8-K: FinWise Bancorp Reports Fourth Quarter and Full Year 2024 Results: Loan Originations Reach $5.0 Billion

FinWise Bancorp announces strong 2024 results with $5.0 billion in loan originations and a net income of $12.7 million, despite a decrease in net income and EPS in Q4 compared to the previous year.

Summary

• FinWise Bancorp reported its fourth quarter and full year 2024 results.
• Loan originations for 2024 totaled $5.0 billion, including $1.3 billion for the fourth quarter.
• Net income for 2024 was $12.7 million, with $2.8 million for the fourth quarter.
• Diluted earnings per share (EPS) were $0.93 for 2024 and $0.20 for the fourth quarter.
• Net interest income for the fourth quarter was $15.5 million, compared to $14.8 million for the previous quarter and $14.4 million for the same quarter of the prior year.
• Nonperforming loan balances increased to $36.4 million as of December 31, 2024, from $30.6 million in the previous quarter and $27.1 million year-over-year.
• The company anticipates continued stability in originations from existing programs and acceleration in production from new programs in 2025.

Sentiment

Score: 6

Explanation: The report presents a mixed picture. While loan originations and asset growth are positive, the decrease in net income and EPS, along with the increase in nonperforming loans, tempers the overall sentiment. The company's future outlook is cautiously optimistic.

Positives

• Loan originations reached $5.0 billion for the year.
• Net interest income increased to $15.5 million for the fourth quarter.
• Total assets grew to $746.0 million.
• The company anticipates continued stability in originations from existing programs and acceleration in production from new programs in 2025.
• The efficiency ratio improved from 67.5% to 64.2% quarter over quarter.

Negatives

• Net income decreased to $2.8 million for the fourth quarter, compared to $3.5 million for the previous quarter and $4.2 million for the same quarter of the prior year.
• Diluted EPS decreased to $0.20 for the fourth quarter, compared to $0.25 for the previous quarter and $0.32 for the same quarter of the prior year.
• Nonperforming loan balances increased to $36.4 million as of December 31, 2024.
• The efficiency ratio increased from 56.0% to 64.2% year over year.

Risks

• The company faces risks related to the financial technology industry and its regulation.
• There are risks associated with the ability of Strategic Program service providers to comply with regulatory regimes.
• The company's reliance on third-party service providers for core systems support poses a risk.
• General economic and business conditions could impact the company's performance.
• Increased competition in the financial services industry is a potential risk.
• The company's ability to manage credit risk effectively is crucial.
• Fluctuations in interest rates and liquidity could pose risks.

Future Outlook

The company anticipates continued stability in originations from existing programs, acceleration in production from new and ramping programs, and a strong pipeline for new partners in 2025, remaining committed to generating positive operating leverage.

Management Comments

• Kent Landvatter, CEO of FinWise, stated that the fourth quarter results capped off a strong 2024, with significant progress in expanding and diversifying revenue sources.
• He also expressed excitement about the outlook for 2025.

Industry Context

FinWise operates in the fintech banking and payments solutions space, providing services to fintech brands. The company is expanding its business model to include payments and BIN sponsorship offerings, aligning with the trend of fintechs seeking bank partners to access financial products.

Comparison to Industry Standards

• FinWise Bancorp was ranked in the top 3 on American Banker's annual list of Top-Performing Publicly Traded Banks with under $2 billion of assets based on 3-year average ROAE ending 12/31/23.
• FinWise Bank was ranked as one of the 50 fastest growing companies in Utah based on revenue growth over five years.
• The company's SBA loss rate is 71% lower than the SBA 7(a) industry for all originations since 2014.

Stakeholder Impact

• Shareholders may be concerned about the decrease in net income and EPS.
• Employees may be affected by the company's expense management efforts.
• Fintech partners will be interested in the company's expanded offerings and compliance oversight.
• Customers may benefit from the company's new products and services.

Next Steps

• The company will host a conference call to discuss the financial results.
• The company intends to use its website to disclose material non-public information.

Key Dates