Finwise Bancorp Reports Fourth Quarter And Full Year 2022 Re...| MENAFN.COM

Tuesday, 31 January 2023 02:57 GMT

Finwise Bancorp Reports Fourth Quarter And Full Year 2022 Results


(MENAFN- GlobeNewsWire - Nasdaq)

- Net Income of $6.5 Million for Fourth Quarter of 2022 -

- Diluted Earnings Per Share of $0.49 for Fourth Quarter of 2022-

MURRAY, Utah, Jan. 25, 2023 (GLOBE NEWSWIRE) -- FinWise Bancorp (NASDAQ: FINW) (“FinWise” or the“Company”), parent company of FinWise Bank (the“Bank”), today announced results for the quarter and year ended December 31, 2022.

Fourth Quarter 2022 Highlights

  • Loan originations were $1.2 billion, compared to $1.5 billion for the quarter ended September 30, 2022, and $2.3 billion for the fourth quarter of the prior year
  • Net interest income was $12.6 million for the quarter ended December 31, 2022, compared to $12.5 million for the quarter ended September 30, 2022, and $15.3 million for the fourth quarter of the prior year
  • Net Income was $6.5 million, compared to $3.7 million for the quarter ended September 30, 2022, and $10.1 million for the fourth quarter of the prior year
  • Diluted earnings per share (“EPS”) were $0.49 for the quarter, compared to $0.27 for the quarter ended September 30, 2022, and $0.90 for the quarter ended December 31, 2021
  • Efficiency ratio was 45.6%, compared to 42.3% for the quarter ended September 30, 2022, and 34.3% for the fourth quarter of the prior year
  • Maintained strong returns with annualized return on average equity (ROAE) of 19.1%, compared to 11.0% in the quarter ended September 30, 2022, and 43.8% in the fourth quarter of the prior year
  • Asset quality remained solid with a non-performing loans to total loans ratio of 0.1%

“The FinWise team executed well in substantially all facets of the business during 2022, culminating the year with solid results in the fourth quarter, an outstanding accomplishment given more challenging economic conditions throughout the year,” said Kent Landvatter, Chief Executive Officer and President of FinWise.“This performance is further validation of our differentiated and diverse business model coupled with our steadfast focus on working with our strategic relationships and serving our clients. As we progress into 2023, we will continue to build on our strengths and plan to reinvest in the company so that we remain well positioned to maximize shareholder value by continuing to generate sustainable and profitable long-term growth.”

Selected Financial Data

For the Three Months Ended For the Years Ended
($s in thousands, except per share amounts, annualized ratios) 12/31/2022 9/30/2022 12/31/2021 12/31/2022 12/31/2021
Net Income $​ 6,545 $​ 3,654 $​ 10,111 $​ 25,115 $​ 31,583
Diluted EPS $ 0.49 $ 0.27 $ 0.90 $ 1.87 $ 3.27
Return on average assets 6.6 % 3.9 % 11.3 % 6.4 % 9.1 %
Return on average equity 19.1 % 11.0 % 43.8 % 19.6 % 39.2 %
Yield on loans 19.04 % 18.94 % 21.62 % 18.52 % 19.01 %
Cost of deposits 1.98 % 1.16 % 0.75 % 1.17 % 1.05 %
Net interest margin 14.27 % 14.93 % 16.62 % 14.04 % 15.10 %
Efficiency Ratio(1) 45.6 % 42.3 % 34.3 % 43.9 % 37.0 %
Tangible book value per share(2) $ 10.95 $ 10.44 $ 9.04 $ 10.95 $ 9.04
Tangible shareholders' equity to tangible assets(2) 34.9 % 34.8 % 30.4 % 34.9 % 30.4 %
Leverage Ratio (Bank under CBLR) 25.1 % 24.9 % 17.7 % 25.1 % 17.7 %

(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 Income

Net income was $6.5 million for the fourth quarter of 2022, compared to $3.7 million for the third quarter of 2022, and $10.1 million for the fourth quarter of 2021. The increase from the previous quarter was primarily due to higher gain on sale, lower provision for income taxes and lower provision for loan losses as our credit quality remained solid, partially offset by an increase in non-interest expense and lower strategic program fees. Compared to the prior year period, the decline was primarily driven by a decrease in net interest income and strategic program fees, and an increase in non-interest expenses, partially offset by higher gain on sale and a lower provision for income taxes.

