FinWise Bancorp Reports Second Quarter 2025 Results
- Loan Originations of $1.5 Billion -
- Net Income of $4.1 Million -
- Diluted Earnings Per Share of $0.29 -
MURRAY, Utah, July 24, 2025 (GLOBE NEWSWIRE) -- FinWise Bancorp (NASDAQ:FINW) ("FinWise" or the "Company"), parent company of FinWise Bank (the "Bank"), today announced results for the quarter ended June 30, 2025.
Second Quarter 2025 Highlights
Loan originations totaled $1.5 billion, compared to $1.3 billion for the quarter ended March 31, 2025, and $1.2 billion for the second quarter of the prior year
Net interest income was $14.7 million, compared to $14.3 million for the quarter ended March 31, 2025, and $14.6 million for the second quarter of the prior year
Net income was $4.1 million, compared to $3.2 million for the quarter ended March 31, 2025, and $3.2 million for the second quarter of the prior year
Diluted earnings per share ("EPS") were $0.29 for the quarter, compared to $0.23 for the quarter ended March 31, 2025, and $0.24 for the second quarter of the prior year
Efficiency ratio1 was 59.5%, compared to 64.8% for the quarter ended March 31, 2025, and 66.8% for the second quarter of the prior year
Nonperforming loan balances were $39.7 million as of June 30, 2025, compared to $29.9 million as of March 31, 2025, and $27.9 million as of June 30, 2024. Nonperforming loan balances guaranteed by the Small Business Administration ("SBA") were $21.2 million, $15.1 million, and $16.0 million as of June 30, 2025, March 31, 2025, and June 30, 2024, respectively
"FinWise delivered solid operating and financial momentum coming into the second quarter, as the components of our growth strategy began to successfully come together and the team executed well," said Kent Landvatter, Chairman and CEO of FinWise Bancorp. "We posted strong loan originations of $1.5 billion, maintained solid revenue and remained disciplined on expense management, all of which contributed to growing profitability. Tangible book value per share also continued to increase, ending the quarter at $13.512. We are also encouraged by the early traction of our new products and remain highly confident that the infrastructure investments of the past two years will support strong, long-term growth and shareholder value."
_______________1 See "Reconciliation of Non-GAAP to GAAP Financial Measures" for a reconciliation of this non-GAAP measure.2 See footnote 2 in the "Selected Financial and Other Data" table.
Selected Financial and Other Data
As of and for the Three Months Ended
($ in thousands, except per share amounts)
6/30/2025
3/31/2025
6/30/2024
Amount of loans originated
$
1,483,179
$
1,264,604
$
1,170,904
Net income
$
4,097
$
3,189
$
3,180
Diluted EPS
$
0.29
$
0.23
$
0.24
Return on average assets
2.0
%
1.7
%
2.1
%
Return on average equity
9.2
%
7.4
%
7.9
%
Yield on loans
11.70
%
12.31
%
14.89
%
Cost of interest-bearing deposits
4.07
%
4.01
%
4.80
%
Net interest margin
7.81
%
8.27
%
10.31
%
Efficiency ratio(1)
59.5
%
64.8
%
66.8
%
Tangible book value per share(2)
$
13.51
$
13.42
$
12.61
Tangible shareholders' equity to tangible assets(2)
21.6
%
22.0
%
26.8
%
Leverage ratio (Bank under CBLR)
18.0
%
18.8
%
20.8
%
Full-time equivalent employees
200
196
191
(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 and Net Interest MarginNet interest income was $14.7 million for the second quarter of 2025, compared to $14.3 million for the prior quarter and $14.6 million for the prior year period. The increase from the prior quarter was primarily due to an increase in the Bank's average balances for the Strategic Program loans held-for-sale portfolio of $39.8 million and the held for investment portfolio of $31.1 million, partially offset by the reversal of interest on new nonaccrual loans and increased average balances in brokered certificates of deposit accounts. The increase from the prior year period was primarily due to volume increases in loans held-for-sale and held for investment portfolios and rate reductions in the brokered CD portfolio partially offset by growth of deposits, particularly brokered certificates of deposit, to support the growth of the loan portfolio. Our strategy to reduce the risk profile of FinWise by growing our loan portfolio with better credit quality but lower yielding loan products is reflected in the increased net interest income but with a lower average yield compared to earlier periods.
