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Finwise Bancorp

FINW
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Business Summary

FinWise Bancorp (FINW) operates as a Utah bank holding company through its wholly-owned subsidiaries, FinWise Bank and FinWise Investment, LLC. The company's business is structured into three reportable segments: traditional banking, banking as a service (BaaS), and treasury & administration. FINW aims to leverage technological advances and strategic relationships to expand its reach in marketing channels and credit products, positioning itself as a technology-focused bank. The company was formed in 2002, acquiring Utah Community Bank, a local community bank founded in 1999 that focused on real estate lending in the Salt Lake City, Utah metropolitan statistical area (MSA).

The company's core business model revolves around originating, selling, or holding loans in four main lending areas: nationwide Strategic Programs, a multi-state SBA 7(a) lending program, residential and owner-occupied commercial real estate lending, and multi-state equipment financing. Revenue is generated through interest income from these loans, non-interest income from Strategic Program fees, gains on loan sales, and credit enhancement income. FINW primarily relies on wholesale funding sources, including brokered deposits, health savings accounts, and institutional deposits, but also utilizes core deposits, online deposits, and borrowings. The company also holds a 20% membership interest in Business Funding Group, LLC (BFG), a significant referral source for SBA loans, with a right of first refusal and an option to purchase all remaining interests through January 1, 2028.

The traditional banking segment provides loan and deposit products and services to consumers and businesses nationally and within the Salt Lake City, Utah MSA. As of December 31, 2025, this segment generated $33.438 million in interest income and $12.448 million in non-interest income, contributing $2.882 million to net income. The BaaS segment focuses on lending, card, and payments solutions nationally to fintech brands. For the year ended December 31, 2025, the BaaS segment reported $53.673 million in interest income and $44.582 million in non-interest income, resulting in a net income of $10.502 million . The treasury and administration segment manages investments, nationally sourced deposits to support other business segments, and other items not specific to traditional banking or BaaS. This segment reported $18.611 million in interest income and $2.804 million in non-interest income, with a net income contribution of $2.707 million .

As of December 31, 2025, the company's loans held-for-investment portfolio totaled $585.509 million . The largest component was SBA loans at $205.615 million , representing 35.1% of the total. Commercial leases accounted for $78.743 million (13.4% ), residential real estate for $59.602 million (10.2% ), and commercial real estate (owner-occupied and non-owner-occupied) for $85.654 million (14.6% ). Strategic Program loans, including those with and without credit enhancement, totaled $129.768 million (22.2% ). Specifically, Strategic Program loans with credit enhancement grew significantly to $108.131 million (18.5% ) from $0.891 million (0.2% ) in the prior year. Consumer loans comprised $21.926 million (3.8% ). The company also held $146.473 million in Strategic Program loans held-for-sale as of December 31, 2025.

For the year ended December 31, 2025, FINW reported total interest income of $92.478 million , up from $74.352 million in 2024. Interest expense increased to $20.295 million from $15.440 million , resulting in net interest income of $72.183 million , an increase of $13.271 million year-over-year. The net interest margin (NIM) decreased to 9.23% in 2025 from 9.99% in 2024, primarily due to increased lending to lower-risk borrowers with lower yields, partially offset by growth in the higher-yielding credit-enhanced portfolio. The provision for credit losses significantly increased to $38.573 million from $11.573 million in 2024, driven by growth in the credit enhancement loan portfolio and higher net charge-offs due to more conservative servicing standards. Non-interest income surged by $35.998 million to $58.483 million in 2025, a 160.1% increase, primarily from credit enhancement income of $23.924 million and higher gains on loan sales of $6.373 million . Total non-interest expense rose to $70.333 million from $52.835 million , largely due to credit enhancement program expenses of $9.755 million and increased salaries and employee benefits of $42.288 million . Net income for 2025 was $16.091 million , up from $12.742 million in 2024. Diluted EPS was $1.13 in 2025, compared to $0.93 in 2024. Total assets increased by $231.159 million to $977.135 million as of December 31, 2025. Cash and cash equivalents stood at $163.400 million . Total deposits increased by $209.609 million to $754.561 million . Total liabilities were $783.940 million , and total shareholders' equity was $193.195 million . The allowance for credit losses (ACL) increased from $13.176 million at December 31, 2024, to $36.796 million at December 31, 2025, primarily due to growth in credit-enhanced balances. Net charge-offs to average loans increased slightly to 2.8% in 2025 from 2.6% in 2024.