Net Interest Income

Net interest income rose slightly to $12.6 million for the fourth quarter of 2022, from $12.5 million for the third quarter of 2022, and down from $15.3 million for the fourth quarter of 2021. The increase from the prior quarter was primarily due to an increase in interest rates being paid on our cash balances at the Federal Reserve which was partially offset by an increase in the Bank's deposit rates being paid to customers. The decline from the prior year period was primarily due to lower average loans held for sale balances.

Loan originations totaled $1.2 billion for the fourth quarter of 2022, down from $1.5 billion for the third quarter of 2022 and $2.3 billion for the fourth quarter of 2021.

Net interest margin for the fourth quarter of 2022 decreased to 14.27% compared to 14.93% for the third quarter of 2022 and 16.62% for the fourth quarter of 2021. The decrease from the previous quarter was primarily driven by the reduction in average balances in the loans held for sale portfolio along with the shifting of the deposit portfolio mix from lower costing deposits to higher costing demand deposits. The net interest margin decrease from the fourth quarter of 2021 was primarily driven by lower average loans held for sale balances and an increase in higher rate deposit balances.

Provision for Loan Losses

The Company's provision for loan losses was $3.2 million for the fourth quarter of 2022, compared to $4.5 million for the third quarter of 2022 and $2.5 million for the fourth quarter of 2021. Compared to the previous quarter, the decrease in provision for loan losses for the fourth quarter of 2022 was primarily due to a decrease in strategic program loans held for investment. Compared to the prior year period, the increase in the provision for loan losses for the fourth quarter of 2022 was primarily due to higher net charge-offs and growth of unguaranteed loans held for investment.

Non-interest Income

For the Three Months Ended
($s in thousands) 12/31/2022 9/30/2022 12/31/2021
Noninterest income:
Strategic Program fees $ 4,487 $ 5,136 $ 6,082
Gain on sale of loans 4,163 1,923 1,813
SBA loan servicing fees 547 327 356
Change in fair value on investment in BFG 430 65 864
Other miscellaneous income 148 72 14
Total noninterest income $ 9,775 $ 7,523 $ 9,129

Non-interest income was $9.8 million for the fourth quarter of 2022, compared to $7.5 million for the third quarter of 2022 and $9.1 million for the fourth quarter of 2021. The increase from the previous quarter was driven primarily by an increase in gain on sale of loans recorded to establish a new Loan Trailing Fee Asset of approximately $2.3 million and an increase in fair value of the Company's investment in Business Funding Group, LLC (“BFG”), partially offset by lower strategic program fees due to the decline in loan origination volumes. Compared to the prior year period, the increase in non-interest income was primarily due to an increase in gain on sale of loans, partially offset by lower strategic program fees resulting primarily from a decline in loan origination volumes and a decrease in the change in fair value of the Company's investment in BFG.

Non-interest Expense

For the Three Months Ended
​($s in thousands) 12/31/2022 9/30/2022 12/31/2021
Noninterest expense:
Salaries and employee benefits $ 5,805 $ 5,137 $ 6,052
Professional Services 1,609 1,701 287
Occupancy and equipment expenses 843 640 208
(Recovery) impairment of SBA servicing asset 779 (127 ) 800
Other operating expenses 1,184 1,118 1,024
Total noninterest expense $ 10,220 $ 8,469 $ 8,371

Non-interest expense was $10.2 million for the fourth quarter of 2022, compared to $8.5 million for the third quarter of 2022 and $8.4 million for the fourth quarter of 2021. The increase from the previous quarter was primarily due to an impairment on the Company's SBA servicing asset in the fourth quarter of 2022, which did not occur in the third quarter of 2022, higher employee head count related to developing and upgrading new and existing technology, and increased business infrastructure. The increase compared to the fourth quarter of 2021 was primarily due to increased professional services relating primarily to an increase in consulting fees and increased depreciation from the buildout of our corporate office which was partially offset by a decrease in salaries and employee benefits.

The Company's efficiency ratio was 45.6% for the fourth quarter of 2022 as compared to 42.3% for the third quarter of 2022 and 34.3% for the fourth quarter of 2021.

Tax Rate

The Company's effective tax rate was approximately 27.3% for the fourth quarter of 2022, compared to 48.7% for the third quarter of 2022 and 25.3% for the fourth quarter of 2021. An immaterial error was corrected during the third quarter of 2022 and is the primary reason for the higher effective tax rate in that quarter.