Loan originations totaled $1.5 billion for the second quarter of 2025, compared to $1.3 billion for the prior quarter and $1.2 billion for the prior year period reflecting new partners ramping up originations and certain long-term partners growing originations.
Net interest margin for the second quarter of 2025 was 7.81%, compared to 8.27% for the prior quarter and 10.31% for the prior year period. The decrease in net interest margin from the prior quarter and prior year period was attributable to accrued interest reversals on loans migrating to nonaccrual status totaling $0.6 million as well as the continued addition of higher quality but lower yielding loans as FinWise continues to diversify and stabilize its loan portfolio.
Provision for Credit LossesThe Company's provision for credit losses was $4.7 million for the second quarter of 2025, compared to $3.3 million for the prior quarter and $2.4 million for the prior year period. The increase in the provision for credit losses from the prior quarter and the prior year period resulted primarily from higher net charge-offs and growth of the credit enhanced loan portfolio offset in part by a change in qualitative factors for certain low risk segments of the owner occupied commercial real estate portfolio. Also contributing to the increase in the provision for credit losses from the prior year period was the expansion in both Strategic Program loans held-for-investment and other held for investment loans.
Non-interest Income
Three Months Ended
($ in thousands)
6/30/2025
3/31/2025
6/30/2024
Non-interest income
Strategic Program fees
$
5,404
$
4,962
$
4,035
Gain on sale of loans
1,483
846
356
SBA loan servicing fees, net
(96
)
178
204
Change in fair value on investment in BFG
300
400
(200
)
Credit enhancement income
2,275
85
39
Other miscellaneous income
971
1,339
732
Total non-interest income
$
10,337
$
7,810
$
5,166
The increase in non-interest income from the prior quarter was primarily due to increases in credit enhancement income, gain on sale of loans, and increased Strategic Program fees. Credit enhancement income mirrors the provision for credit losses on credit enhanced loans and increased due to the higher credit enhanced loan balances outstanding at June 30, 2025. The gain on sale of loans increased as FinWise increased its sales of the guaranteed portion of SBA 7(a) loan balances to capitalize on favorable market conditions. The higher Strategic Program fees resulted from increased originations. Offsetting these non-interest income increases in part were decreases in SBA loan servicing fees due to an increase in the provision for SBA servicing losses, and a decrease in other miscellaneous income due primarily to a decrease in dividends received from BFG for the quarter.
The increase in non-interest income from the prior year period was primarily due to the increase in credit enhancement income due to the higher credit enhanced loan balance, an increase in Strategic Program fees related to higher originations and the gain on loan sales related to the increased sales of the guaranteed portion of SBA 7(a) loan balances.
Non-interest Expense
Three Months Ended
($ in thousands)
6/30/2025
3/31/2025
6/30/2024
Non-interest expense
Salaries and employee benefits
$
10,491
$
9,826
$
8,609
Professional services
949
907
1,282
Occupancy and equipment expenses
445
543
556
Credit enhancement expense
78
11
—
Other operating expenses
2,949
3,031
2,771
Total non-interest expense
$
14,912
$
14,318
$
13,218
The increase in non-interest expense from the prior quarter resulted from increases in salaries and employee benefits mainly as a result of annual compensation reviews and resulting compensation increases and deferred compensation award amortization, incurred to retain and motivate our employees. 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 in the first half of 2024, and amortization of deferred compensation awards.
FinWise's efficiency ratio was 59.5% for the second quarter, a decline from the 64.8% from the prior quarter and 66.8% for the prior year period. The efficiency ratio decline resulted primarily from the increase in credit enhanced income previously discussed. It is anticipated that the efficiency ratio will decline further as revenues are realized in future periods from interest earned on credit enhanced loan balances as well as the BIN sponsorship and payments initiatives developed during 2023 and 2024.
