- Loan Originations of $6.1 Billion for 2025, including $1.6 Billion for Fourth Quarter -
- Net Income of $16.1 Million for 2025, including $3.9 Million for Fourth Quarter -
- Diluted Earnings Per Share of $1.13 for 2025, including $0.27 for Fourth Quarter -
MURRAY, Utah, Jan. 29, 2026 (GLOBE NEWSWIRE) -- FinWise Bancorp (NASDAQ:FINW) ("FinWise" or the "Company"), parent company of FinWise Bank (the "Bank"), today announced results for the quarter and fiscal year ended December 31, 2025.
Fourth Quarter 2025 Highlights
- Loan originations totaled $1.6 billion, compared to $1.8 billion for the quarter ended September 30, 2025, and $1.3 billion for the fourth quarter of the prior year
- Net interest income was $24.6 million, compared to $18.6 million for the quarter ended September 30, 2025, and $15.5 million for the fourth quarter of the prior year
- Net income was $3.9 million, compared to $4.9 million for the quarter ended September 30, 2025, and $2.8 million for the fourth quarter of the prior year
- Diluted earnings per share ("EPS") were $0.27 for the quarter, compared to $0.34 for the quarter ended September 30, 2025, and $0.20 for the fourth quarter of the prior year
- Efficiency ratio1 was 50.5%, compared to 47.6% for the quarter ended September 30, 2025, and 64.2% for the fourth quarter of the prior year
- Nonperforming loan balances were $43.7 million as of December 31, 2025, compared to $42.8 million as of September 30, 2025, and $36.5 million as of December 31, 2024. Nonperforming loan balances guaranteed by the Small Business Administration ("SBA") were $24.2 million, $23.3 million, and $19.2 million as of December 31, 2025, September 30, 2025, and December 31, 2024, respectively
"FinWise delivered a strong 2025, growing net income 26% versus 2024 and posting a steady fourth quarter, all of which underscores how our multi-year investments are gradually translating into tangible, sustainable results," said Kent Landvatter, Chairman and CEO of FinWise Bancorp. "We delivered balanced revenue growth and disciplined expense management, leading to solid profitability and continued expansion of tangible book value per share. Fourth quarter loan originations totaled $1.6 billion, ahead of our initial guidance of $1.4 billion. This brings full-year 2025 originations to $6.1 billion, representing healthy 22% year-over-year growth. Balances in our credit enhanced product reached $118 million at year-end 2025, also ahead of expectations. With a scalable model that is now demonstrating sustained momentum, we remain confident in our ability to continue delivering long‑term value for our shareholders."
______________________________
1 See "Reconciliation of Non-GAAP to GAAP Financial Measures" for a reconciliation of this non-GAAP measure.
Selected Financial and Other Data
| As of and for the Three Months Ended | As of and for the Years Ended | ||||||||||||||||||
| ($ in thousands, except per share amounts) | 12/31/2025 | 9/30/2025 | 12/31/2024 | 12/31/2025 | 12/31/2024 | ||||||||||||||
| Amount of loans originated | $ | 1,561,310 | $ | 1,789,736 | $ | 1,305,028 | $ | 6,098,830 | $ | 5,015,662 | |||||||||
| Net income | $ | 3,915 | $ | 4,891 | $ | 2,793 | $ | 16,091 | $ | 12,742 | |||||||||
| Diluted EPS(1) | $ | 0.27 | $ | 0.34 | $ | 0.20 | $ | 1.13 | $ | 0.93 | |||||||||
| Return on average assets(2) | 1.7 | % | 2.2 | % | 1.6 | % | 1.9 | % | 2.0 | % | |||||||||
| Return on average equity(2) | 8.1 | % | 10.6 | % | 6.5 | % | 8.9 | % | 7.7 | % | |||||||||
| Yield on loans | 16.06 | % | 13.09 | % | 14.01 | % | 13.43 | % | 14.47 | % | |||||||||
| Cost of interest-bearing deposits | 3.96 | % | 4.06 | % | 4.30 | % | 4.02 | % | 4.57 | % | |||||||||
| Net interest margin | 11.42 | % | 9.01 | % | 10.00 | % | 9.23 | % | 9.99 | % | |||||||||
| Efficiency ratio(3) | 50.5 | % | 47.6 | % | 64.2 | % | 53.8 | % | 64.9 | % | |||||||||
| Tangible book value per share(4) | $ | 14.15 | $ | 13.84 | $ | 13.15 | $ | 14.15 | $ | 13.15 | |||||||||
| Tangible shareholders' equity to tangible assets(4) | 19.8 | % | 20.9 | % | 23.3 | % | 19.8 | % | 23.3 | % | |||||||||
| Leverage ratio (Bank under CBLR) | 16.9 | % | 17.2 | % | 20.6 | % | 16.9 | % | 20.6 | % | |||||||||
| Full-time equivalent employees | 198 | 194 | 196 | 198 | 196 | ||||||||||||||
| (1) | FinWise uses the two-class method to calculate basic and diluted EPS as restricted stock awards are considered participating securities due to the dividend rights associated with those awards. On December 31, 2025, executive management elected to waive the dividend rights on their non-vested restricted stock awards. As a result, beginning on December 31, 2025, the unvested shares held by executive management will no longer be treated as participating securities and are excluded from the two-class method calculation of EPS. This change was effective beginning with the quarter ending December 31, 2025 and had a de minimus impact on basic and diluted earnings per share. The change does not affect previously reported periods. |
| (2) | Annualized for the respective three-month periods. |
| (3) | Efficiency ratio is a non-GAAP financial measure. The efficiency ratio is defined as total non-interest expense divided by the sum of net interest income and non-interest income. The Company believes this measure is important as an indicator of productivity because it shows the amount of revenue generated for each dollar spent. See "Reconciliation of Non-GAAP to GAAP Financial Measures" for a reconciliation of this measure to its most comparable GAAP measure. |
| (4) | Tangible shareholders' equity to tangible assets is a non-GAAP financial 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 to total assets. The Company had no goodwill or other intangible assets at the end of any period indicated. The Company has not considered loan servicing rights or loan trailing fee assets as intangible assets for purposes of this calculation. As a result, tangible shareholders' equity is the same as total shareholders' equity at the end of each of the periods indicated. |
Net Interest Income and Net Interest Margin
Net interest income was $24.6 million for the fourth quarter of 2025, compared to $18.6 million for the prior quarter and $15.5 million for the prior year period. The increase from the prior quarter was primarily due to an increase in the Bank's credit enhanced balances in the held-for-investment portfolio of $76.5 million which carries a higher contractual interest rate, offset in part by increased average balances in certificates of deposits used to fund the loan portfolio growth. The increase from the prior year period was primarily due to an increase in the Bank's credit enhanced balances in the held-for-investment portfolio of $117.0 million and increased average balances in the Strategic Program loans held-for-sale portfolio of $51.5 million and was offset in part by growth in brokered certificates of deposits used to fund the loan portfolio growth.