Balance Sheet

The Company's total assets were $402.2 million at December 31, 2022, an increase from $385.6 million at September 30, 2022 and $380.2 million at December 31, 2021. The increase from September 30, 2022 was primarily due to an increase in deposits utilized to fund the Company's growth in cash and held for investment loan portfolio, partially offset by a decrease in deposits utilized to fund the Company's held for sale loan portfolio. The increase in total assets compared to December 31, 2021 was primarily due to an increase in cash from growth in deposits to fund the Company's held for investment loan portfolio, partially offset by a decrease in deposits utilized to fund the Company's held for sale loan portfolio.

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

As of
12/31/2022 9/30/2022 12/31/2021
($s in thousands) Amount % of total loans Amount % of total loans Amount % of total loans
SBA $ 145,172 55.8 % $ 127,455 49.6 % $ 142,392 53.6 %
Commercial, non real estate 11,484 4.4 % 12,970 5.1 % 3,428 1.3 %
Residential real estate 37,815 14.5 % 34,501 13.4 % 27,108 10.2 %
Strategic Program loans 47,848 18.4 % 70,290 27.4 % 85,850 32.3 %
Commercial real estate 12,063 4.7 % 6,149 2.4 % 2,436 0.9 %
Consumer 5,808 2.2 % 5,455 2.1 % 4,574 1.7 %
Total period end loans $ 260,190 100.0 % $ 256,820 100.0 % $ 265,788 100.0 %

Note: SBA loans as of December 31, 2022, September 30, 2022 and December 31, 2021 include $0.6 million, $0.7 million and $1.1 million in PPP loans, respectively. SBA loans as of December 31, 2022, September 30, 2022 and December 31, 2021 include $49.5 million, $42.6 million and $75.7 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 December 31, 2022, September 30, 2022 and December 31, 2021 was $8.5 million, $10.2 million and $8.5 million, respectively.

Total loans receivable at December 31, 2022 increased to $260.2 million from $256.8 million at September 30, 2022 and decreased from $265.8 million at December 31, 2021. The increase in loans receivable compared to the amount at September 30, 2022 was due primarily to increases in SBA 7(a) loan balances, and commercial real estate loans, partially offset by a decrease in strategic program held for sale loans. The decrease in loans receivable compared to the amount at December 31, 2021 was due primarily to decreases in strategic program held for sale loans and SBA 7(a) loan balances that are guaranteed by the SBA, partially offset by increases in SBA 7(a) loan balances that are not guaranteed by the SBA, residential real estate loans, commercial real estate loans, and commercial non-real estate loans.

The following table shows the Company's deposit composition as of the dates indicated:

As of
12/31/2022 9/30/2022 12/31/2021
($s in thousands) Amount Percent Amount Percent Amount Percent
Noninterest-bearing demand deposits $ 78,817 32.5 % $ 97,654 42.0 % $ 110,548 43.9 %
Interest-bearing deposits:
Demand 50,746 20.8 % 55,152 23.6 % 5,399 2.1 %
Savings 8,289 3.4 % 7,252 3.1 % 6,685 2.7 %
Money market 10,882 4.5 % 12,281 5.3 % 31,076 12.3 %
Time certificates of deposit 94,264 38.8 % 60,499 26.0 % 98,184 39.0 %
Total period end deposits $ 242,998 100.0 % $ 232,838 100.0 % $ 251,892 100.0 %

Total deposits at December 31, 2022 increased to $243.0 million from $232.8 million at September 30, 2022, and decreased from $251.9 million at December 31, 2021. The increase from the amount at September 30, 2022 was driven primarily by an increase in time certificates of deposits, partially offset by decreases in noninterest-bearing and interest-bearing demand deposits. The decrease from the amount at December 31, 2021 was driven primarily by decreases in noninterest-bearing demand deposits, money market deposits and time certificates of deposit, partially offset by an increase in interest-bearing demand deposits. The increase in interest-bearing demand deposits compared to December 31, 2021, is primarily due to new HSA deposits from Lively, Inc., a technology focused Health Savings Account provider.

