FinWise Bancorp (FINW) Q3 2024 earnings summary

Executive summary

• Loan originations reached $1.4B in Q3 2024, up from $1.1B in Q3 2023 and $1.2B in Q2 2024, driven by new and existing Strategic Programs.

• Net income for Q3 2024 was $3.5M, or $0.25 per diluted share, up from Q2 2024 but down from $4.8M in Q3 2023, as higher expenses offset revenue growth.

• Net interest margin declined to 9.70% from 10.31% in Q2 2024 and 11.77% in Q3 2023, reflecting a shift to lower-risk, lower-yield loans and a one-time adjustment.

• Strategic Program lending, new program launches, and fintech partnerships contributed to growth and business diversification.

• Tangible book value per share increased to $12.90, and total assets grew to $683.0M as of September 30, 2024.

Financial highlights

• Net interest income was $14.8M for Q3 2024, up from $14.6M in Q2 2024 and $14.4M in Q3 2023, including a $500K one-time adjustment for accrued interest on non-performing loans.

• Non-interest income rose to $6.1M, mainly due to higher origination and Strategic Program fees.

• Non-interest expense increased to $14.0M, reflecting higher salaries, infrastructure investments, and a $400K one-time bonus accrual catch-up.

• Provision for credit losses was $2.2M, down from $2.4M in Q2 2024 and $3.1M in Q3 2023.

• EPS (diluted) was $0.25 for Q3 2024, compared to $0.24 in Q2 2024 and $0.37 in Q3 2023.

Outlook and guidance

• Originations in early Q4 2024 are tracking modestly lower than Q3, with seasonality expected from the student loan program.

• Expense growth is expected to decelerate in Q4 and align with production increases in 2025; efficiency ratio will remain elevated until new program revenues materialize.

• Effective tax rate projected at 25.1% for Q4 and 25.5% for full year 2024.

• NIM expected to continue declining in Q4, absent further Fed actions.

• Payments and BIN Sponsorship products are under development, with full launch and revenue impact expected in 2025.