Tax RateThe Company's effective tax rate was 24.5% for the second quarter of 2025, compared to 28.1% for the prior quarter and 23.9% for the prior year period. The decrease from the prior quarter was principally due to the change in estimated disallowed compensation expense relative to full year net income expectations. The increase from the prior year period was due primarily to higher estimated disallowed compensation estimates.
Net IncomeNet income was $4.1 million for the second quarter of 2025, compared to $3.2 million for the prior quarter and $3.2 million for the prior year period. The changes in net income for the three months ended June 30, 2025 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 $842.5 million as of June 30, 2025, an increase from $804.1 million as of March 31, 2025 and $617.8 million as of June 30, 2024. The increase in total assets from March 31, 2025 was primarily due to continued growth in the Company's net loans held-for-investment and loans held-for-sale portfolios of $34.1 million and $28.5 million, respectively. The increase in total assets compared to June 30, 2024 was primarily due to increases in the Company's net loans held-for-investment and loans held-for-sale portfolios of $108.0 million and $80.7 million, respectively, as well as an increase in investment securities available-for-sale of $30.1 million. The increased loan balances are consistent with our strategy to grow the loan portfolio with higher quality lower risk assets.
The following table provides the composition and gross balances of loans held-for-investment ("HFI") as of the dates indicated:
6/30/2025
3/31/2025
6/30/2024
($ in thousands)
Amount
% of total loans
Amount
% of total loans
Amount
% of total loans
SBA
$
246,903
46.6
%
$
246,004
50.0
%
$
249,281
60.2
%
Commercial leases
88,957
16.8
%
76,823
15.6
%
56,529
13.7
%
Commercial, non-real estate
5,510
1.0
%
3,550
0.7
%
1,999
0.5
%
Residential real estate
54,132
10.2
%
55,814
11.3
%
42,317
10.2
%
Strategic Program loans
30,699
5.8
%
19,916
4.1
%
17,861
4.3
%
Commercial real estate:
Owner occupied
77,871
14.7
%
65,920
13.4
%
28,340
6.8
%
Non-owner occupied
1,417
0.3
%
1,390
0.3
%
2,134
0.5
%
Consumer
24,555
4.6
%
22,806
4.6
%
15,880
3.8
%
Total period end loans
$
530,044
100.0
%
$
492,223
100.0
%
$
414,341
100.0
%
Note: SBA loans as of June 30, 2025, March 31, 2025 and June 30, 2024 include $144.3 million, $150.0 million and $147.8 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA. The HFI balance on Strategic Program loans with annual interest rates below 36% as of June 30, 2025, March 31, 2025 and June 30, 2024 was $5.7 million, $3.8 million and $2.6 million, respectively.Total gross loans HFI as of June 30, 2025 increased $37.8 million and $115.7 million compared to March 31, 2025 and June 30, 2024, respectively. The Company experienced growth primarily in its commercial real estate - owner occupied and commercial leases consistent with its strategy to increase its loan portfolio with higher quality, lower rate loans. The credit enhanced portfolio of the Strategic Program loans increased $10.4 million in the quarter to $11.7 million consistent with the strategy to serve this need of our Strategic Program customers.
The following table presents the Company's deposit composition as of the dates indicated:
As of
6/30/2025
3/31/2025
6/30/2024
($ in thousands)
Amount
Percent
Amount
Percent
Amount
Percent
Noninterest-bearing demand deposits
$
120,747
19.0
%
$
123,322
20.4
%
$
107,083
24.9
%
Interest-bearing deposits:
Demand
67,890
10.7
%
83,410
13.8
%
48,319
11.3
%
Savings
11,623
1.8
%
8,888
1.5
%
9,746
2.3
%
Money market
21,083
3.3
%
17,939
2.9
%
9,788
2.3
%
Time certificates of deposit
413,831
65.2
%
372,200
61.4
%
254,259
59.2
%
Total period end deposits
$
635,174
100.0
%
$
605,759
100.0
%
$
429,195
100.0
%
The increase in total deposits as of June 30, 2025 from March 31, 2025 and June 30, 2024 was driven primarily by increases in brokered time certificates of deposits, which were added to fund loan growth and provide balance sheet liquidity. The increase in total deposits from June 30, 2024 was also driven by an increase in noninterest-bearing demand deposits and interest-bearing demand deposits, primarily due to growth from new and existing customer relationships.