Total shareholders' equity at December 31, 2022 increased $6.2 million to $140.5 million from $134.3 million at September 30, 2022. Compared to December 31, 2021, total shareholders' equity at December 31, 2022 increased $25.1 million from $115.4 million. The increase over both prior periods 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 2021
Capital Ratios 12/31/2022 9/30/2022 12/31/2021 Well-
Capitalized
Requirement
Well-
Capitalized
Requirement
Leverage Ratio 25.1 % 24.9 % 17.7 % 9.0 % 8.5 %

The Bank's capital levels remain significantly above well-capitalized guidelines as of the end of the fourth quarter of 2022.

Share Repurchase Program

On August 18, 2022, the Company's Board of Directors authorized a share repurchase program pursuant to which the Company may repurchase up to 5% of outstanding common stock as of August 16, 2022, or 644,241 shares of the Company's common stock, through August 31, 2024. As of December 31, 2022, the Company has repurchased a total of 120,000 shares for a total of $1.1 million.

Asset Quality

Nonperforming loans were $0.4 million or 0.1% of total loans receivable at December 31, 2022, compared to $0.7 million or 0.2% of total loans receivable at December 31, 2021. The Company did not have any nonperforming loans as of September 30, 2022. As noted above, the provision for loan losses was $3.2 million for the fourth quarter of 2022, compared to $4.5 million for the third quarter of 2022 and $2.5 million for the fourth quarter of 2021. The Company's allowance for loan losses to total loans was 4.6% at December 31, 2022 compared to 4.7% at September 30, 2022 and 3.7% at December 31, 2021.

For the fourth quarter of 2022, the Company's net charge-offs were $3.2 million, compared to $3.1 million for the third quarter of 2022 and $2.3 million for the fourth quarter of 2021. The increase in net charge-offs compared to the third quarter of 2022 was primarily driven by higher net charge-offs related to retained strategic programs. The increase in net charge-offs compared to the fourth quarter of 2021 was primarily driven by some normalization of credit losses to pre-pandemic market conditions and growth in the unguaranteed loans held for investment balances.

The following table presents a summary of changes in the allowance for loan losses and asset quality ratios for the periods indicated:

For the Three Months Ended
​($s in thousands) 12/31/2022 9/30/2022 12/31/2021
Allowance for Loan and Lease Losses:
Beginning Balance $ 11,968 $ 10,602 $ 9,640
Provision 3,202 4,457 2,503
Charge offs
SBA - (259 ) (99 )
Commercial, non real estate - - -
Residential real estate - - -
Strategic Program loans (3,440 ) (3,070 ) (2,380 )
Commercial real estate - - -
Consumer (62 ) (4 ) (1 )
Recoveries
SBA 9 9 5
Commercial, non real estate - - 11
Residential real estate - - -
Strategic Program loans 244 233 176
Commercial real estate - - -
Consumer 64 - -
Ending Balance $ 11,985 $ 11,968 $ 9,855
Asset Quality Ratios As of and For the Three Months Ended
($s in thousands, annualized ratios) 12/31/2022 9/30/2022 12/31/2021
Nonperforming loans $ 356 $ - $ 657
Nonperforming loans to total loans 0.1 % 0.0 % 0.2 %
Net charge offs to average loans 4.9 % 4.7 % 3.2 %
Allowance for loan losses to loans held for investment 5.1 % 5.6 % 4.8 %
Allowance for loan losses to total loans 4.6 % 4.7 % 3.7 %
Net charge offs $ 3,185 $ 3,091 $ 2,288

Webcast and Co n fe r e n ce Call I n fo r mation

FinWise will host a conference call today at 5:30 PM ET to discuss its financial results for the fourth quarter of 2022. A simultaneous audio webcast of the conference call will be available on the Company's investor relations section of the website at .

The dial-in number for the conference call is (877) 423-9813 (toll-free) or (201) 689-8573 (international). Please dial the number 10 minutes prior to the scheduled start time.

A webcast replay of the call will be available on the Company's website at for six months following the call.

