ended September 30, 2024, and $1.2 billion for the fourth quarter of the prior year
- Net interest income was $15.5 million, compared to $14.8 million for the quarter ended September 30, 2024, and $14.4 million for the fourth quarter of the prior year
- Net income was $2.8 million, compared to $3.5 million for the quarter ended September 30, 2024, and $4.2 million for the fourth quarter of the prior year
- Diluted earnings per share (“EPS”) were $0.20 for the quarter, compared to $0.25 for the quarter ended September 30, 2024, and $0.32 for the fourth quarter of the prior year
- Efficiency ratio1 was 64.2%, compared to 67.5% for the quarter ended September 30, 2024, and 56.0% for the fourth quarter of the prior year
- Nonperforming loan balances were $36.4 million as of December 31, 2024, compared to $30.6 million as of September 30, 2024, and $27.1 million as of December 31, 2023. Nonperforming loan balances guaranteed by the Small Business Administration (“SBA”) were $19.2 million, $17.8 million, and $15.0 million as of December 31, 2024, September 30, 2024, and December 31, 2023, respectively
“Our fourth quarter results capped off a strong 2024 for FinWise, as we made significant progress in our goal to expand and diversify our sources of revenue to enhance the company’s long-term growth,” said Kent Landvatter, CEO of FinWise. “We were also pleased with the rebound in loan originations from existing programs, as well as the number of new strategic programs we announced, including four new Lending programs, two of which include our Credit Enhancement product, one Payments and one Credit Card program. As we look ahead to 2025, we are excited about the outlook, and currently anticipate continued stability in originations from existing programs, acceleration in production from new and ramping programs, a strong pipeline for new partners and remain committed to generating positive operating leverage.”
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1 See “Reconciliation of Non-GAAP to GAAP Financial Measures” for a reconciliation of this non-GAAP measure.
Selected Financial and Other Data
| ($ in thousands, except per share amounts) | As of and for the Three Months Ended | As of and for the Years Ended | |||||||||||||||||
| 12/31/2024 | 9/30/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | |||||||||||||||
| Amount of loans originated | $ | 1,305,028 | $ | 1,448,251 | $ | 1,177,704 | $ | 5,015,662 | $ | 4,303,361 | |||||||||
| Net income | $ | 2,793 | $ | 3,454 | $ | 4,156 | $ | 12,742 | $ | 17,460 | |||||||||
| Diluted EPS | $ | 0.20 | $ | 0.25 | $ | 0.32 | $ | 0.93 | $ | 1.33 | |||||||||
| Return on average assets | 1.6 | % | 2.1 | % | 2.9 | % | 2.0 | % | 3.5 | % | |||||||||
| Return on average equity | 6.5 | % | 8.3 | % | 10.8 | % | 7.7 | % | 11.9 | % | |||||||||
| Yield on loans | 14.01 | % | 14.16 | % | 16.21 | % | 14.47 | % | 17.05 | % | |||||||||
| Cost of interest-bearing deposits | 4.30 | % | 4.85 | % | 4.82 | % | 4.57 | % | 4.22 | % | |||||||||
| Net interest margin | 10.00 | % | 9.70 | % | 10.61 | % | 9.99 | % | 11.65 | % | |||||||||
| Efficiency ratio(1) | 64.2 | % | 67.5 | % | 56.0 | % | 64.9 | % | 53.4 | % | |||||||||
| Tangible book value per share(2) | $ | 13.15 | $ | 12.90 | $ | 12.41 | $ | 13.15 | $ | 12.41 | |||||||||
| Tangible shareholders’ equity to tangible assets(2) | 23.3 | % | 24.9 | % | 26.5 | % | 23.3 | % | 26.5 | % | |||||||||
| Leverage ratio (Bank under CBLR) | 20.6 | % | 20.3 | % | 20.7 | % | 20.6 | % | 20.7 | % | |||||||||
| Full-time equivalent employees | 196 | 194 | 162 | 196 | 162 | ||||||||||||||
(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 non-interest expense divided by the sum of net interest income and non-interest income. The Company believes this measure is important as an indicator of productivity because it shows the amount of revenue generated for each dollar spent.
(2) Tangible shareholders’ equity to tangible assets is considered a non-GAAP financial 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 to total assets. The Company had no goodwill or other intangible assets at the end of any period indicated. The Company has not considered loan servicing rights or loan trailing fee assets as intangible assets for purposes of this calculation. As a result, tangible shareholders’ equity is the same as total shareholders’ equity at the end of each of the periods indicated.
Net Interest Income
Net interest income was $15.5 million for the fourth quarter of 2024, compared to $14.8 million for the prior quarter and $14.4 million for the prior year period. The increase from the prior quarter was primarily due to an average balance increase in the loans held for investment (“HFI”) portfolio and a decrease in yields paid on interest-earning deposits, principally certificate of deposits. Further contributing to the increase from the prior quarter was a third quarter 2024 decrease in net interest income of $0.5 million for accrued interest not previously reversed at the time loans were deemed nonperforming. The increase from the prior year period was primarily due to increases in the average balances of loans held-for-sale and loans HFI portfolios and was partially offset by yield decreases on those same portfolios as well as decreased volumes and rates paid on the Company’s interest bearing deposits.