Loan originations totaled $1.6 billion for the fourth quarter of 2025, a decrease from the $1.8 billion recorded in the prior quarter and an increase from the $1.3 billion recorded in the prior year period. The decrease from the prior quarter was primarily due to the seasonality of two strategic programs originating higher volumes of student loans during the third quarter. The increase from the prior year period mostly reflects the expansion of originations from newly onboarded strategic programs and the continued increase in originations by certain established strategic programs.
Net interest margin for the fourth quarter of 2025 was 11.42%, compared to 9.01% for the prior quarter and 10.00% for the prior year period. The increase in net interest margin from the prior quarter is largely attributable to the credit enhanced portfolio growth of $76.5 million as well as a reduction in accrued interest reversals on loans migrating to nonaccrual status during the fourth quarter when compared to the prior quarter. The increase in net interest margin from the prior year period was attributable to the growth in the credit enhanced portfolio of $117.0 million and was partially offset by the Company's strategy to reduce the average credit risk in the loan portfolio by increasing its investment in higher quality but lower yielding loans.
Provision for Credit Losses
| Three Months Ended | |||||||||||
| ($ in thousands) | 12/31/2025 | 9/30/2025 | 12/31/2024 | ||||||||
| Provision for credit losses: | |||||||||||
| Strategic Program loans - with credit enhancement(1) | $ | 12,801 | $ | 8,762 | $ | 25 | |||||
| Strategic Program loans - without credit enhancement | 2,064 | 2,550 | 2,405 | ||||||||
| All other loans (core portfolio) | 2,853 | 1,346 | 1,337 | ||||||||
| Provision for credit losses on loans | 17,718 | 12,658 | 3,767 | ||||||||
| Provision for unfunded commitments | (6 | ) | 141 | 111 | |||||||
| Total provision for credit losses | $ | 17,712 | $ | 12,799 | $ | 3,878 | |||||
| (1) | For credit enhanced loans, fintech partners are required to maintain a deposit account at FinWise, which is used to recover charge-offs. The provision for credit losses on these loans differs from the core portfolio, as it is fully offset by expected recoveries under the partner guarantee, which is recognized as credit enhancement income in non-interest income. |
The Company's provision for credit losses was $17.7 million for the fourth quarter of 2025, compared to $12.8 million for the prior quarter and $3.9 million for the prior year period. The increase in the provision for credit losses from the prior quarter and the prior year period resulted primarily from growth in the credit enhanced loan portfolio as well as higher net charge-offs resulting from our adoption of more conservative servicing and administration standards which prompted an accelerated classification of nonperforming loans and charge-offs.
Non-interest Income
| Three Months Ended | |||||||||||
| ($ in thousands) | 12/31/2025 | 9/30/2025 | 12/31/2024 | ||||||||
| Non-interest income | |||||||||||
| Strategic Program fees | $ | 5,477 | $ | 6,180 | $ | 4,899 | |||||
| Gain on sale of loans | 2,190 | 1,854 | 872 | ||||||||
| SBA loan servicing fees, net | 4 | (242 | ) | 181 | |||||||
| Change in fair value on investment in BFG | 400 | 200 | (200 | ) | |||||||
| Credit enhancement income | 12,801 | 8,762 | 25 | ||||||||
| Other miscellaneous income (loss) | 1,410 | 1,298 | (174 | ) | |||||||
| Total non-interest income | $ | 22,282 | $ | 18,052 | $ | 5,603 | |||||
The increase in non-interest income from the prior quarter was primarily due to increases in credit enhancement income. Credit enhancement income mirrors the provision for credit losses on credit enhanced loans and increased principally due to the higher credit enhanced loan balances outstanding at December 31, 2025. Offsetting this non-interest income increase in part was a decrease in Strategic Program fees due to lower origination volumes.
The increase in non-interest income compared to the prior year period was primarily due to increases in credit enhanced loan balances which generated higher credit enhancement income. Additionally, the increased sales of the guaranteed portions of SBA 7(a) loans led to an increase in gains on loan sales, while higher originations resulted in increased Strategic Program fees. Other miscellaneous income also increased, largely because of a charge in the prior year period of $0.9 million to remove unamortized broker premiums upon calling $160.0 million of callable certificates of deposits, an increase in current quarter dividends received from our investment in BFG as well as an increase in operating lease rental income during the current quarter.
Non-interest Expense
| Three Months Ended | |||||||||||
| ($ in thousands) | 12/31/2025 | 9/30/2025 | 12/31/2024 | ||||||||
| Non-interest expense | |||||||||||
| Salaries and employee benefits | $ | 11,157 | $ | 10,814 | $ | 9,375 | |||||
| Professional services | 899 | 876 | 556 | ||||||||
| Occupancy and equipment expenses | 434 | 456 | 533 | ||||||||
| Credit enhancement servicing expense | 961 | 248 | 1 | ||||||||
| Credit enhancement guarantee expense | 6,724 | 1,720 | 5 | ||||||||
| Other operating expenses | 3,476 | 3,335 | 3,094 | ||||||||
| Total non-interest expense | $ | 23,651 | $ | 17,449 | $ | 13,564 | |||||
The increase in non-interest expense from the prior quarter resulted primarily from increases in credit enhancement guarantee and servicing expenses largely related to growth in credit enhanced loans.