Website Information

The Company intends to use its website, 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 non-member 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

Contacts

'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, 2021 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
12/31/2022 9/30/2022 12/31/2021
(Unaudited) (Unaudited)
ASSETS
Cash and cash equivalents
Cash and due from banks $ 386 $ 410 $ 411
Interest-bearing deposits 100,181 92,053 85,343
Total cash and cash equivalents 100,567 92,463 85,754
Investment securities held-to-maturity, at cost 14,292 13,925 11,423
Investment in Federal Home Loan Bank (FHLB) stock, at cost 449 449 378
Strategic Program loans held-for-sale, at lower of cost or fair value 23,589 43,606 60,748
Loans receivable, net 224,217 200,485 198,102
Premises and equipment, net 9,478 6,830 3,285
Accrued interest receivable 1,818 1,672 1,548
Deferred taxes, net 1,167 2,164 1,823
SBA servicing asset, net 5,210 5,269 3,938
Investment in Business Funding Group (BFG), at fair value 4,800 4,500 5,900
Operating lease right-of-use (“ROU”) assets 6,470 6,691 -
Other assets 10,152 7,515 7,315
Total assets $ 402,209 $ 385,569 $ 380,214
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing $ 78,817 $ 97,654 $ 110,548
Interest-bearing 164,181 135,184 141,344
Total deposits 242,998 232,838 251,892
Accrued interest payable 54 30 48
Income taxes payable, net 1,077 1,066 233
PPP Liquidity Facility 314 345 1,050
Operating lease liabilities 8,449 7,249 -
Other liabilities 8,858 9,756 11,549
Total liabilities 261,750 251,284 264,772
Shareholders' equity
Common Stock 13 13 13
Additional paid-in-capital 54,614 55,113 54,836
Retained earnings 85,832 79,159 60,593
Total shareholders' equity 140,459 134,285 115,442
Total liabilities and shareholders' equity $ 402,209 $ 385,569 $ 380,214


FINWISE BANCORP
CONSOLIDATED STATEMENTS OF INCOME
($s in thousands, except per share amounts; Unaudited)
For the Three Months Ended
12/31/2022 9/30/2022 12/31/2021
Interest income
Interest and fees on loans $ 12,440 $ 12,481 $ 15,500
Interest on securities 73 52 28
Other interest income 757 290 25
Total interest income 13,270 12,823 15,553
Interest expense
Interest on deposits 624 303 279
Interest on PPP Liquidity Facility - 1 2
Total interest expense 624 304 281
Net interest income 12,646 12,519 15,272
Provision for loan losses 3,202 4,457 2,503
Net interest income after provision for loan losses 9,444 8,062 12,769
Non-interest income
Strategic Program fees 4,487 5,136 6,082
Gain on sale of loans, net 4,163 1,923 1,813
SBA loan servicing fees 547 327 356
Change in fair value on investment in BFG 430 65 864
Other miscellaneous income 148 72 14
Total non-interest income 9,775 7,523 9,129
Non-interest expense
Salaries and employee benefits 5,805 5,137 6,052
Professional services 1,609 1,701 287
Occupancy and equipment expenses 843 640 208
(Recovery) impairment of SBA servicing asset 779 (127 ) 800
Other operating expenses 1,184 1,118 1,024
Total non-interest expense 10,220 8,469 8,371
Income before income tax expense 8,999 7,116 13,527
Provision for income taxes 2,454 3,462 3,416
Net income $ 6,545 $ 3,654 10,111
Earnings per share, basic $ 0.51 $ 0.28 $ 0.95
Earnings per share, diluted $ 0.49 $ 0.27 $ 0.90
Weighted average shares outstanding, basic 12,740,933 12,784,298 10,169,005
Weighted average shares outstanding, diluted 13,218,403 13,324,059 10,818,984
Shares outstanding at end of period 12,831,345 12,864,821 12,772,010


FINWISE BANCORP
CONSOLIDATED STATEMENTS OF INCOME
($s in thousands, except per share amounts)
For the Years Ended
12/31/2022 12/31/2021
(Unaudited)
Interest income
Interest and fees on loans $ 50,941 $ 49,135
Interest on securities 208 47
Other interest income 1,180 61
Total interest income 52,329 49,243
Interest expense
Interest on deposits 1,432 1,138
Interest on PPP Liquidity Facility 2 127
Total interest expense 1,434 1,265
Net interest income 50,895 47,978
Provision for loan losses 13,519 8,039
Net interest income after provision for loan losses 37,376 39,939
Non-interest income
Strategic Program fees 22,467 17,959
Gain on sale of loans, net 13,550 9,689
SBA loan servicing fees 1,603 1,156
Change in fair value on investment in BFG (478 ) 2,991
Other miscellaneous income 269 49
Total non-interest income 37,411 31,844
Non-interest expense
Salaries and employee benefits 24,489 22,365
Professional services 5,454 1,049
Occupancy and equipment expenses 2,204 810
(Recovery) impairment of SBA servicing asset 1,728 800
Other operating expenses 4,881 4,487
Total non-interest expense 38,756 29,511
Income before income tax expense 36,031 42,272
Provision for income taxes 10,916 10,689
Net income $ 25,115 $ 31,583
Earnings per share, basic $ 1.96 $ 3.44
Earnings per share, diluted $ 1.87 $ 3.27
Weighted average shares outstanding, basic 12,729,898 8,669,724
Weighted average shares outstanding, diluted 13,357,022 9,108,163
Shares outstanding at end of period 12,831,345 12,772,010


