FinWise Bancorp Reports Third Quarter 2022 Results

FinWise Bank

- Net Income of $3.7 Million -

- Diluted Earnings Per Share of $0.27 -

MURRAY, Utah, Oct. 26, 2022 (GLOBE NEWSWIRE) -- FinWise Bancorp (NASDAQ: FINW) (“FinWise” or the “Company”), parent company of FinWise Bank (the “Bank”), today announced results for the quarter ended September 30, 2022.

Third Quarter 2022 Highlights

• Loan originations were $1.5 billion, compared to $2.1 billion for the quarter ended June 30, 2022 and $1.8 billion in the prior year period

• Net interest income was $12.5 million, compared to $12.8 million for the quarter ended June 30, 2022 and $13.5 million in the prior year period

• Net Income was $3.7 million, compared to $5.5 million for the quarter ended June 30, 2022 and $8.4 million in the prior year period

• Diluted earnings per share (“EPS”) were $0.27 for the quarter, compared to $0.41 for the quarter ended June 30, 2022 and $0.91 for the prior year period

• Efficiency ratio was 42.3%, compared to 52.0% for the quarter ended June 30, 2022 and 33.7% for the prior year period

• Maintained strong returns with annualized return on average equity (ROAE) of 11.0%, compared to 17.2% in the quarter ended June 30, 2022 and 52.2% in the prior year period

• Asset quality remained solid as there were no nonperforming loans as of September 30, 2022.
  

“FinWise delivered a solid third quarter even as we faced an increasingly challenging macro environment,” said Kent Landvatter, Chief Executive Officer and President of FinWise. “The FinWise team remains thoroughly focused on serving our clients while managing what we can control during the current environment – prudent underwriting, cost control, and continuing to enhance our differentiated business model in order to remain well positioned to capitalize on future growth opportunities when the environment stabilizes. We believe these factors allow us to continue to follow our path of long-term operating efficiency and profitability.”

Selected Financial Data

		For the Three Months Ended
($s in thousands, except per share amounts, annualized ratios)			9/30/2022			6/30/2022		9/30/2021
Net Income		$	3,654		$	5,482		$	8,442
Diluted EPS		$	0.27		$	0.41		$	0.91
Return on average assets		3.9%			5.5%			10.8%
Return on average equity		11.0%			17.2%			52.2%
Yield on loans		18.94%			18.42%			23.04%
Cost of deposits		1.16%			0.77%			0.97%
Net interest margin		14.93%			13.69%			18.31%
Efficiency Ratio (1)		42.3%			52.0%			33.7%
Tangible book value per share		$	10.44		$	10.13		$	7.90
Tangible shareholders’ equity to tangible assets (2)		34.8%			35.7%			20.4%
Leverage Ratio (Bank under CBLR)		24.9%			21.4%			19.5%
(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 as an intangible asset 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 $3.7 million for the third quarter of 2022, compared to $5.5 million for the second quarter of 2022, and $8.4 million for the third quarter of 2021. The decline from the previous quarter was primarily due to higher provision for income taxes, higher provision for loan losses and lower strategic program fees, partially offset by a decrease in non-interest expense. Compared to the prior year period, the decline was primarily driven by an increase in the provision for loan losses and non-interest expenses and a decrease in gain-on-sale of loans and interest income.

Net Interest Income

Net interest income was $12.5 million for the third quarter of 2022, compared to $12.8 million for the second quarter of 2022, and $13.5 million for the third quarter of 2021. The decline from both prior periods was primarily due to lower average loans held for sale balances.

Loan originations totaled $1.5 billion for the third quarter of 2022, down from $2.1 billion for the second quarter of 2022, and down from $1.8 billion for the third quarter of 2021.

Net interest margin for the third quarter of 2022 increased to 14.93% compared to 13.69% for the second quarter of 2022 and decreased compared to 18.31% for the third quarter of 2021. The increase from the previous quarter was primarily driven by an increase in variable rates on SBA 7(a) loans and a loan mix shift away from loans carrying lower yields within the strategic program held for sale portfolio. The net interest margin decrease from the third quarter of 2021 was driven mainly by a loan mix shift toward loans carrying lower yields.