During 2025, FINW launched several new fintech relationships and program offerings. These included a strategic lending program with Backd Business Funding for business installment loans, providing Backd with access to the credit-enhanced balance sheet program. The company also entered a strategic program agreement with DreamFi, Inc. to support underserved and underbanked communities. A program management, network issuer processor, and servicer agreement was established with Tallied Technologies, Inc. to deliver credit card products and card processing solutions, resulting in the issuance of two Mastercard co-branded credit cards and the purchase of an existing credit card portfolio. Additionally, existing partner Plannery was launched on MoneyRails™ for payment servicing of loans. These developments underscore the company's continued investment in expanding its fintech banking operations and product offerings.

Business Outlook

Management anticipates continued growth in the BaaS segment, driven by the expansion of fintech partnerships and product offerings. The traditional banking segment is expected to provide a stable business, with its performance influenced by interest rate trends. The treasury and administration segment will remain focused on optimizing liquidity and supporting the funding needs of the other operating segments. The company continues to monitor regulatory developments and market conditions that may impact segment performance.

FINW's growth strategy includes expanding its commercial leasing and Point of Sale (POS) lending revenue by attracting additional merchants and growing existing merchant relationships. Diversifying merchant relationships is considered important to mitigate risks associated with changing consumer spending behavior and economic conditions. The company may also implement or acquire new lines of business or pilot programs and offer new products and services within existing lines of business. For example, during 2025, FINW launched a strategic lending program with Backd Business Funding to provide business installment loans to small and medium-sized businesses, offering Backd access to its credit-enhanced balance sheet program. Another strategic program agreement was made with DreamFi, Inc. to support underserved and underbanked communities. Furthermore, a program management, network issuer processor, and servicer agreement with Tallied Technologies, Inc. was established to deliver credit card products and card processing solutions, leading to the issuance of two Mastercard co-branded credit cards and the purchase of an existing credit card portfolio.

The company's operational outlook includes a focus on maintaining effective internal controls over financial reporting, which is crucial for the reliability of financial statements. Management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on that system. The company also continues to invest in its operational infrastructure to support growth, as evidenced by increased expenditures on computer software of $1.5 million and operating lease depreciation of $0.8 million in 2025. The company's cybersecurity posture is actively managed through its technology, risk management, and audit teams, with oversight from the Board of Directors, to protect against threats and ensure the confidentiality, integrity, and availability of sensitive information.

Regarding capital allocation, FINW aims to maintain adequate capital to support anticipated asset growth, operating needs, and unexpected risks, ensuring compliance with all current and anticipated regulatory capital guidelines. Primary sources of new capital include retained earnings and proceeds from the sale and issuance of capital stock or other securities. The company did not pay a dividend in 2024 or 2025 and currently has no plans to pay dividends for the foreseeable future. A common stock repurchase program, authorized on March 6, 2024, allows for the repurchase of up to 641,832 shares of common stock, expiring on March 31, 2026. As of December 31, 2025, 597,224 shares remained available for repurchase. Since inception, 44,608 shares have been repurchased and retired for $0.5 million at an average price of $10.30 per share .

Management explicitly flagged several structural headwinds and execution risks. The success of the financial technology and banking-as-a-service (BaaS) industries, as well as the continued evolution of their regulation, is a key risk. The ability of Fintech Banking and Payment Solutions service providers to comply with regulatory regimes and FINW's ability to adequately oversee and monitor them are critical. Changes in laws, rules, regulations, interpretations, or policies relating to financial institutions, accounting, tax, trade, tariffs, monetary, and fiscal matters, including interest rate caps, could impact the business. The company also faces risks in keeping pace with rapid technological changes, including the development of applications utilizing artificial intelligence, and potential system failures or cybersecurity breaches. The adequacy of its risk management framework and allowance for credit losses (ACL) is also a concern. Changes in Small Business Administration (SBA) rules and the performance of the loan portfolio, including the value of collateral, are significant risks. The concentration of lending and depositor relationships through Strategic Programs in the financial technology industry and the ability to develop a strong core deposit base are also noted.