The increase in non-interest expense from the prior year period was primarily due to an increase in credit enhancement program expenses resulting from growth in credit enhanced loans and salaries and employee benefits mainly from the amortization of deferred compensation awards incurred to retain and motivate our employees.
FinWise's efficiency ratio was 50.5% for the fourth quarter, compared to 47.6% for the prior quarter and 64.2% for the prior year period. We expect the efficiency ratio to continue improving as we begin to realize revenues from interest earned on credit enhanced loan balances.
Tax Rate
The Company's effective tax rate was 28.7% for the fourth quarter of 2025, compared to 23.7% for the prior quarter and 24.3% for the prior year period. The increase from the prior quarter and prior year period was principally due to an increase in the exclusion of compensation expense for highly compensated individuals and the apportionment of income between states with various tax rates.
Net Income
Net income was $3.9 million for the fourth quarter of 2025, compared to $4.9 million for the prior quarter and $2.8 million for the prior year period. The changes in net income for the three months ended December 31, 2025 compared to the prior quarter and prior year period are generally the result of the factors discussed in the foregoing sections.
Balance Sheet
The Company's total assets were $977.1 million as of December 31, 2025, an increase from $899.9 million as of September 30, 2025 and $746.0 million as of December 31, 2024. The increase in total assets from September 30, 2025 was primarily due to continued growth in the Company's loans held-for-investment, net, of $17.8 million, interest-bearing cash deposits of $56.1 million, and an increase in the credit enhancement asset of $11.2 million. The increase in total assets compared to December 31, 2024 was primarily due to increases in the Company's loans held-for-investment, net, of $103.5 million, loans held-for-sale portfolio of $54.9 million, interest-bearing cash deposits of $51.8 million, and credit enhancement asset of $22.3 million. The increased loan balances are generally consistent with our strategy to grow the loan portfolio with higher quality lower risk assets.
The following table provides the composition and gross balances of loans held-for-investment ("HFI") as of the dates indicated:
| 12/31/2025 | 9/30/2025 | 12/31/2024 | |||||||||||||||||||||
| ($ in thousands) | Amount | % of total loans | Amount | % of total loans | Amount | % of total loans | |||||||||||||||||
| SBA | $ | 205,615 | 34.5 | % | $ | 240,060 | 42.2 | % | $ | 255,056 | 54.8 | % | |||||||||||
| Commercial leases | 78,743 | 13.2 | % | 90,413 | 15.8 | % | 70,153 | 15.1 | % | ||||||||||||||
| Commercial, non-real estate | 4,201 | 0.7 | % | 4,827 | 0.9 | % | 3,691 | 0.8 | % | ||||||||||||||
| Residential real estate | 59,602 | 10.0 | % | 60,503 | 10.7 | % | 51,574 | 11.1 | % | ||||||||||||||
| Strategic Program loans: | |||||||||||||||||||||||
| Strategic Program loans - with credit enhancement | 117,913 | 19.8 | % | 41,369 | 7.3 | % | 891 | 0.2 | % | ||||||||||||||
| Strategic Program loans - without credit enhancement | 21,637 | 3.6 | % | 21,654 | 3.8 | % | 19,231 | 4.1 | % | ||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||
| Owner occupied | 84,016 | 14.1 | % | 83,302 | 14.7 | % | 41,046 | 8.8 | % | ||||||||||||||
| Non-owner occupied | 1,638 | 0.3 | % | 1,424 | 0.3 | % | 1,379 | 0.3 | % | ||||||||||||||
| Consumer | 21,926 | 3.8 | % | 24,250 | 4.3 | % | 22,212 | 4.8 | % | ||||||||||||||
| Total period end loans | $ | 595,292 | 100.0 | % | $ | 567,802 | 100.0 | % | $ | 465,233 | 100.0 | % | |||||||||||
Note: SBA loans as of December 31, 2025, September 30, 2025 and December 31, 2024 include $102.7 million, $132.2 million and $158.7 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA. The HFI balance on Strategic Program loans without credit enhancement with annual interest rates below 36% as of December 31, 2025, September 30, 2025 and December 31, 2024 was $3.8 million, $3.9 million and $3.1 million, respectively.
Total gross loans HFI as of December 31, 2025 increased $27.5 million and $130.1 million compared to September 30, 2025 and December 31, 2024, respectively. The Company increased its sales of the guaranteed portion of SBA loans during the fourth quarter of 2025, resulting in higher gains on sale of loans. The declines in the SBA and commercial lease portfolios between third and fourth quarters of 2025 was mainly due to sales of associated loans within those portfolios. Management anticipates that these portfolios will continue to grow in 2026, aligned with the Company's objective to diversify its loan portfolio with higher-quality but lower- interest rate loans. The credit enhanced portfolio of the Strategic Program loans increased $76.5 million in the quarter to $117.9 million consistent with the Company's strategy to increase the outstanding balance of lower credit risk loans.
The following table presents the Company's deposit composition as of the dates indicated:
| As of | |||||||||||||||||||||||
| | 12/31/2025 | 9/30/2025 | 12/31/2024 | ||||||||||||||||||||
| ($ in thousands) | Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||
| Noninterest-bearing demand deposits | $ | 168,442 | 22.3 | % | $ | 130,601 | 19.2 | % | $ | 126,782 | 23.3 | % | |||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||||
| Demand | 74,817 | 9.9 | % | 89,443 | 13.1 | % | 71,403 | 13.1 | % | ||||||||||||||
| Savings | 11,017 | 1.5 | % | 11,495 | 1.7 | % | 9,287 | 1.7 | % | ||||||||||||||
| Money market | 22,017 | 2.9 | % | 22,634 | 3.3 | % | 16,709 | 3.0 | % | ||||||||||||||
| Time certificates of deposit | 478,268 | 63.4 | % | 428,137 | 62.7 | % | 320,771 | 58.9 | % | ||||||||||||||
| Total period end deposits | $ | 754,561 | 100.0 | % | $ | 682,310 | 100.0 | % | $ | 544,952 | 100.0 | % | |||||||||||
The increase in total deposits as of December 31, 2025 from September 30, 2025 and December 31, 2024 was driven primarily by growth in time certificates of deposits, which were added to fund loan growth and enhance the liquidity of the balance sheet and an increase in noninterest-bearing demand deposits primarily related to collateral deposits by certain strategic programs in anticipation of increased volumes in student loan fundings in January 2026.