Provision for Loan Losses

The Company’s provision for loan losses was $4.5 million for the third quarter of 2022, compared to $2.9 million for the second quarter of 2022 and $3.4 million for the third quarter of 2021. Compared to the previous quarter and third quarter of 2021, the increase in provision for loan losses for the third 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)		9/30/2022			6/30/2022			9/30/2021
Non-interest income:
Strategic program fees		$	5,136		$	6,221		$	4,982
Gain on sale of loans		1,923			2,412			2,876
SBA loan servicing fees		327			342			337
Change in fair value on investment in BFG		65			(575)			266
Other miscellaneous income		72			31			14
Total non-interest income		$	7,523		$	8,431		$	8,475

Non-interest income was $7.5 million for the third quarter of 2022, compared to $8.4 million for the second quarter of 2022 and $8.5 million for the third quarter of 2021. The decline from the previous quarter was driven primarily by lower strategic program fees due to the decline in loan origination volumes and the decline in gain on sale of loans due to a decrease in the premium received for SBA 7(a) loans sold, partially offset by a decrease in fair value of the Company’s investment in Business Funding Group, LLC (“BFG”) in the previous quarter which did not occur in the third quarter of 2022. Compared to the prior year period, the decrease was primarily due to lower gain on sale of loans due to a decrease in the premium received for SBA 7(a) loans sold 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)		9/30/2022				6/30/2022			9/30/2021
Non-interest expense:
Salaries and employee benefits		$	5,137			$	6,594		$	5,930
Occupancy and equipment expenses		640				419			205
(Recovery) impairment of SBA servicing asset		(127		)		1,135			-
Other operating expenses		2,819				2,871			1,263
Total non-interest expense		$	8,469			$	11,019		$	7,398

Non-interest expense was $8.5 million for the third quarter of 2022, compared to $11.0 million for the second quarter of 2022 and $7.4 million for the third quarter of 2021. The decrease over the previous quarter was primarily due to the cessation in June 2022 of commission accruals related to the Company’s strategic lending program and an impairment on the Company’s SBA servicing asset in the previous quarter which did not occur in the third quarter of 2022. The increase compared to the third quarter of 2021 was primarily due to increased other operating expenses relating primarily to an increase in consulting fees, partially offset by the cessation in June 2022 of commission accruals related to the Company’s strategic lending program.

The Company’s efficiency ratio was 42.3% for the third quarter of 2022 as compared to 52.0% for the second quarter of 2022 and 33.7% for the third quarter of 2021.

Tax Rate

The Company’s effective tax rate was approximately 48.7% for the third quarter of 2022, compared to 24.6% for the second quarter of 2022 and 24.5% for the third quarter of 2021. During the final preparation for filing of the Company’s 2021 income tax returns an immaterial error in the calculation of the Company’s tax provision was identified that understated the income tax expense. This error was corrected during the third quarter of 2022.  

Balance Sheet  

The Company’s total assets were $385.6 million at September 30, 2022, an increase from $366.0 million at June 30, 2022 and an increase from $338.3 million at September 30, 2021. The increase over the prior period was mainly due to an increase in deposits utilized to fund the Company’s growth in held for investment loan portfolio and the Strategic Program held for sale loan portfolio. The increase in total assets compared to September 30, 2021 was mainly due to an increase in cash from the Company’s public stock offering, 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
		9/30/2022					6/30/2022					9/30/2021
($s in thousands)		Amount			% of total loans		Amount			% of total loans		Amount			% of total loans
SBA		$	127,455		49.6%		$	124,477		53.6%		$	125,192		50.2%
Commercial, non real estate		12,970			5.1%		7,847			3.4%		3,955			1.6%
Residential real estate		34,501			13.4%		30,965			13.3%		25,105			10.1%
Strategic Program loans		70,290			27.4%		59,066			25.5%		87,876			35.3%
Commercial real estate		6,149			2.4%		4,722			2.0%		2,357			0.9%
Consumer		5,455			2.1%		5,062			2.2%		4,729			1.9%
Total period end loans		$	256,820		100.0%		$	232,139		100.0%		$	249,214		100.0%
Note: SBA loans as of September 30, 2022, June 30, 2022 and September 30, 2021 include $0.7 million, $0.7 million and $2.3 million in PPP loans, respectively.  SBA loans as of September 30, 2022, June 30, 2022 and September 30, 2021 include $42.6 million, $46.0 million and $59.9 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 September 30, 2022, June 30, 2022 and September 30, 2021 was $10.2 million, $12.0 million and $9.5 million, respectively.

