- Net Income of $2.7 Million -
- Diluted Earnings Per Share of $0.20 -
MURRAY, Utah, April 30, 2026 (GLOBE NEWSWIRE) -- FinWise Bancorp (NASDAQ:FINW) ("FinWise", the "Company", "we", "our", or "us"), parent company of FinWise Bank (the "Bank"), today announced results for the quarter ended March 31, 2026.
First Quarter 2026 Highlights
Loan originations totaled $1.7 billion, compared to $1.6 billion for the quarter ended December 31, 2025, and $1.3 billion for the first quarter of the prior year
Net interest income was $28.1 million, compared to $24.6 million for the quarter ended December 31, 2025, and $14.3 million for the first quarter of the prior year
Net income was $2.7 million, compared to $3.9 million for the quarter ended December 31, 2025, and $3.2 million for the first quarter of the prior year
Diluted earnings per share ("EPS") were $0.20 for the quarter, compared to $0.27 for the quarter ended December 31, 2025, and $0.23 for the first quarter of the prior year
Efficiency ratio1 was 66.3%, compared to 50.5% for the quarter ended December 31, 2025, and 64.8% for the first quarter of the prior year
Nonperforming loan balances were $49.8 million as of March 31, 2026, compared to $43.7 million as of December 31, 2025, and $29.9 million as of March 31, 2025. Nonperforming loan balances guaranteed by the Small Business Administration ("SBA") were $26.7 million, $24.2 million, and $15.1 million as of March 31, 2026, December 31, 2025, and March 31, 2025, respectively
"FinWise delivered $1.7 billion in loan originations during the first quarter—up 38% year over year— and core expenses were held flat enabling us to grow tangible book value to $14.34 per share and maintaining a strong Bank Leverage Ratio of 16.8%, nearly double the current well capitalized minimum requirement," said Jim Noone, CEO of FinWise Bancorp. "Results this quarter included elevated net charge-offs, from both our credit enhanced portfolio—which are fully reimbursed to FinWise under the structure of the product—as well as a limited number of legacy SBA credits. We expect these SBA charge-offs to remain elevated over the next few quarters as those credits continue to be actively managed. Our partner pipeline continues to strengthen, the platform is scaling, and the long-term trajectory of the business is strong. We remain focused on disciplined execution and building long-term shareholder value."
Selected Financial and Other Data
As of and for the Three Months Ended
($ in thousands, except per share amounts)
3/31/2026
12/31/2025
3/31/2025
Amount of loans originated
$
1,745,428
$
1,561,310
$
1,264,604
Net income
$
2,735
$
3,915
$
3,189
Diluted EPS(1)
$
0.20
$
0.27
$
0.23
Return on average assets(2)
1.2
%
1.7
%
1.7
%
Return on average equity(2)
5.7
%
8.1
%
7.4
%
Yield on loans
18.04
%
16.06
%
12.31
%
Cost of interest-bearing deposits
3.91
%
3.96
%
4.01
%
Net interest margin
12.90
%
11.42
%
8.27
%
Efficiency ratio(3)
66.3
%
50.5
%
64.8
%
Tangible book value per share(4)
$
14.34
$
14.15
$
13.42
Tangible shareholders' equity to tangible assets(4)
21.9
%
19.8
%
22.0
%
Leverage ratio (Bank under CBLR)
16.8
%
16.9
%
18.8
%
Full-time equivalent employees
210
198
196
(1)
FinWise uses the two-class method to calculate basic and diluted EPS as restricted stock awards are considered participating securities due to the dividend rights associated with those awards. On December 31, 2025, executive management elected to waive the dividend rights on their non-vested restricted stock awards. As a result, beginning on December 31, 2025, the unvested shares held by executive management will no longer be treated as participating securities and are excluded from the two-class method calculation of EPS. This change was effective beginning with the quarter ending December 31, 2025 and had a de minimus impact on basic and diluted earnings per share in the fourth quarter of 2025. The change does not affect previously reported periods.
(2)
Annualized for the respective three-month periods.
(3)
Efficiency ratio is a non-GAAP financial 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. See "Reconciliation of GAAP to Non-GAAP Financial Measures" for a reconciliation of this measure to its most comparable GAAP measure.