Total shareholders' equity as of December 31, 2025 increased $5.4 million to $193.2 million from $187.8 million at September 30, 2025. Compared to December 31, 2024, total shareholders' equity increased by $19.5 million from $173.7 million. The increases from September 30, 2025 and December 31, 2024 were primarily due to net income generated throughout the respective periods.
Bank Regulatory Capital Ratios
The following table presents the leverage ratios for the Bank as of the dates indicated as determined under the Community Bank Leverage Ratio Framework of the Federal Deposit Insurance Corporation:
| As of | |||||||
| Capital Ratios | 12/31/2025 | 9/30/2025 | 12/31/2024 | Well-Capitalized Requirement | |||
| Leverage ratio | 16.9% | 17.2% | 20.6% | 9.0% | |||
The decrease in the leverage ratio from the prior quarter and prior year period resulted primarily from the growth in the loan portfolio exceeding the relative growth in capital from earnings. The Bank's capital levels as of December 31, 2025 remain sufficiently above the regulatory well-capitalized guidelines as of December 31, 2025.
Share Repurchase Program
Since the share repurchase program's inception in March 2024, the Company has repurchased and subsequently retired a total of 44,608 shares for $0.5 million. There were no shares repurchased during the fourth quarter of 2025.
Asset Quality
The recorded balances of nonperforming loans were $43.7 million, or 7.3% of total loans held-for-investment, as of December 31, 2025, compared to $42.8 million, or 7.5% of total loans held-for-investment, as of September 30, 2025 and $36.5 million, or 7.8% of total loans held-for-investment, as of December 31, 2024. The balances of nonperforming loans guaranteed by the SBA were $24.2 million, $23.3 million, and $19.2 million as of December 31, 2025, September 30, 2025 and December 31, 2024, respectively. The increase in nonperforming loans from the prior quarter and prior year period was primarily attributable to an increase in the SBA 7(a) loan portfolio being classified as nonaccrual mainly due to the negative impact of sustained elevated interest rates on the Company's small business borrowers. The Company's allowance for credit losses to total loans held-for-investment was 6.2% as of December 31, 2025 compared to 4.5% as of September 30, 2025 and 2.8% as of December 31, 2024. The increase in the ratio from the prior quarter and prior year period was primarily due to the provision for credit losses related to the growth of the credit enhanced loan balances.
The Company's net charge-offs were $6.7 million, $3.1 million and $3.2 million for the three months ended December 31, 2025, September 30, 2025, and December 31, 2024, respectively. The increase in charge-offs from the prior quarter and the prior year period resulted primarily from growth in the credit enhanced loan portfolio as well as higher net charge-offs in the non-SP loan portfolios resulting from our adoption of more conservative servicing and administration standards which prompted an accelerated classification of nonperforming loans and charge-offs.
The following table presents a summary of changes in the allowance for credit losses and credit quality data for the periods indicated:
| Three Months Ended | |||||||||||
| ($ in thousands) | 12/31/2025 | 9/30/2025 | 12/31/2024 | ||||||||
| Allowance for credit losses: | |||||||||||
| Beginning balance | $ | 25,778 | $ | 16,247 | $ | 12,661 | |||||
| Provision for credit losses(1) | 17,718 | 12,658 | 3,766 | ||||||||
| Charge-offs | |||||||||||
| Construction and land development | — | — | — | ||||||||
| Residential real estate | (704 | ) | (33 | ) | (206 | ) | |||||
| Residential real estate multifamily | — | — | — | ||||||||
| Commercial real estate: | |||||||||||
| Owner occupied | (1,204 | ) | (258 | ) | (411 | ) | |||||
| Non-owner occupied | — | — | — | ||||||||
| Commercial and industrial | (441 | ) | (409 | ) | (555 | ) | |||||
| Consumer | (212 | ) | (119 | ) | (60 | ) | |||||
| Lease financing receivables | (73 | ) | (52 | ) | — | ||||||
| Strategic Program loans | (4,432 | ) | (2,746 | ) | (2,528 | ) | |||||
| Recoveries | |||||||||||
| Construction and land development | — | — | — | ||||||||
| Residential real estate | 2 | 3 | 6 | ||||||||
| Residential real estate multifamily | — | — | — | ||||||||
| Commercial real estate: | |||||||||||
| Owner occupied | 28 | 90 | 112 | ||||||||
| Non-owner occupied | — | — | — | ||||||||
| Commercial and industrial | — | 1 | — | ||||||||
| Consumer | 5 | 3 | 1 | ||||||||
| Lease financing receivables | 3 | 52 | 77 | ||||||||
| Strategic Program loans | 328 | 341 | 313 | ||||||||
| Ending Balance | $ | 36,796 | $ | 25,778 | $ | 13,176 | |||||
| Credit Quality Data | As of and For the Three Months Ended | ||||||||||
| ($ in thousands) | 12/31/2025 | 9/30/2025 | 12/31/2024 | ||||||||
| Nonperforming loans: | |||||||||||
| Guaranteed | $ | 24,195 | $ | 23,333 | $ | 19,203 | |||||
| Unguaranteed | 19,518 | 19,445 | 17,281 | ||||||||
| Total nonperforming loans | $ | 43,713 | $ | 42,778 | $ | 36,484 | |||||
| Allowance for credit losses | $ | 36,796 | $ | 25,778 | $ | 13,176 | |||||
| Net charge-offs | $ | 6,700 | $ | 3,126 | $ | 3,249 | |||||
| Total loans held-for-investment | $ | 595,292 | $ | 567,802 | $ | 465,233 | |||||
| Total loans held-for-investment less guaranteed balances | $ | 492,598 | $ | 435,557 | $ | 306,483 | |||||
| Average loans held-for-investment | $ | 594,967 | $ | 550,534 | $ | 454,474 | |||||
| Nonperforming loans to total loans held-for-investment | 7.3 | % | 7.5 | % | 7.8 | % | |||||
| Unguaranteed nonperforming loans to total loans held-for-investment | 3.3 | % | 3.4 | % | 3.7 | % | |||||
| Net charge-offs to average loans held-for-investment (annualized) | 4.5 | % | 2.3 | % | 2.8 | % | |||||
| Allowance for credit losses to loans held-for-investment | 6.2 | % | 4.5 | % | 2.8 | % | |||||
| Allowance for credit losses to loans held-for-investment less guaranteed balances | 7.5 | % | 5.9 | % | 4.3 | % | |||||
| (1) | Excludes the provision for unfunded commitments. |
Webcast and Conference Call Information
FinWise will host a conference call today at 5:00 PM ET to discuss its financial results for the fourth quarter and year ended December 31, 2025. A simultaneous audio webcast of the conference call will be available at https://investors.finwisebancorp.com/.