Total loans receivable at September 30, 2022 increased to $256.8 million from $232.1 million at June 30, 2022 and increased from $249.2 million at September 30, 2021. The increase in loans receivable compared to the amount at June 30, 2022 was due primarily to increases in strategic program held for sale loans, SBA 7(a) loan balances that are not guaranteed by the SBA, and commercial, non real estate loans. The increase in loans receivable compared to the amount at September 30, 2021 was due primarily to increases in SBA 7(a) loan balances that are not guaranteed by the SBA, residential real estate loans, and commercial, non real estate loans, partially offset by decreases in strategic program held for sale loans and SBA 7(a) loan balances that are guaranteed by the SBA.

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

		As of
		9/30/2022					6/30/2022					9/30/2021
($s in thousands)		Total			Percent		Total			Percent		Total			Percent
Noninterest-bearing demand deposits		$	97,654		42.0%		$	83,490		38.1%		$	109,459		43.4%
Interest-bearing deposits:
Demand		55,152			23.6%		11,360			5.1%		5,398			2.1%
Savings		7,252			3.1%		7,462			3.4%		8,146			3.2%
Money markets		12,281			5.3%		48,273			22.0%		25,679			10.1%
Time certificates of deposit		60,499			26.0%		68,774			31.4%		104,354			41.2%
Total period end deposits		$	232,838		100.0%		$	219,359		100.0%		$	253,036		100.0%

Total deposits at September 30, 2022 increased to $232.8 million from $219.4 million at June 30, 2022, and decreased from $253.0 million at September 30, 2021. The increase from the amount at June 30, 2022 was driven primarily by an increase in interest-bearing demand and noninterest-bearing demand deposits, partially offset by decreases in money market deposits and time certificates of deposits.   The decrease from the amount at September 30, 2021 was driven by decreases in time certificates of deposit, money market deposits, and noninterest-bearing demand deposits, partially offset by an increase in interest-bearing demand deposits. The increase in interest-bearing demand deposits over both periods is primarily due to new HSA deposits from Lively, Inc., a technology focused Health Savings Account provider.       

Total shareholders’ equity at September 30, 2022 increased $3.8 million, to $134.3 million from $130.5 million at June 30, 2022. Compared to September 30, 2021, total shareholders’ equity at September 30, 2022 increased $65.2 million from $69.1 million. The increase in shareholders’ equity over the prior quarter was mainly driven by net income for the third quarter of 2022. The increase over the prior year period was primarily due to the Company’s initial public offering and net income.

Bank Regulatory Capital Ratios

The following table presents the leverage ratios for the Bank as of the dates indicated:

		As of						2022		2021
		9/30/2022		6/30/2022		9/30/2021		Well-Capitalized Requirement		Well-Capitalized Requirement
Leverage Ratio (Bank under CBLR)		24.9%		21.4%		19.5%		9.0%		8.5%

The Bank’s capital levels remain significantly above well-capitalized guidelines as of the end of the third 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 September 30, 2022, the Company has repurchased a total of 20,000 shares for a total of $0.2 million.