Loan originations totaled $1.3 billion for the fourth quarter, compared to $1.4 billion for the prior quarter of 2024 and $1.2 billion for the prior year period.
Net interest margin for the fourth quarter of 2024 was 10.00%, compared to 9.70% for the prior quarter and 10.61% for the prior year period. The increase in net interest margin from the prior quarter is primarily attributable to the current quarter decrease in the cost of certificates of deposits and the growth in the overall loan portfolio. The decrease from the prior year period is primarily attributable to the Company’s strategy to reduce the average credit risk in the loan portfolio by increasing its investment in higher quality but lower yielding loans.
Provision for Credit Losses
The Company’s provision for credit losses was $3.9 million for the fourth quarter of 2024, compared to $2.2 million for the prior quarter and $3.2 million for the prior year period. The provision for credit losses increased when compared to the prior quarter and prior year period due primarily to a net charge-off on the non-guaranteed portion of SBA loans in the fourth quarter of 2024 of $1.0 million.
Non-interest Income
| Three Months Ended | |||||||||||
| ($ in thousands) | 12/31/2024 | 9/30/2024 | 12/31/2023 | ||||||||
| Non-interest income | |||||||||||
| Strategic Program fees | $ | 4,899 | $ | 4,862 | $ | 4,229 | |||||
| Gain on sale of loans | 872 | 393 | 440 | ||||||||
| SBA loan servicing fees, net | 181 | 87 | 572 | ||||||||
| Change in fair value on investment in BFG | (200 | ) | (100 | ) | 200 | ||||||
| Credit enhancement income | 25 | 47 | – | ||||||||
| Other miscellaneous income | (174 | ) | 765 | 716 | |||||||
| Total non-interest income | $ | 5,603 | $ | 6,054 | $ | 6,157 | |||||
The decrease in non-interest income from the prior quarter and prior year period was primarily due to a decrease in other miscellaneous income resulting from the $0.9 million charge-off of unamortized premium on approximately $160.0 million of callable CDs which were called during the fourth quarter of 2024 and replaced with lower cost CDs. This decrease was partially offset by the $0.5 million gain on sale of the guaranteed portion of SBA loans that occurred during the fourth quarter of 2024.
Non-interest Expense
| Three Months Ended | |||||||||||
| ($ in thousands) | 12/31/2024 | 9/30/2024 | 12/31/2023 | ||||||||
| Non-interest expense | |||||||||||
| Salaries and employee benefits | $ | 9,375 | $ | 9,659 | $ | 7,396 | |||||
| Professional services | 556 | 1,331 | 1,433 | ||||||||
| Occupancy and equipment expenses | 1,094 | 1,046 | 923 | ||||||||
| Credit enhancement expense | 5 | 3 | – | ||||||||
| Other operating expenses | 2,534 | 2,010 | 1,751 | ||||||||
| Total non-interest expense | $ | 13,564 | $ | 14,049 | $ | 11,503 | |||||
The decrease in non-interest expense from the prior quarter was primarily due to a decrease in salaries and employee benefits resulting from bonus accrual reductions and a decrease in professional services expense resulting from a reduction in accruals for legal services. The increase in non-interest expense from the prior year period was primarily due to an increase in salaries and employee benefits due mainly to increasing headcount and other operating expenses driven by increased spending to support the growth in the Company’s business infrastructure.
Reflecting the expenses incurred to develop the Company’s business infrastructure, the Company’s efficiency ratio was 64.2% for the fourth quarter of 2024, compared to 67.5% for the prior quarter and 56.0% for the prior year period. As a result of the infrastructure build, the Company anticipates the efficiency ratio will remain elevated until the Company begins to realize the revenues associated with the new programs developed.
Tax Rate
The Company’s effective tax rate was 24.3% for the fourth quarter of 2024, compared to 25.1% for the prior quarter and 28.5% for the prior year period. The decrease from the prior quarter was due primarily to more favorable resolution of historical state tax matters during the fourth quarter of 2024. The decrease from the prior year period was primarily due to a reduction in permanent differences impacting income tax expense.
Net Income
Net income was $2.8 million for the fourth quarter of 2024, compared to $3.5 million for the prior quarter and $4.2 million for the prior year period. The changes in net income for the three months ended December 31, 2024 compared to the prior quarter and prior year period are the result of the factors discussed above.
Balance Sheet
The Company’s total assets were $746.0 million as of December 31, 2024, an increase from $683.0 million as of September 30, 2024 and $586.2 million as of December 31, 2023. The increase in total assets from September 30, 2024 was primarily due to continued growth in the Company’s loans HFI, net, and loans held-for-sale portfolios of $29.7 million and $7.6 million, respectively, as well as an increase of $21.5 million in interest-bearing cash deposits. The increase in total assets compared to December 31, 2023 was primarily due to increases in the Company’s loans HFI, net, and loans held-for-sale portfolios of $89.3 million and $44.1 million, respectively, as well as an increase in investment securities available-for-sale of $29.9 million, partially offset by a decrease of $17.0 million in interest-bearing deposits.
The following table shows the gross loans HFI balances as of the dates indicated:
| 12/31/2024 | 9/30/2024 | 12/31/2023 | |||||||||||||||||||||
| ($ in thousands) | Amount | % of total
loans |
Amount | % of total
loans |
Amount | % of total
loans |
|||||||||||||||||
| SBA | $ | 255,056 |
|
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