(4)
Tangible shareholders' equity to tangible assets is 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 $28.1 million for the first quarter of 2026, compared to $24.6 million for the prior quarter and $14.3 million for the prior year period. The increase from the prior quarter resulted primarily from a change in estimate on the allocation of interest received on credit enhanced loans in excess of the amount FinWise retains. FinWise now estimates that all excess interest is attributable to servicing and credit guarantee expense where previously it had been estimated that a portion was attributable to originations costs, or finders fee, and was reported net in interest income. Also contributing to the increase in interest income was an increase in the Bank's average balance of credit enhanced loans. Net interest margin increased due to the described increase in interest income as well a lower cost of deposits. The increase in interest income and net interest margin from the prior year period was primarily due to an increase in the Bank's credit enhanced average balances, an increase in average balances in the Strategic Program loans held-for-sale portfolio of $45.0 million, and the change in estimated allocation of excess interest on credit enhanced loans, offset in part by growth in brokered certificates of deposits used to fund the loan portfolio growth.
Loan originations totaled $1.7 billion for the first quarter of 2026, an increase from the $1.6 billion recorded in the prior quarter and the $1.3 billion recorded in the prior year period. The growth in originations compared to both the prior quarter and the prior year period mostly reflects the continued increase in originations by certain established strategic programs as well as newly onboarded strategic programs.
Net interest margin for the first quarter of 2026 was 12.90%, compared to 11.42% for the prior quarter and 8.27% for the prior year period. The increase in net interest margin from the prior quarter results from the change in estimated allocation of the excess interest as previously described as well as the credit enhanced portfolio average balance growth and higher yields on the loans held-for-investment and slightly lower rates paid on deposits. The increase in net interest margin from the prior year period also resulted from the change in estimated allocation of the credit enhancement program and the average balance growth.
Provision for Credit Losses
Three Months Ended
($ in thousands)
3/31/2026
12/31/2025
3/31/2025
Provision for credit losses:
Strategic Program loans - with credit enhancement(1)
$
5,864
$
12,801
$
85
Strategic Program loans - without credit enhancement
1,886
2,064
1,816
All other loans (core portfolio)
2,816
2,853
1,406
Provision for credit losses on loans
10,566
17,718
3,307
Provision for unfunded commitments
15
(6
)
29
Total provision for credit losses
$
10,581
$
17,712
$
3,336
(1)
For credit enhanced loans, fintech partners are required to maintain a deposit account at FinWise, which is used to recover charge-offs. The provision for credit losses on these loans differs from the core portfolio, as it is fully offset by expected recoveries under the partner guarantee, which is recognized as credit enhancement income in non-interest income.
The Company's provision for credit losses was $10.6 million for the first quarter of 2026, compared to $17.7 million for the prior quarter and $3.3 million for the prior year period. The decrease in the provision for credit losses from the prior quarter was primarily due to a ramp up in the prior quarter with credit enhanced loan programs, which required a higher provision for credit losses as the Company anticipated increased risk exposure associated with the growth. However, in the first quarter of 2026, the growth in these programs stabilized, which led to a lower provision for credit losses. The increase in the Strategic Program loans' provision for credit losses from the prior year period was primarily related to growth in the credit enhanced loan portfolio as well as higher net charge-offs resulting from our adoption of more conservative servicing and administration standards which prompted an accelerated classification of nonperforming loans and charge-offs. The increase in the core portfolio's provision for credit losses from the prior year period results from the increased estimate of losses on the higher balances of the non-guaranteed nonperforming loans.
Non-interest Income
Three Months Ended
($ in thousands)
3/31/2026
12/31/2025
3/31/2025
Non-interest income
Strategic Program fees
$
5,702
$
5,477
$
4,962
Gain on sale of loans
1,452
2,190
846
SBA loan servicing fees, net
158
4
178
Change in fair value on investment in BFG
(200
)
400
400
Interchange income
703
310
—
Credit enhancement income
5,864
12,801
85
Other miscellaneous income (loss)
948
1,100
1,339
Total non-interest income
$
14,627
$
22,282
$
7,810
The decrease in non-interest income from the prior quarter was primarily due to decreases in credit enhancement income, gain on sale of loans, and the fair value of our BFG investment. Credit enhancement income mirrors the provision for credit losses on credit enhanced loans and decreased for the quarter ended March 31, 2026. In the prior quarter, the Company experienced significant expansion in the credit enhanced loan programs, which led to higher credit enhancement income as a result of a higher provision for credit losses. The decrease in gain on sale of loans from the prior quarter was due to lower sales of the guaranteed portion of SBA 7(a) loans. These decreases in non-interest income from the prior quarter were partially offset by an increase in interchange income, which was largely a result of a full quarter of performance of our credit card portfolio acquired in mid-November 2025.