FINWISE BANCORP
AVERAGE BALANCES, YIELDS, AND RATES
($s in thousands; Unaudited)
For the Three Months Ended For the Three Months Ended For the Three Months Ended
12/31/2022 9/30/2022 12/31/2021
Average
Balance
Interest Average
Yield/Rate
Average
Balance
Interest Average
Yield/Rate
Average Balance Interest Average
Yield/Rate
Interest earning assets:
Interest-bearing deposits with the Federal Reserve, non-
U.S. central banks and other banks $ 78,619 $ 757 3.85 % $ 59,337 $ 290 1.95 % $ 72,746 $ 25 0.14 %
Investment securities 14,414 73 2.03 % 12,418 52 1.67 % 8,078 28 1.39 %
Loans held for sale 43,751 3,990 36.48 % 50,516 4,533 35.89 % 87,156 7,553 34.66 %
Loans held for investment 217,619 8,450 15.53 % 213,080 7,948 14.92 % 199,609 7,947 15.93 %
Total interest earning assets 354,403 13,270 14.98 % 335,351 12,823 15.30 % 367,589 15,553 16.92 %
Less: ALL (11,683 ) (10,768 ) (9,450
Non-interest earning assets 32,891 32,626 24,379
Total assets $ 375,611 $ 357,209 $ 382,518
Interest bearing liabilities:
Demand $ 44,115 $ 375 3.40 % $ 11,857 $ 113 3.81 % $ 7,411 $ 15 0.81 %
Savings 7,605 5 0.26 % 7,514 1 0.05 % 7,573 1 0.05 %
Money market accounts 15,109 45 1.19 % 20,615 29 0.56 % 28,859 21 0.28 %
Certificates of deposit 59,273 199 1.34 % 64,789 160 0.99 % 104,134 242 0.93 %
Total deposits 126,102 624 1.98 % 104,775 303 1.16 % 147,977 279 0.75 %
Other borrowings 330 - 0.35 % 360 1 0.35 % 1,437 2 0.63 %
Total interest bearing liabilities 126,432 624 1.97 % 105,135 304 1.16 % 149,414 281 0.75 %
Non-interest bearing deposits 96,581 102,575 127,590
Non-interest bearing liabilities 17,164 17,542 16,315
Shareholders' equity 135,434 131,957 89,199
Total liabilities and shareholders' equity $ 375,611 $ 357,209 $ 382,518
Net interest income and interest rate spread $ 12,646 13.01 % $ 12,519 14.14 % $ 15,272 16.17 %
Net interest margin 14.27 % 14.93 % 16.62 %
Ratio of average interest-earning assets to average interest- bearing liabilities 280.31 % 318.97 % 246.02 %

Note: Average PPP loans for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021 were $0.6 million, $0.7 million and $1.5 million, respectively.