Total shareholders' equity as of June 30, 2025 increased $4.6 million to $182.0 million from $177.4 million at March 31, 2025. Compared to June 30, 2024, total shareholders' equity increased by $16.2 million from $165.8 million. The increase from March 31, 2025 was primarily due to the Company's net income and stock-based compensation. The increase from June 30, 2024 was primarily due to the Company's net income and stock-based compensation, partially offset by the repurchase of common stock under the Company's share repurchase program.
Bank Regulatory Capital RatiosThe 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
Capital Ratios
6/30/2025
3/31/2025
6/30/2024
Well-Capitalized Requirement
Leverage ratio
18.0
%
18.8
%
20.8
%
9.0
%
The decrease in the leverage ratio from the prior quarter and prior year period primarily results from the growth in the loan portfolio exceeding the relative growth in capital from earnings. The Bank's capital levels remain significantly above the regulatory well-capitalized guidelines as of June 30, 2025.
Share Repurchase ProgramSince the share repurchase program's inception in March 2024, the Company has repurchased and subsequently retired a total of 44,608 shares for $0.5 million. There were no shares repurchased during the second quarter of 2025.
Asset QualityThe recorded balances of nonperforming loans were $39.7 million, or 7.5% of total loans held-for-investment, as of June 30, 2025, compared to $29.9 million, or 6.1% of total loans held-for-investment, as of March 31, 2025 and $27.9 million, or 6.5% of total loans held-for-investment, as of June 30, 2024. The balances of nonperforming loans guaranteed by the SBA were $21.2 million, $15.1 million, and $16.0 million as of June 30, 2025, March 31, 2025 and June 30, 2024, respectively. The increase in nonperforming loans from the prior quarter and prior year period was primarily attributable to an increase in the SBA 7(a) loan portfolio being classified as non-accrual mainly due to the negative impact of sustained elevated interest rates on the Company's small business borrowers. The Company's allowance for credit losses to total loans held-for-investment was 3.1% as of June 30, 2025 compared to 2.9% as of March 31, 2025 and 3.2% as of June 30, 2024. The increase in the ratio from the prior quarter was primarily due to the provision for credit losses related to the growth of the credit enhanced loan balances offset in part by a change in qualitative factors for a subsegment of owner occupied commercial real estate. The slight decrease in the ratio from the prior year period was primarily due to the shift in our Strategic Program held-for-investment loan balances to programs with lower historical losses and the referenced change in qualitative factors offset in large part by the increase in the allowance for credit losses resulting from the credit enhancement loan portfolio increase.
The Company's net charge-offs were $2.8 million, $2.2 million and $1.9 million for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, respectively. The increase from the prior quarter and prior year period was primarily due to charge-offs of certain held-for-investment balances upon moving to nonaccrual status.
The following table presents a summary of changes in the allowance for credit losses and credit quality data for the periods indicated:
Three Months Ended
($ in thousands)
6/30/2025
3/31/2025
6/30/2024
Allowance for credit losses:
Beginning balance
$
14,235
$
13,176
$
12,632
Provision for credit losses(1)
4,796
3,307
2,393
Charge-offs
Construction and land development
—
—
—
Residential real estate
(210
)
(7
)
—
Residential real estate multifamily
—
—
—
Commercial real estate:
Owner occupied
(309
)
(68
)
—
Non-owner occupied
—
—
—
Commercial and industrial
—
(83