The dial-in number for the conference call is (877) 423-9813 (toll-free) or (201) 689-8573 (international). The conference ID is 13757193. Please dial the number 10 minutes prior to the scheduled start time.
A webcast replay of the call will be available at investors.finwisebancorp.com for six months following the call.
Website Information
The Company intends to use its website, www.finwisebancorp.com, as a means of 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 which wholly owns FinWise Bank, a Utah chartered state bank, and FinWise Investment LLC (together "FinWise"). FinWise provides Banking and Payments solutions to fintech brands. FinWise's existing Strategic Program Lending business, conducted through scalable API-driven infrastructure, powers deposit, lending and payments programs for leading fintech brands. As part of Strategic Program Lending, FinWise also provides a Credit Enhanced Balance Sheet Program, which addresses the challenges that lending and card programs face diversifying their funding sources and managing capital efficiency. In addition, FinWise manages other Lending programs such as SBA 7(a), Owner Occupied Commercial Real Estate, and Leasing, which provide flexibility for disciplined balance sheet growth. FinWise is also expanding and diversifying its business model by incorporating Payments (MoneyRails™) and BIN Sponsorship offerings. Through its compliance oversight and risk management-first culture, FinWise is well positioned to guide fintechs through a rigorous process to facilitate regulatory compliance. For more information about FinWise visit https://investors.finwisebancorp.com.
Contacts
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"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995
This release may contain forward-looking statements within the meaning of 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, the Company's strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. These statements are often, but not always, made through the use of words or phrases such as "may," "should," "could," "predict," "believe," "expect," "anticipate," "seek," "estimate," "intend," "plan," "project," "projection," "forecast," "budget," "goal," "target," "would," "aim" and "outlook," or similar expressions generally indicate a forward-looking statement.
These forward-looking statements are based on management assumptions and involve risks and uncertainties that are subject to change based on various important factors, some of which are beyond the Company's control. Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause the Company's actual results to differ materially from those indicated in these forward-looking statements, including: the success of the financial technology and banking-as-a-service industries, as well as the continued evolution of the regulation of these industries; the Company's ability to maintain and grow its relationships with its service providers and reliance on such providers to comply with regulatory regimes; the Company's ability to keep pace with rapid technological changes in the industry or implement new technology effectively; ability to effectively manage and remediate system failure or cybersecurity breaches of the Company's network security; the Company's ability to measure and manage its credit risk effectively and any deterioration of the business and economic conditions in the Company's primary market areas; the adequacy of the Company's allowance for credit losses; changes in Small Business Administration rules, regulations and loan products and the existing regulatory framework for brokered deposits; higher inflation and its impacts; the effects of changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs on its trading partners; the value of collateral securing the Company's loans; the Company's levels of nonperforming assets; the potential for negative consequences resulting from regulatory violations, investigations and examinations, including potential supervisory actions, the assessment of fines and penalties, the imposition of sanctions, the need to undertake remedial actions and possible damage to the Company's reputation; natural disasters and adverse weather, acts of terrorism, pandemics, an outbreak of hostilities or other international or domestic calamities; anticipated benefits of new lines of business that the Company may enter or investments or acquisitions the Company may make that are not realized within the expected time frame or at all; further negative ratings outlooks or downgrades of the long-term credit rating of the United States; the ongoing government shutdown and other political impasses, including with respect to the debt ceiling and the federal budget of the United States.
The Company cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management's current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review the Company's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. The Company does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by the Company or by or on behalf of the Company, except as may be required under applicable law.