The increase in non-interest income compared to the prior year period was primarily due to increases in credit enhanced loan balances which generated higher credit enhancement income. Additionally, the increased sales of the guaranteed portions of SBA 7(a) loans led to an increase in gains on loan sales, higher originations resulted in increased Strategic Program fees, and acquisition of the credit card portfolio introduced interchange income to FinWise.
Non-interest Expense
Three Months Ended
($ in thousands)
3/31/2026
12/31/2025
3/31/2025
Non-interest expense
Salaries and employee benefits
$
11,038
$
11,157
$
9,826
Professional services
880
899
907
Occupancy and equipment expenses
425
434
543
Credit enhancement servicing expense
2,429
961
2
Credit enhancement guarantee expense
10,098
6,724
11
Other operating expenses
3,468
3,476
3,029
Total non-interest expense
$
28,338
$
23,651
$
14,318
The increase in non-interest expense from the prior quarter resulted primarily from increases in credit enhancement guarantee and servicing expenses largely resulting from an increase in interest income attributable to the credit enhanced loan portfolio. The increase in the credit enhancement servicing and guarantee expenses results principally from a change in estimate of the allocation of interest received on credit enhanced loans in excess of the amount FinWise retains. FinWise estimates that all the excess interest is attributable to the servicing and guarantee expenses where previously it has been estimated that a portion of the excess spread was attributable to origination costs, or finder's fee, and was reported net in interest income.
The increase in non-interest expense from the prior year period was primarily due to an increase in credit enhancement guarantee and servicing expenses resulting from growth in credit enhanced loans and salaries and employee benefits mainly from increased headcount.
FinWise's efficiency ratio was 66.3% for the first quarter, compared to 50.5% for the prior quarter and 64.8% for the prior year period. We expect the efficiency ratio to improve as we begin to realize increased revenues from interest earned on our growing credit enhanced loan balances.
Tax RateThe Company's effective tax rate was 28.0% for the first quarter of 2026, compared to 28.7% for the prior quarter and 28.1% for the prior year period. The decrease from the prior quarter and prior year period was principally due to the apportionment of income between states with various tax rates.
Net IncomeNet income was $2.7 million for the first quarter of 2026, compared to $3.9 million for the prior quarter and $3.2 million for the prior year period. The changes in net income for the three months ended March 31, 2026 compared to the prior quarter and prior year period are generally the result of the factors discussed in the foregoing sections.
Balance Sheet The Company's total assets were $899.4 million as of March 31, 2026, a decrease from $977.1 million as of December 31, 2025 and an increase from $804.1 million as of March 31, 2025. The decrease in total assets from December 31, 2025 was primarily due to decreases in the Company's interest-bearing cash deposits of $60.7 million, loans held-for-sale portfolio of $12.6 million, and loans held-for-investment, net, of $2.4 million. The increase in total assets compared to March 31, 2025 was primarily due to increases in the Company's credit enhancement loans of $107.8 million, credit enhancement asset of $23.2 million, and loans held-for-sale portfolio of $15.1 million, offset in part by a decrease in SBA loans of $43.6 million.
The following table provides the composition and gross balances of loans held-for-investment ("HFI") as of the dates indicated:
3/31/2026
12/31/2025
3/31/2025
($ in thousands)
Amount
% of total loans
Amount
% of total loans
Amount
% of total loans
SBA
$
202,438
34.6
%
$
205,615
35.1
%
$
246,004
50.0
%
Commercial leases
78,913
13.5
%
78,743
13.4
%
76,823
15.6
%
Commercial, non-real estate
3,877
0.7
%
4,201
0.7
%
3,550
0.7
%
Residential real estate
62,464
10.7
%
59,602
10.2
%
55,814
11.3
%
Strategic Program loans:
Strategic Program loans - with credit enhancement
109,081
18.7
%
108,131
18.5
%
1,285
0.3
%
Strategic Program loans - without credit enhancement
20,779
3.6
%
21,637
3.7
%
18,631
3.8
%
Commercial real estate:
Owner occupied
86,083
14.7
%
84,016
14.3
%
65,920
13.4
%
Non-owner occupied
2,003
0.3
%
1,638
0.3
%
1,390
0.3
%
Consumer
18,599
3.2
%
21,926
3.8
%
22,806
4.6
%
Total period end loans
$
584,237
100.0
%
$
585,509
100.0
%
$
492,223
100.0
%
Note: SBA loans as of March 31, 2026, December 31, 2025 and March 31, 2025 include $95.1 million, $102.7 million and $150.0 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA.
