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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):  January 25, 2023

FINWISE BANCORP
(Exact name of registrant as specified in its charter)

Utah
001-40721
83-0356689
(State or other jurisdiction of incorporation or organization)
(Commission file number)
(I.R.S. employer identification no.)

756 East Winchester St., Suite 100
Murray, Utah
(Address of principal executive offices)


84107
(Zip code)

Registrant’s telephone number, including area code:  (801) 501-7200

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:




Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.          ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock, par value $0.001 per share

FINW

The NASDAQ Stock Market LLC



Item 2.02
Results of Operations and Financial Condition.

Attached and incorporated herein by reference as Exhibit 99.1 is a copy of a press release of FinWise Bancorp (the “Company”), dated January 25, 2023, reporting the Company’s financial results for the fiscal quarter ended December 31, 2022.

The information set forth under this “Item 2.02 Results of Operations and Financial Condition,” including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, as amended, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01
Financial Statements and Exhibits.

(d)
Exhibits

Exhibit No.
Description


Press Release dated January 25, 2023


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, FinWise Bancorp has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

DATE:  January 25, 2023
FINWISE BANCORP



/s/ Javvis Jacobson                                 

Name: Javvis Jacobson

Title: Chief Financial Officer and Executive Vice President



EX-99.1 2 brhc10046916_ex99-1.htm EXHIBIT 99.1
Exhibit 99.1


FINWISE BANCORP REPORTS FOURTH QUARTER AND FULL YEAR 2022 RESULTS
 
- 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, JANUARY 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.”

1
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.
 
2
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.
 
3
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.
 
4
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.
 
5
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.
 
6
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
 

7
Webcast and Conference Call Information
 
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 https://services.choruscall.com/mediaframe/webcast.html?webcastid=RWKUafDT.
 
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 https://finwisebank.gcs-web.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 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 www.finwisebancorp.com.

Contacts
 
investors@finwisebank.com

media@finwisebank.com

8
"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.
 
9
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.
 
10
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
 

11
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
 

12
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
 

13
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.
 
14
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