| FINWISE BANCORP CONSOLIDATED BALANCE SHEETS ($ in thousands; Unaudited) | |||||||||||
| 12/31/2025 | 9/30/2025 | 12/31/2024 | |||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | |||||||||||
| Cash and due from banks | $ | 12,082 | $ | 10,362 | $ | 9,600 | |||||
| Interest-bearing deposits | 151,318 | 95,265 | 99,562 | ||||||||
| Total cash and cash equivalents | 163,400 | 105,627 | 109,162 | ||||||||
| Investment securities available-for-sale, at fair value | 27,755 | 27,761 | 29,930 | ||||||||
| Investment securities held-to-maturity, at cost | 9,927 | 10,617 | 12,565 | ||||||||
| Investment in Federal Home Loan Bank ("FHLB") stock, at cost | 440 | 440 | 349 | ||||||||
| Strategic Program loans held-for-sale, at lower of cost or fair value | 146,473 | 156,718 | 91,588 | ||||||||
| Loans held-for-investment, net | 551,334 | 533,549 | 447,812 | ||||||||
| Credit enhancement asset | 22,411 | 11,214 | 111 | ||||||||
| Premises and equipment, net | 2,540 | 2,725 | 3,548 | ||||||||
| Assets subject to operating leases, net | 12,575 | 13,317 | 10,176 | ||||||||
| Accrued interest receivable | 3,707 | 1,959 | 3,566 | ||||||||
| Deferred taxes, net | 2,345 | 1,079 | — | ||||||||
| SBA servicing asset, net | 3,547 | 3,121 | 3,273 | ||||||||
| Investment in Business Funding Group ("BFG"), at fair value | 9,000 | 8,600 | 7,700 | ||||||||
| Operating lease right-of-use ("ROU") assets | 2,963 | 3,162 | 3,564 | ||||||||
| Income tax receivable, net | 3,545 | 3,314 | 8,868 | ||||||||
| Other assets | 15,173 | 16,726 | 13,764 | ||||||||
| Total assets | $ | 977,135 | $ | 899,929 | $ | 745,976 | |||||
| | |||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| Liabilities | |||||||||||
| Deposits | |||||||||||
| Noninterest-bearing | $ | 168,442 | $ | 130,601 | $ | 126,782 | |||||
| Interest-bearing | 586,119 | 551,709 | 418,170 | ||||||||
| Total deposits | 754,561 | 682,310 | 544,952 | ||||||||
| Accrued interest payable | 2,632 | 4,518 | 1,494 | ||||||||
| Income taxes payable, net | 837 | 839 | 4,423 | ||||||||
| Deferred taxes, net | — | — | 899 | ||||||||
| Operating lease liabilities | 4,408 | 4,683 | 5,302 | ||||||||
| Other liabilities | 21,502 | 19,814 | 15,186 | ||||||||
| Total liabilities | 783,940 | 712,164 | 572,256 | ||||||||
| Shareholders' equity | |||||||||||
| Common stock | 14 | 14 | 13 | ||||||||
| Additional paid-in-capital | 60,958 | 59,417 | 56,926 | ||||||||
| Retained earnings | 132,197 | 128,282 | 116,594 | ||||||||
| Accumulated other comprehensive income, net of tax | 26 | 52 | 187 | ||||||||
| Total shareholders' equity | 193,195 | 187,765 | 173,720 | ||||||||
| Total liabilities and shareholders' equity | $ | 977,135 | $ | 899,929 | $ | 745,976 | |||||
| FINWISE BANCORP CONSOLIDATED STATEMENTS OF INCOME ($ in thousands, except per share amounts; Unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| 12/31/2025 | 9/30/2025 | 12/31/2024 | |||||||||
| Interest income | |||||||||||
| Interest and fees on loans | $ | 28,915 | $ | 22,532 | $ | 18,388 | |||||
| Interest on securities | 349 | 360 | 401 | ||||||||
| Other interest income | 970 | 1,074 | 573 | ||||||||
| Total interest income | 30,234 | 23,966 | 19,362 | ||||||||
| Interest expense | |||||||||||
| Interest on deposits | 5,666 | 5,359 | 3,833 | ||||||||
| Total interest expense | 5,666 | 5,359 | 3,833 | ||||||||
| Net interest income | 24,568 | 18,607 | 15,529 | ||||||||
| Provision for credit losses | 17,712 | 12,799 | 3,878 | ||||||||
| Net interest income after provision for credit losses | 6,856 | 5,808 | 11,651 | ||||||||
| Non-interest income | |||||||||||
| Strategic Program fees | 5,477 | 6,180 | 4,899 | ||||||||
| Gain on sale of loans, net | 2,190 | 1,854 | 872 | ||||||||
| SBA loan servicing fees, net | 4 | (242 | ) | 181 | |||||||
| Change in fair value on investment in BFG | 400 | 200 | (200 | ) | |||||||
| Credit enhancement income | 12,801 | 8,762 | 25 | ||||||||
| Other miscellaneous income | 1,410 | 1,298 | (174 | ) | |||||||
| Total non-interest income | 22,282 | 18,052 | 5,603 | ||||||||
| Non-interest expense | |||||||||||
| Salaries and employee benefits | 11,157 | 10,814 | 9,375 | ||||||||
| Professional services | 899 | 876 | 556 | ||||||||
| Occupancy and equipment expenses | 434 | 456 | 533 | ||||||||
| Credit enhancement servicing expense | 961 | 248 | 1 | ||||||||
| Credit enhancement guarantee expense | 6,724 | 1,720 | 5 | ||||||||
| Other operating expenses | 3,476 | 3,335 | 3,094 | ||||||||
| Total non-interest expense | 23,651 | 17,449 | 13,564 | ||||||||
| Income before income taxes | 5,487 | 6,411 | 3,690 | ||||||||
| Provision for income taxes | 1,572 | 1,520 | 897 | ||||||||
| Net income | $ | 3,915 | $ | 4,891 | $ | 2,793 | |||||
| Earnings per share, basic | $ | 0.29 | $ | 0.36 | $ | 0.21 | |||||
| Earnings per share, diluted | $ | 0.27 | $ | 0.34 | $ | 0.20 | |||||
| Weighted average shares outstanding, basic | 12,952,200 | 12,859,264 | 12,659,986 | ||||||||