Total gross loans HFI as of March 31, 2026 decreased $1.3 million and increased $92.0 million compared to December 31, 2025 and March 31, 2025, respectively. The declines in the SBA portfolio resulted primarily from sales of the guaranteed portions of SBA 7(a) loans and increased charge-offs, reflecting ongoing portfolio and credit risk management. The credit enhanced portfolio of the Strategic Program loans as of March 31, 2026 increased $1.0 million and $107.8 million compared to December 31, 2025 and March 31, 2025, respectively, reflecting our 2025 strategic initiative to develop the credit enhanced portfolio.
The following table presents the Company's deposit composition as of the dates indicated:
3/31/2026
12/31/2025
3/31/2025
($ in thousands)
Amount
Percent
Amount
Percent
Amount
Percent
Noninterest-bearing demand deposits
$
127,223
18.9
%
$
168,442
22.3
%
$
123,322
20.4
%
Interest-bearing deposits:
Demand
104,016
15.4
%
74,817
9.9
%
83,410
13.8
%
Savings
9,613
1.4
%
11,017
1.5
%
8,888
1.5
%
Money market
23,286
3.4
%
22,017
2.9
%
17,939
2.9
%
Time certificates of deposit
410,718
60.9
%
478,268
63.4
%
372,200
61.4
%
Total period end deposits
$
674,856
100.0
%
$
754,561
100.0
%
$
605,759
100.0
%
The decrease in total deposits as of March 31, 2026 from December 31, 2025 was primarily due to reductions in noninterest-bearing demand deposits and certificates of deposit, as excess funds were not required to support the lower level of assets. The increase in total deposits as of March 31, 2026 from March 31, 2025 was driven primarily by growth in time certificates of deposit, which were added to fund loan growth and enhance FinWise's liquidity profile.
Total shareholders' equity as of March 31, 2026 increased $3.4 million to $196.6 million from $193.2 million at December 31, 2025. Compared to March 31, 2025, total shareholders' equity increased by $19.2 million from $177.4 million. The increases from December 31, 2025 and March 31, 2025 were primarily due to net income generated throughout the respective periods.
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
3/31/2026
12/31/2025
3/31/2025
Well-Capitalized Requirement
Leverage ratio
16.8%
16.9%
18.8%
9.0%
The slight decrease in the leverage ratio from the prior quarter was primarily due to the growth in the average asset balances exceeding the relative growth in capital from earnings. The decrease from the prior year period resulted primarily from the growth in the loan portfolio exceeding the relative growth in capital from earnings. The Bank's capital levels as of March 31, 2026 remain sufficiently above the regulatory well-capitalized guidelines as of March 31, 2026.
Asset QualityThe recorded balances of nonperforming loans were $49.8 million, or 8.5% of total loans held-for-investment, as of March 31, 2026, compared to $43.7 million, or 7.5% of total loans held-for-investment, as of December 31, 2025 and $29.9 million, or 6.1% of total loans held-for-investment, as of March 31, 2025. The balances of nonperforming loans guaranteed by the SBA were $26.7 million, $24.2 million, and $15.1 million as of March 31, 2026, December 31, 2025 and March 31, 2025, 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 nonaccrual mainly due to the negative impact of sustained elevated interest rates on the Company's small business borrowers and the adverse performance of internet based companies. The Company's allowance for credit losses to total loans held-for-investment was 6.5% as of March 31, 2026 compared to 6.3% as of December 31, 2025 and 2.9% as of March 31, 2025. The increase in the ratio from the prior quarter and prior year period was primarily due to the provision for credit losses related to the growth of the credit enhanced loan balances.
The Company's net charge-offs were $9.4 million, $6.7 million and $2.2 million for the three months ended March 31, 2026, December 31, 2025, and March 31, 2025, respectively. The increase in net charge-offs from the prior quarter and the first quarter of 2025 resulted primarily from higher net charge-offs associated with credit enhanced strategic program loans as that program increases in size and matures. FinWise is reimbursed in full for the losses on the credit enhanced loan portfolio. Charge-offs have also increased for the traditional bank portfolio, particularly the retained portion of the SBA 7(a) loans reflecting credit deterioration of specific loans. The retained strategic program loan charge-offs remained consistent for the three months ended March 31, 2026 compared to the three months ended December 31, 2025.
The following table presents a summary of changes in the allowance for credit losses and credit quality data for the periods indicated:
Three Months Ended
($ in thousands)
3/31/2026
12/31/2025
3/31/2025
Allowance for credit losses:
Beginning balance
$
36,796
$
25,778
$
13,176
Provision for credit losses(1)
10,566
17,718
3,307
Charge-offs
Construction and land development
—
—
—
Residential real estate
(244
)
