On July 25, 2024, FinWise Bancorp (FINW, Financial) released its 8-K filing for the second quarter of 2024, reporting a net income of $3.2 million and diluted earnings per share (EPS) of $0.24. This performance surpasses the analyst estimate of $0.19 EPS and aligns closely with the estimated revenue of $19.45 million.
FinWise Bancorp is an independent bank that provides a full range of banking services to individual and corporate customers. The bank's primary source of revenue is from loans including Small Business Administration, commercial, commercial real estate, residential real estate, and consumer. The Bank also has established Strategic Programs with various third-party loan origination platforms that use technology to streamline the origination of unsecured consumer and secured or unsecured business loans to borrowers within certain approved credit profiles.
Performance Highlights
FinWise Bancorp reported loan originations of $1.2 billion, consistent with the same quarter last year and an increase from $1.1 billion in the previous quarter. Net interest income rose to $14.6 million, up from $14.0 million in Q1 2024 and $13.7 million in Q2 2023. However, net income slightly decreased to $3.2 million from $3.3 million in the previous quarter and $4.6 million in the same quarter last year.
Financial Achievements
The bank's net interest margin improved to 10.31% from 10.12% in the previous quarter, although it was down from 12.14% in the same quarter last year. The efficiency ratio increased to 66.3%, up from 60.6% in Q1 2024 and 52.7% in Q2 2023, reflecting higher operational costs.
Income Statement and Key Metrics
| Metric | 6/30/2024 | 3/31/2024 | 6/30/2023 |
|---|---|---|---|
| Net Income ($ in thousands) | 3,180 | 3,315 | 4,638 |
| Diluted EPS | 0.24 | 0.25 | 0.35 |
| Return on Average Equity | 7.9% | 8.4% | 12.8% |
| Efficiency Ratio | 66.3% | 60.6% | 52.7% |
Analysis and Commentary
FinWise Bancorp's performance in Q2 2024 highlights the bank's ability to maintain strong loan originations and net interest income despite increased operational costs. The slight decrease in net income compared to the previous quarter and the same quarter last year can be attributed to higher compensation expenses and other operational costs associated with business infrastructure development.
“FinWise delivered another strong quarter, driven by continued growth in loan originations, solid revenue and stable credit quality,” said Kent Landvatter, Chief Executive Officer of FinWise.
Balance Sheet and Asset Quality
As of June 30, 2024, FinWise Bancorp's total assets increased to $617.8 million from $610.8 million in the previous quarter and $495.6 million in the same quarter last year. The increase was primarily driven by growth in commercial leases, owner-occupied commercial real estate, and residential real estate loan portfolios.
Nonperforming loans rose to $27.9 million, or 6.5% of total loans receivable, compared to $26.0 million, or 6.6%, in the previous quarter and $1.9 million, or 0.7%, in the same quarter last year. The increase in nonperforming loans was mainly due to SBA 7(a) loans classified as nonperforming.
Conclusion
FinWise Bancorp's Q2 2024 earnings report demonstrates the bank's resilience and ability to generate solid revenue through its diversified loan portfolio and strategic programs. Despite facing challenges such as increased operational costs and higher nonperforming loans, the bank's strong loan originations and net interest income highlight its robust business model and potential for future growth.
Explore the complete 8-K earnings release (here) from FinWise Bancorp for further details.