| Weighted average shares outstanding, diluted | 13,635,186 | 13,615,354 | 13,392,411 | ||||||||
| Shares outstanding at end of period | 13,655,961 | 13,571,090 | 13,211,640 | ||||||||
| FINWISE BANCORP CONSOLIDATED STATEMENTS OF INCOME ($ in thousands, except per share amounts) | |||||||
| Years Ended | |||||||
| 12/31/2025 | 12/31/2024 | ||||||
| (Unaudited) | |||||||
| Interest income | |||||||
| Interest and fees on loans | $ | 87,087 | $ | 68,892 | |||
| Interest on securities | 1,489 | 897 | |||||
| Other interest income | 3,902 | 4,563 | |||||
| Total interest income | 92,478 | 74,352 | |||||
| Interest expense | |||||||
| Interest on deposits | 20,295 | 15,440 | |||||
| Total interest expense | 20,295 | 15,440 | |||||
| Net interest income | 72,183 | 58,912 | |||||
| Provision for credit losses | 38,573 | 11,573 | |||||
| Net interest income after provision for credit losses | 33,610 | 47,339 | |||||
| Non-interest income | |||||||
| Strategic Program fees | 22,024 | 17,762 | |||||
| Gain on sale of loans, net | 6,373 | 2,036 | |||||
| SBA loan servicing fees, net | (156 | ) | 1,137 | ||||
| Change in fair value on investment in BFG | 1,300 | (625 | ) | ||||
| Credit enhancement income | 23,924 | 111 | |||||
| Other miscellaneous income | 5,018 | 2,064 | |||||
| Total non-interest income | 58,483 | 22,485 | |||||
| Non-interest expense | |||||||
| Salaries and employee benefits | 42,288 | 35,205 | |||||
| Professional services | 3,630 | 4,736 | |||||
| Occupancy and equipment expenses | 1,877 | 2,179 | |||||
| Credit enhancement servicing expense | 1,222 | 1 | |||||
| Credit enhancement guarantee expense | 8,533 | 8 | |||||
| Other operating expenses | 12,783 | 10,706 | |||||
| Total non-interest expense | 70,333 | 52,835 | |||||
| Income before income taxes | 21,760 | 16,989 | |||||
| Provision for income taxes | 5,669 | 4,247 | |||||
| Net income | $ | 16,091 | $ | 12,742 | |||
| Earnings per share, basic | $ | 1.20 | $ | 0.98 | |||
| Earnings per share, diluted | $ | 1.13 | $ | 0.93 | |||
| Weighted average shares outstanding, basic | 12,828,016 | 12,612,455 | |||||
| Weighted average shares outstanding, diluted | 13,565,336 | 13,228,869 | |||||
| Shares outstanding at end of period | 13,655,961 | 13,211,160 | |||||
| FINWISE BANCORP AVERAGE BALANCES, YIELDS, AND RATES ($ in thousands; Unaudited) | |||||||||||||||||||||||||||||||||||
| | Three Months Ended | ||||||||||||||||||||||||||||||||||
| | 12/31/2025 | 9/30/2025 | 12/31/2024 | ||||||||||||||||||||||||||||||||
| Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | |||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | $ | 101,074 | $ | 970 | 3.81 | % | $ | 97,404 | $ | 1,074 | 4.37 | % | $ | 52,375 | $ | 573 | 4.35 | % | |||||||||||||||||
| Investment securities | 38,124 | 349 | 3.64 | % | 39,497 | 360 | 3.61 | % | 43,212 | 401 | 3.69 | % | |||||||||||||||||||||||
| Strategic Program loans held-for-sale | 119,139 | 5,765 | 19.20 | % | 132,314 | 6,219 | 18.65 | % | 67,676 | 5,040 | 29.63 | % | |||||||||||||||||||||||
| Loans held-for-investment | 594,967 | 23,150 | 15.44 | % | 550,534 | 16,313 | 11.76 | % | 454,474 | 13,348 | 11.68 | % | |||||||||||||||||||||||
| Total interest-earning assets | 853,304 | 30,234 | 14.06 | % | 819,749 | 23,966 | 11.60 | % | 617,737 | 19,362 | 12.47 | % | |||||||||||||||||||||||
| Noninterest-earning assets | 66,770 | 65,084 | 55,767 | ||||||||||||||||||||||||||||||||
| Total assets | $ | 920,074 | $ | 884,833 | $ | 673,504 | |||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Demand | $ | 76,080 | $ | 663 | 3.46 | % | $ | 69,941 | $ | 630 | 3.57 | % | $ | 57,305 | $ | 617 | 4.28 | % | |||||||||||||||||
| Savings | 11,507 | 47 | 1.62 | % | 12,271 | 54 | 1.75 | % | 9,192 | 9 | 0.40 | % | |||||||||||||||||||||||
| Money market accounts | 20,990 | 193 | 3.64 | % | 24,629 | 237 | 3.82 | % | 15,726 | 147 | 3.73 | % | |||||||||||||||||||||||
| Certificates of deposit | 458,838 | 4,763 | 4.12 | % | 417,059 | 4,438 | 4.22 | % | 272,799 | 3,060 | 4.46 | % | |||||||||||||||||||||||
| Total deposits | 567,415 | 5,666 | 3.96 | % | 523,900 | 5,359 | 4.06 | % | 355,022 | 3,833 | 4.30 | % | |||||||||||||||||||||||
| Other borrowings | — | — | — | % | — | — | — | % | 79 | — | 0.35 | % | |||||||||||||||||||||||
| Total interest-bearing liabilities | 567,415 | 5,666 | 3.96 | % | 523,900 | 5,359 | 4.06 | % | 355,101 | 3,833 | 4.29 | % | |||||||||||||||||||||||
| Noninterest-bearing deposits | 129,063 | 140,499 | 119,945 | ||||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities | 32,738 | 36,552 | 27,636 | ||||||||||||||||||||||||||||||||
| Shareholders' equity | 190,858 | 183,882 | 170,823 | ||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 920,074 | $ | 884,833 | $ | 673,505 | |||||||||||||||||||||||||||||
| Net interest income and interest rate spread | $ | 24,568 | 10.10 | % | $ | 18,607 | 7.54 | % | $ | 15,529 | 8.18 | % | |||||||||||||||||||||||
| Net interest margin | 11.42 | % | 9.01 | % | 10.00 | % | |||||||||||||||||||||||||||||