Asset Quality

The Company did not have any nonperforming loans at September 30, 2022, compared to $0.6 million or 0.3% of total loans receivable at June 30, 2022 and $0.8 million or 0.3% of total loans receivable at September 30, 2021. As noted above, the provision for loan losses was $4.5 million for the third quarter of 2022, compared to $2.9 million for the second quarter of 2022 and $3.4 million for the third quarter of 2021. The Company’s allowance for loan losses to total loans (less PPP loans) was 4.7% at September 30, 2022 compared to 4.6% at June 30, 2022 and 3.9% at September 30, 2021.

For the third quarter of 2022, the Company’s net charge-offs were $3.1 million, compared to $2.3 million for the second quarter of 2022 and $1.0 million for the third quarter of 2021. The increase in net charge-offs for the third quarter of 2022 compared to the second quarter of 2022 was primarily driven by higher net charge-offs related to strategic programs and charge-offs related to SBA 7(a) loan balances that are not guaranteed by the SBA that have been carried as classified assets since 2019. The increase in net charge-offs during the third quarter of 2022 compared to the third quarter of 2021 was mainly driven by some normalization of credit losses to pre-pandemic market conditions and growth in the Company’s 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)		9/30/2022			6/30/2022			9/30/2021
Allowance for Loan & Lease Losses:
Beginning Balance		$	10,602		$	9,987		$	7,239
Provision		4,457			2,913			3,367
Charge offs
SBA		(259)			(102)			(1)
Commercial, non real estate		-			-			-
Residential real estate		-			-			-
Strategic Program loans		(3,070)			(2,560)			(1,105)
Commercial real estate		-			-			-
Consumer		(4)			-			-
Recoveries
SBA		9			48			30
Commercial, non real estate		-			1			11
Residential real estate		-			-			-
Strategic Program loans		233			315			99
Commercial real estate		-			-			-
Consumer		-			-			-
Ending Balance		$	11,968		$	10,602		$	9,640
Asset Quality Ratios		As of and For the Three Months Ended
($s in thousands, annualized ratios)		9/30/2022			6/30/2022			9/30/2021
Nonperforming loans		$	-		$	633		$	757
Nonperforming loans to total loans		0.0%			0.3%			0.3%
Net charge offs to average loans		4.7%			3.3%			1.6%
Allowance for loan losses to loans held for investment		5.6%			5.3%			5.2%
Allowance for loan losses to total loans		4.7%			4.6%			3.9%
Allowance for loan losses to total loans (less PPP loans) (1)		4.7%			4.6%			3.9%
Net charge-offs		$	3,091		$	2,298		$	966
(1) 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.  Allowance for loan losses to total loans (less PPP loans) is defined as the allowance for loan losses divided by total loans minus PPP loans. The most directly comparable GAAP financial measure is allowance for loan losses to total loans.

Webcast and Conference Call Information

FinWise will host a conference call today at 5:30 PM ET to discuss its financial results for the third 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://finwisebank.gcs-web.com/events/event-details/finwise-bancorp-third-quarter-2022-earnings-conference-call.

