FinWise Bancorp (FINW) Stephens 26th Annual Investment Conference summary

Business model evolution and diversification

• Lending as a service has been a core focus, with a robust compliance and IT infrastructure built since 2016 to support scalable growth and regulatory resilience.

• Expansion into payments and BIN sponsorship is underway, leveraging existing infrastructure; both are in pilot stages with full rollout and revenue contribution expected in 2025.

• Cross-selling opportunities exist with current fintech partners, and the first partner to use the full suite of offerings has been signed.

• The partner pipeline is strong, with more inbound interest than ever, allowing for greater selectivity in onboarding.

• Strategic partnership revenues currently make up about 60% of total revenues, with exponential growth expected from payments and BIN sponsorship.

Risk management, compliance, and regulatory environment

• Early investment in compliance and risk management has provided a competitive advantage, attracting higher-quality fintech partners.

• The regulatory environment is seen as a barrier to entry, but also as a moat; management expects a more favorable regulatory climate could further benefit the business.

• Brokered deposits are closely monitored due to potential regulatory scrutiny, but management expects flexibility under a new administration.

• Interchange fee changes have minimal impact due to the settlement-based model, with interchange passed to fintech partners.

• The company is prepared for increased competition but believes its long-term investment in compliance and IT will deter less committed entrants.

Financial performance, growth outlook, and profitability

• Originations saw a significant lift in Q3, partly due to seasonality and new partners; further growth is expected as new fintechs mature.

• Four new lending partners, a payments partner, a credit card partner, and a credit enhanced balance sheet partner were signed this year.

• The credit enhanced balance sheet model allows for balance sheet growth with limited credit risk, focusing on larger, well-underwritten partners.

• Most infrastructure investment is complete; incremental expenses are now tied to onboarding new partners, with revenue typically following after two to three quarters.

• Long-term profitability targets are set to maintain a return on assets above 2%, preserving an attractive profile relative to peers.