Geographic, regulatory, and macro factors identified as constraints include adverse changes to regional economies, particularly those with a concentration of commercial and consumer banking clients in Utah, New York, and New Jersey. Competition from other financial services companies, including fintech companies acquiring banks, is a significant factor. The highly regulated environment, including heightened regulatory and supervisory requirements, expectations, and scrutiny in the U.S., leads to increased compliance, regulatory, and other risks and costs. Risks related to litigation and regulatory actions, including enforcement actions, could subject the company to significant fines, penalties, judgments, or other requirements. Changes in legislative, regulatory, or tax priorities, as well as privacy regulations, information security, and data protection, could increase costs and limit how personal information is collected and used. Climate change and related legislative and regulatory initiatives, as well as evolving ESG expectations, are also identified as potential risks.

Risk Factors

The company faces material risks from weak economic conditions, which could constrain growth and profitability, increase loan defaults, and necessitate higher provisions for credit losses. Its commercial and consumer banking clients, particularly in real estate and SBA 7(a) lending, are concentrated in Utah, New York, and New Jersey, making the company sensitive to adverse regional economic changes. Intense competition from larger financial institutions and fintech companies, some of which are not subject to the same regulatory restrictions, poses a threat to market share. The inability to adequately measure and limit credit risk, coupled with the potential insufficiency of the allowance for credit losses (ACL) to absorb unexpected losses, could lead to adverse financial outcomes. Dependence on the U.S. federal government for its SBA lending program, including changes to guarantee levels or program funding, and reliance on BFG for 100% of SBA 7(a) loan originations in 2025 , presents significant concentration risk. Interest rate fluctuations could adversely affect net interest income, with a simulated -10.4% impact on net interest income under a -400 bps parallel interest rate shock as of December 31, 2025. Liquidity risk is material, with approximately 17.3% of total deposits ($130.8 million ) from Strategic Program service providers, and potential deposit run-off could force reliance on more expensive funding. Cybersecurity threats and system failures pose risks of increased operating costs, litigation, and data loss. The evolving and uncertain regulatory framework for Strategic Programs, including potential "true lender" challenges and state usury law violations, could force business model alterations. Non-compliance with extensive federal and state regulations, including the Bank Secrecy Act and consumer protection laws, could result in significant fines, penalties, and restrictions on business activities.