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

"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) 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 PPP; (b) system failure or cybersecurity breaches of the Company’s network security; (c) 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; (d) the Company’s ability to keep pace with rapid technological changes in the industry or implement new technology effectively; (e) 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; (f) 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; (g) increased competition in the financial services industry, particularly from regional and national institutions and other companies that offer banking services; (h) 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; (i) the adequacy of the Company’s risk management framework; (j) the adequacy of the Company’s allowance for loan losses; (k) the financial soundness of other financial institutions; (l) new lines of business or new products and services; (m) changes in 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; (n) changes in the value of collateral securing the Company’s loans; (o) possible increases in the Company’s levels of nonperforming assets; (p) potential losses from loan defaults and nonperformance on loans; (q) the Company’s ability to protect its intellectual property and the risks it faces with respect to claims and litigation initiated against the Company; (r) the inability of small- and medium-sized businesses to whom the Company lends to weather adverse business conditions and repay loans; (s) the Company’s ability to implement aspects of its growth strategy and to sustain its historic rate of growth; (t) the Company’s ability to continue to originate, sell and retain loans, including through its Strategic Programs; (u) the concentration of the Company’s lending and depositor relationships through Strategic Programs in the financial technology industry generally; (v) the Company’s ability to attract additional merchants and retain and grow its existing merchant relationships; (w) 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; (x) 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; (y) 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; (z) the Company’s dependence on its management team and changes in management composition; (aa) 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; (bb) compliance with laws and regulations, supervisory actions, the Dodd-Frank Act, the Regulatory Relief Act, capital requirements, the Bank Secrecy Act, anti-money laundering laws, predatory lending laws, and other statutes and regulations; (cc) changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters; (dd) the Company’s ability to maintain a strong core deposit base or other low-cost funding sources; (ee) results of examinations of the Company by the Company’s regulators, including the possibility that its regulators may, among other things, require the Company to increase its allowance for loan losses or to write-down assets; (ff) the Company’s involvement from time to time in legal proceedings, examinations and remedial actions by regulators; (gg) further government intervention in the U.S. financial system; (hh) 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; (ii) the Company’s ability to maintain and grow its relationships with its Strategic Program service providers; (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.

The foregoing factors should not be construed as exhaustive. If one or more events related to these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from its forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. 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
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
($s in thousands; unaudited)

		As of
($s in thousands)		9/30/2022			6/30/2022			9/30/2021
ASSETS
Cash and cash equivalents
Cash and due from banks		$	410		$	397		$	410
Interest bearing deposits		92,053			96,131			67,696
Total cash and cash equivalents		92,463			96,528			68,106
Investment securities held-to-maturity, at cost		13,925			12,463			4,414
Investment in Federal Home Loan Bank (FHLB) stock, at cost		449			449			377
Loans receivable, net		200,485			189,670			178,748
Strategic Program loans held-for-sale, at lower of cost or fair value		43,606			31,599			62,702
Premises and equipment, net		6,830			5,834			2,484
Accrued interest receivable		1,672			1,422			1,297
Deferred taxes, net		2,164			2,018			1,597
SBA servicing asset, net		5,269			4,586			4,368
Investment in Business Funding Group (BFG), at fair value		4,500			4,600			5,241
Investment in Finwise Investments, LLC		271			80			-
Operating lease right-of-use ("ROU") assets		6,691			6,935			-
Income taxes receivable, net		-			1,843			-
Other assets		7,244			7,960			8,982
Total assets		$	385,569		$	365,987		$	338,316
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest bearing		$	97,654		$	83,490		$	109,459
Interest bearing		135,184			135,869			143,577
Total deposits		232,838			219,359			253,036
Accrued interest payable		30			34			43
Income taxes payable, net		1,066			-			823
PPP Liquidity Facility		345			376			2,259
Operating lease liabilities		7,249			7,393			-
Other liabilities		9,756			8,288			13,017
Total liabilities		251,284			235,450			269,178
Shareholders' equity
Common stock		13			13			9
Additional paid-in-capital		55,113			55,015			18,647
Retained earnings		79,159			75,509			50,482
Total shareholders' equity		134,285			130,537			69,138
Total liabilities and shareholders' equity		$	385,569		$	365,987		$	338,316

FINWISE BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
($s in thousands, except per share amounts; unaudited)