FINWISE BANCORP
AVERAGE BALANCES, YIELDS, AND RATES
($s in thousands)
For the Year Ended For the Year Ended
12/31/2022 12/31/2021
(Unaudited)
Average
Balance
Interest Average
Yield/Rate
Average
Balance
Interest Average
Yield/Rate
Interest earning assets:
Interest-bearing deposits with the Federal Reserve, non-
U.S. central banks and other banks $ 74,920 $ 1,180 1.58 % $ 55,960 $ 61 0.11 %
Investment securities 12,491 208 1.67 % 3,298 47 1.43 %
Loans held for sale 65,737 21,237 32.31 % 59,524 22,461 37.73 %
Loans held for investment 209,352 29,704 14.19 % 198,992 26,674 13.40 %
Total interest earning assets 362,500 52,329 14.44 % 317,774 49,243 15.50 %
Less: ALL (10,816 ) (7,548 )
Non-interest earning assets 30,141 17,002
Total assets $ 381,825 $ 327,228
Interest bearing liabilities:
Demand $ 17,564 $ 531 3.02 % $ 6,060 $ 53 0.87 %
Savings 7,310 7 0.10 % 7,897 10 0.13 %
Money market accounts 26,054 116 0.45 % 21,964 75 0.34 %
Certificates of deposit 71,661 778 1.09 % 72,311 1,000 1.38 %
Total deposits 122,589 1,432 1.17 % 108,232 1,138 1.05 %
Other borrowings 566 2 0.35 % 36,363 127 0.35 %
Total interest bearing liabilities 123,155 1,434 1.16 % 144,595 1,265 0.87 %
Non-interest bearing deposits 114,174 107,481
Non-interest bearing liabilities 15,781 11,392
Shareholders' equity 128,715 63,760
Total liabilities and shareholders' equity $ 381,825 $ 327,228
Net interest income and interest rate spread $ 50,895 13.28 % $ 47,978 14.63 %
Net interest margin 14.04 % 15.10 %
Ratio of average interest-earning assets to average interest- bearing liabilities 294.34 % 219.77 %

Note: Average PPP loans for the years ended December 31, 2022 and December 31, 2021 were $0.8 million and $36.6 million, respectively.

FINWISE BANCORP
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
($s in thousands, except per share amounts; Unaudited)
As of and for the Three Months Ended
12/31/2022 9/30/2022 12/31/2021
Selected Loan Metrics
Amount of loans originated $ 1,219,851 $ 1,506,100 $ 2,304,234
Selected Income Statement Data
Interest income $ 13,270 $ 12,823 $ 15,553
Interest expense 624 304 281
Net interest income 12,646 12,519 15,272
Provision for loan losses 3,202 4,457 2,503
Net interest income after provision for loan losses 9,444 8,062 12,769
Non-interest income 9,775 7,523 9,129
Non-interest expense 10,220 8,469 8,371
Provision for income taxes 2,454 3,462 3,416
Net income 6,545 3,654 10,111
Selected Balance Sheet Data
Total Assets $ 402,209 $ 385,569 $ 380,214
Cash and cash equivalents 100,567 92,463 85,754
Investment securities held-to-maturity, at cost 14,292 13,925 11,423
Loans receivable, net 224,217 200,485 198,102
Strategic Program loans held-for-sale, at lower of cost or fair value 23,589 43,606 60,748
SBA servicing asset, net 5,210 5,269 3,938
Investment in Business Funding Group, at fair value 4,800 4,500 5,900
Deposits 242,998 232,838 251,892
PPP Liquidity Facility 314 345 1,050
Total shareholders' equity 140,459 134,285 115,442
Tangible shareholders' equity(1) 140,459 134,285 115,442
Share and Per Share Data
Earnings per share - basic $ 0.51 $ 0.28 $ 0.95
Earnings per share - diluted $ 0.49 $ 0.27 $ 0.90
Book value per share $ 10.95 $ 10.44 $ 9.04
Tangible book value per share(1) $ 10.95 $ 10.44 $ 9.04
Weighted avg outstanding shares - basic 12,740,933 12,784,298 10,169,005
Weighted avg outstanding shares - diluted 13,218,403 13,324,059 10,818,984
Shares outstanding at end of period 12,831,345 12,864,821 12,772,010
Asset Quality Ratios
Nonperforming loans to total loans 0.1 % 0.0 % 0.2 %
Net charge offs to average loans 4.9 % 4.7 % 3.2 %
Allowance for loan losses to loans held for investment 5.1 % 5.6 % 4.8 %
Allowance for loan losses to total loans 4.6 % 4.7 % 3.7 %
Capital Ratios
Total shareholders' equity to total assets 34.9 % 34.8 % 30.4 %
Tangible shareholders' equity to tangible assets(1) 34.9 % 34.8 % 30.4 %
Leverage Ratio (Bank under CBLR) 25.1 % 24.9 % 17.7 %

(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 For the Three Months Ended
12/31/2022 9/30/2022 12/31/2021
​($s in thousands)
Non-interest expense $ 10,220 $ 8,469 $ 8,371
Net interest income 12,646 12,519 15,272
Total non-interest income 9,775 7,523 9,129
Adjusted operating revenue $ 22,421 $ 20,042 $ 24,401
Efficiency ratio 45.6 % 42.3 % 34.3 %





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