Management Priorities

Management's message to shareholders emphasizes the company's identity as a technology-focused bank that leverages strategic relationships and proprietary technology to expand its reach and product offerings. They highlight the success of past investments in product expansion, which contributed to the increase in net income for the year ended December 31, 2025, to $16.091 million . Management explicitly states their belief that strong capital levels support current and planned growth strategy. Key strategic priorities for the period ahead include continued growth in the BaaS segment through expanding fintech partnerships and product offerings, maintaining the stability of the traditional banking business while monitoring interest rate trends, and optimizing liquidity and supporting funding needs through the treasury and administration segment. They also underscore the importance of ongoing monitoring of regulatory developments and market conditions to adapt performance.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Segment Results
  2. [2] Item 7, MD&A — Segment Results
  3. [3] Item 7, MD&A — Segment Results
  4. [4] Item 7, MD&A — Segment Results
  5. [5] Item 7, MD&A — Segment Results
  6. [6] Item 7, MD&A — Segment Results
  7. [7] Item 7, MD&A — Segment Results
  8. [8] Item 7, MD&A — Segment Results
  9. [9] Item 7, MD&A — Segment Results
  10. [10] Item 7, MD&A — Loans Held-for-Investment Portfolio
  11. [11] Item 7, MD&A — Loans Held-for-Investment Portfolio
  12. [12] Item 7, MD&A — Loans Held-for-Investment Portfolio
  13. [13] Item 7, MD&A — Loans Held-for-Investment Portfolio
  14. [14] Item 7, MD&A — Loans Held-for-Investment Portfolio
  15. [15] Item 7, MD&A — Loans Held-for-Investment Portfolio
  16. [16] Item 7, MD&A — Loans Held-for-Investment Portfolio
  17. [17] Item 7, MD&A — Loans Held-for-Investment Portfolio
  18. [18] Item 7, MD&A — Loans Held-for-Investment Portfolio
  19. [19] Item 7, MD&A — Loans Held-for-Investment Portfolio
  20. [20] Item 7, MD&A — Loans Held-for-Investment Portfolio
  21. [21] Item 7, MD&A — Loans Held-for-Investment Portfolio
  22. [22] Item 7, MD&A — Loans Held-for-Investment Portfolio
  23. [23] Item 7, MD&A — Loans Held-for-Investment Portfolio
  24. [24] Item 7, MD&A — Loans Held-for-Investment Portfolio
  25. [25] Item 7, MD&A — Loans Held-for-Investment Portfolio
  26. [26] Item 7, MD&A — Loans Held-for-Investment Portfolio
  27. [27] Item 7, MD&A — Financial Condition
  28. [28] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  29. [29] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  30. [30] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  31. [31] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  32. [32] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  33. [33] Item 7, MD&A — Net Interest Income and NIM
  34. [34] Item 7, MD&A — Net Interest Income and NIM
  35. [35] Item 7, MD&A — Net Interest Income and NIM
  36. [36] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  37. [37] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  38. [38] Item 7, MD&A — Non-interest Income
  39. [39] Item 7, MD&A — Non-interest Income
  40. [40] Item 7, MD&A — Non-interest Income
  41. [41] Item 7, MD&A — Non-interest Income
  42. [42] Item 7, MD&A — Non-interest Income
  43. [43] Item 7, MD&A — Non-interest Expense
  44. [44] Item 7, MD&A — Non-interest Expense
  45. [45] Item 7, MD&A — Reconciliations of Non-GAAP Financial Measures
  46. [46] Item 7, MD&A — Non-interest Expense
  47. [47] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  48. [48] Item 7, MD&A — Results of Operations for the Years Ended December 31, 2025 and 2024
  49. [49] Item 8, Consolidated Statements of Income
  50. [50] Item 8, Consolidated Statements of Income
  51. [51] Item 7, MD&A — Total Assets
  52. [52] Item 7, MD&A — Total Assets
  53. [53] Item 8, Consolidated Balance Sheets
  54. [54] Item 7, MD&A — Deposits
  55. [55] Item 7, MD&A — Deposits
  56. [56] Item 7, MD&A — Total Liabilities
  57. [57] Item 7, MD&A — Financial Condition
  58. [58] Item 7, MD&A — Allowance for Credit Losses
  59. [59] Item 7, MD&A — Allowance for Credit Losses
  60. [60] Item 7, MD&A — Net Charge-Offs
  61. [61] Item 7, MD&A — Net Charge-Offs
  62. [62] Item 7, MD&A — Non-interest Expense
  63. [63] Item 7, MD&A — Non-interest Expense
  64. [64] Item 7, MD&A — Stock Repurchase Program
  65. [65] Item 7, MD&A — Stock Repurchase Program
  66. [66] Item 7, MD&A — Stock Repurchase Program
  67. [67] Item 7, MD&A — Stock Repurchase Program
  68. [68] Item 7, MD&A — Stock Repurchase Program
  69. [69] Item 1, Business — Our Relationship with Business Funding Group
  70. [70] Item 1, Business — Our Relationship with Business Funding Group
  71. [71] Item 7A, Quantitative and Qualitative Disclosures About Market Risk
  72. [72] Item 7A, Quantitative and Qualitative Disclosures About Market Risk
  73. [73] Item 1A, Risk Factors — Risks Related to Our Banking Business
  74. [74] Item 1A, Risk Factors — Risks Related to Our Banking Business
  75. [75] Item 7, MD&A — Net Income

Analysis on 5/21/2026