		For the Three Months Ended
($s in thousands, except per share amounts)		9/30/2022			6/30/2022			9/30/2021
Interest income
Interest and fees on loans		$	12,481		$	12,864		$	13,726
Interest on securities		52			44			7
Other interest income		290			105			16
Total interest income		12,823			13,013			13,749
Interest expense
Interest on deposits		303			244			271
Interest on PPP Liquidity Facility		1			-			8
Total interest expense		304			244			279
Net interest income		12,519			12,769			13,470
Provision for loan losses		4,457			2,913			3,367
Net interest income after provision for loan losses		8,062			9,856			10,103
Non-interest income
Strategic Program fees		5,136			6,221			4,982
Gain on sale of loans		1,923			2,412			2,876
SBA loan servicing fees		327			342			337
Change in fair value on investment in BFG		65			(575)			266
Other miscellaneous income		72			31			14
Total non-interest income		7,523			8,431			8,475
Non-interest expense
Salaries and employee benefits		5,137			6,594			5,930
Occupancy and equipment expenses		640			419			205
(Recovery) impairment of SBA servicing asset		(127)			1,135			-
Other operating expenses		2,819			2,871			1,263
Total non-interest expense		8,469			11,019			7,398
Income before income tax expense		7,116			7,268			11,180
Provision for income taxes		3,462			1,786			2,738
Net income		$	3,654		$	5,482		$	8,442
Earnings per share, basic		$	0.28		$	0.43		$	0.97
Earnings per share, diluted		$	0.27		$	0.41		$	0.91
Weighted average shares outstanding, basic		12,784,298			12,716,010			8,255,953
Weighted average shares outstanding, diluted		13,324,059			13,417,390			8,810,829
Shares outstanding at end of period		12,864,821			12,884,821			8,746,110

FINWISE BANCORP
AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
($s in thousands; unaudited)

		For the Three Months Ended								For the Three Months Ended									For the Three Months Ended
		9/30/2022								6/30/2022									9/30/2021
($s in thousands, annualized ratios)		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		$	59,337			290		1.95%		$	82,046			105			0.51%		$	54,261			16			0.12%
Investment securities		12,418				52		1.67%		11,837				44			1.49%		1,689				7			1.66%
Loans held for sale		50,516				4,533		35.89%		74,800				5,949			31.81%		65,273				6,293			38.56%
Loans held for investment		213,080				7,948		14.92%		204,501				6,915			13.53%		173,068				7,433			17.18%
Total interest earning assets		335,351				12,823		15.30%		373,184				13,013			13.95%		294,291				13,749			18.69%
Less: allowance for loan losses		(10,768		)						(10,425		)							(8,083		)
Non-interest earning assets		32,626								32,558									18,846
Total assets		$	357,209							$	395,317								$	305,054
Interest bearing liabilities:
Demand		$	11,857			113		3.81%		$	7,587			$	27		1.42%		$	5,007			11			0.88%
Savings		7,514				1		0.05%		7,430				1			0.05%		8,818				3			0.14%
Money market accounts		20,615				29		0.56%		29,318				21			0.29%		22,274				21			0.38%
Certificates of deposit		64,789				160		0.99%		82,870				195			0.94%		76,127				236			1.24%
Total deposits		104,775				303		1.16%		127,205				244			0.77%		112,226				271			0.97%
Other borrowings		360				1		0.35%		601				-			0.35%		9,365				8			0.34%
Total interest bearing liabilities		105,135				304		1.16%		127,806				244			0.76%		121,591				279			0.92%
Non-interest bearing deposits		102,575								120,359									107,342
Non-interest bearing liabilities		17,542								19,429									13,076
Shareholders’ equity		131,957								127,723									63,045
Total liabilities and shareholders’ equity		$	357,209							$	395,317								$	305,054
Net interest income and interest rate spread						12,519		14.14%						$	12,769		13.18%						$	13,470		17.77%
Net interest margin								14.93%									13.69%									18.31%
Ratio of average interest-earning assets to average interest- bearing liabilities								318.97%									291.99%									242.03%
Note: Average PPP loans for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021 were $0.7 million, $0.9 million and $8.8 million, respectively.

FINWISE BANCORP
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
($s in thousands, except per share amounts; unaudited)

($s in thousands, except for per share data, annualized ratios)		As of and for the Three Months Ended
		9/30/2022			6/30/2022			9/30/2021
Selected Loan Metrics
Amount of loans originated		$	1,506,100		$	2,088,843		$	1,822,942
Selected Income Statement Data
Interest income		$	12,823		$	13,013		$	13,749
Interest expense		304			244			279
Net interest income		12,519			12,769			13,470
Provision for loan losses		4,457			2,913			3,367
Net interest income after provision for loan losses		8,062			9,856			10,103
Non-interest income		7,523			8,431			8,475
Non-interest expense		8,469			11,019			7,398
Provision for income taxes		3,462			1,786			2,738
Net income		3,654			5,482			8,442
Selected Balance Sheet Data
Total Assets		$	385,569		$	365,987		$	338,316
Cash and cash equivalents		92,463			96,528			68,106
Investment securities held-to-maturity, at cost		13,925			12,463			4,414
Loans receivable, net		200,485			189,670			178,748
Strategic Program loans held-for-sale, at lower of cost or fair value		43,606			31,599			62,702
SBA servicing asset, net		5,269			4,586			4,368
Investment in Business Funding Group, at fair value		4,500			4,600			5,241
Deposits		232,838			219,359			253,036
PPP Liquidity Facility		345			376			2,259
Total shareholders' equity		134,285			130,537			69,138
Tangible shareholders’ equity (1)		134,285			130,537			69,138
Share and Per Share Data
Earnings per share - basic		$	0.28		$	0.43		$	0.97
Earnings per share - diluted		$	0.27		$	0.41		$	0.91
Book value per share		$	10.44		$	10.13		$	7.90
Tangible book value per share (1)		$	10.44		$	10.13		$	7.90
Weighted avg outstanding shares - basic		12,784,298			12,716,010			8,255,953
Weighted avg outstanding shares - diluted		13,324,059			13,417,390			8,810,829
Shares outstanding at end of period		12,864,821			12,884,821			8,746,110
Asset Quality Ratios
Nonperforming loans to total loans		0.0%			0.3%			0.3%
Net charge offs to average loans		4.7%			3.3%			1.6%
Allowance for loan losses to loans held for investment		5.6%			5.3%			5.2%
Allowance for loan losses to total loans		4.7%			4.6%			3.9%
Allowance for loan losses to total loans (less PPP loans) (2)		4.7%			4.6%			3.9%
Capital Ratios
Total shareholders' equity to total assets		34.8%			35.7%			20.4%
Tangible shareholders’ equity to tangible assets (1)		34.8%			35.7%			20.4%
Leverage Ratio (Bank under CBLR)		24.9%			21.4%			19.5%
(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 as an intangible asset 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. (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.  Allowance for loan losses to total loans (less PPP loans) is defined as the allowance for loan losses divided by total loans minus PPP loans. The most directly comparable GAAP financial measure is allowance for loan losses to total loans.

Reconciliation of Non-GAAP to GAAP Financial Measures

Efficiency ratio
		For Three Months Ended
($s in thousands, annualized ratios)		9/30/2022			6/30/2022			9/30/2021
Non-interest expense		$	8,469		$	11,019		$	7,398
Net interest income		12,519			12,769			13,470
Total non-interest income		7,523			8,431			8,475
Adjusted operating revenue		$	20,042		$	21,200		$	21,945
Efficiency ratio		42.3%			52.0%			33.7%
Allowance for loan losses to total loans (less PPP Loans)
		As of
		9/30/2022			6/30/2022			9/30/2021
($s in thousands)
Allowance for loan losses		$	11,968		$	10,602		$	9,640
Total Loans		256,820			232,139			249,214
PPP Loans		679			734			2,303
Total Loans less PPP Loans		$	256,141		$	231,405		$	246,911
Allowance for loan losses to total loans (less PPP Loans)		4.7%			4.6%			3.9%
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans)
		As of
		9/30/2022			6/30/2022			9/30/2021
($s in thousands)
Total Assets		$	385,569		$	365,987		$	338,316
PPP Loans		679			734			2,303
Total Assets less PPP Loans		$	384,890		$	365,253		$	336,013
Total nonperforming assets and troubled debt restructurings		$	95		$	728		$	864
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans)		0.0%			0.2%			0.3%