| Ratio of average interest-earning assets to average interest-bearing liabilities | 150.38 | % | 156.47 | % | 173.96 | % | |||||||||||||||||||||||||||||
| FINWISE BANCORP AVERAGE BALANCES, YIELDS, AND RATES ($ in thousands; Unaudited) | |||||||||||||||||||||||
| | Years Ended | ||||||||||||||||||||||
| | 12/31/2025 | 12/31/2024 | |||||||||||||||||||||
| Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | ||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||
| Interest-bearing deposits | $ | 93,107 | $ | 3,902 | 4.19 | % | $ | 87,086 | $ | 4,563 | 5.24 | % | |||||||||||
| Investment securities | 40,449 | 1,489 | 3.68 | % | 26,691 | 897 | 3.36 | % | |||||||||||||||
| Strategic Program loans held-for-sale | 112,778 | 21,884 | 19.40 | % | 58,896 | 17,698 | 30.05 | % | |||||||||||||||
| Loans held-for-investment | 535,671 | 65,203 | 12.17 | % | 417,207 | 51,194 | 12.27 | % | |||||||||||||||
| Total interest-earning assets | 782,005 | 92,478 | 11.83 | % | 589,880 | 74,352 | 12.60 | % | |||||||||||||||
| Noninterest-earning assets | 57,484 | 47,598 | |||||||||||||||||||||
| Total assets | $ | 839,489 | $ | 637,478 | |||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||
| Demand | $ | 71,824 | $ | 2,542 | 3.54 | % | $ | 59,317 | $ | 2,108 | 3.55 | % | |||||||||||
| Savings | 10,768 | 123 | 1.14 | % | 9,574 | 66 | 0.69 | % | |||||||||||||||
| Money market accounts | 20,376 | 763 | 3.75 | % | 12,284 | 452 | 3.68 | % | |||||||||||||||
| Certificates of deposit | 401,302 | 16,867 | 4.20 | % | 256,575 | 12,814 | 4.99 | % | |||||||||||||||
| Total deposits | 504,270 | 20,295 | 4.02 | % | 337,750 | 15,440 | 4.57 | % | |||||||||||||||
| Other borrowings | 13 | — | 0.05 | % | 126 | — | 0.34 | % | |||||||||||||||
| Total interest-bearing liabilities | 504,283 | 20,295 | 4.02 | % | 337,876 | 15,440 | 4.57 | % | |||||||||||||||
| Noninterest-bearing deposits | 125,490 | 107,760 | |||||||||||||||||||||
| Noninterest-bearing liabilities | 28,055 | 26,634 | |||||||||||||||||||||
| Shareholders' equity | 181,661 | 165,208 | |||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 839,489 | $ | 637,478 | |||||||||||||||||||
| Net interest income and interest rate spread | $ | 72,183 | 7.80 | % | $ | 58,912 | 8.03 | % | |||||||||||||||
| Net interest margin | 9.23 | % | 9.99 | % | |||||||||||||||||||
| Ratio of average interest-earning assets to average interest-bearing liabilities | 155.07 | % | 174.58 | % | |||||||||||||||||||
Reconciliation of Non-GAAP to GAAP Financial Measures
(Unaudited)
| Efficiency ratio | Three Months Ended | Years Ended | |||||||||||||||||
| ($ in thousands) | 12/31/2025 | 9/30/2025 | 12/31/2024 | 12/31/2025 | 12/31/2024 | ||||||||||||||
| Non-interest expense | $ | 23,651 | $ | 17,449 | $ | 13,564 | $ | 70,333 | $ | 52,835 | |||||||||
| Net interest income | 24,568 | 18,607 | 15,529 | 72,183 | 58,912 | ||||||||||||||
| Total non-interest income | 22,282 | 18,052 | 5,603 | 58,483 | 22,485 | ||||||||||||||
| Adjusted operating revenue | $ | 46,850 | $ | 36,659 | $ | 21,132 | $ | 130,666 | $ | 81,397 | |||||||||
| Efficiency ratio | 50.5 | % | 47.6 | % | 64.2 | % | 53.8 | % | 64.9 | % | |||||||||
The following table presents the impact of the credit enhancement program on our efficiency ratio:
| Adjusted efficiency ratio | Three Months Ended | Years Ended | |||||||||||||||||
| ($ in thousands) | 12/31/2025 | 9/30/2025 | 12/31/2024 | 12/31/2025 | 12/31/2024 | ||||||||||||||
| Non-interest expense (GAAP) | $ | 23,651 | $ | 17,449 | $ | 13,564 | $ | 70,333 | $ | 52,835 | |||||||||
| Less: credit enhancement program expenses | 7,685 | 1,968 | 6 | 9,755 | 9 | ||||||||||||||
| Adjusted non-interest expense | 15,966 | 15,481 | 13,558 | 60,578 | 52,826 | ||||||||||||||
| Net interest income (GAAP) | 24,568 | 18,607 | 15,529 | 72,183 | 58,912 | ||||||||||||||
| Less: credit enhancement program expenses | 7,685 | 1,968 | 6 | 9,755 | 9 | ||||||||||||||
| Adjusted net interest income | 16,883 | 16,639 | 15,523 | 62,428 | 58,903 | ||||||||||||||
| Total non-interest income (GAAP) | 22,282 | 18,052 | 5,603 | 58,483 | 22,485 | ||||||||||||||
| Less: credit enhancement income | 12,801 | 8,762 | 25 | 23,924 | 111 | ||||||||||||||
| Adjusted non-interest income | 9,481 | 9,290 | 5,578 | 34,559 | 22,374 | ||||||||||||||
| Adjusted operating revenue | $ | 26,364 | $ | 25,929 | $ | 21,101 | $ | 96,987 | $ | 81,277 | |||||||||
| Adjusted efficiency ratio | 60.6 | % | 59.7 | % | 64.3 | % | 62.5 | % | 65.0 | % | |||||||||
FinWise has entered into agreements with certain of its Strategic Program service providers pursuant to which they provide credit enhancement on loans which protects the Bank by indemnifying or reimbursing the Bank for incurred credit and fraud losses. We estimate and record a provision for expected losses for these Strategic Program loans in accordance with GAAP, which requires estimation of the provision without consideration of the credit enhancement. When the provision for expected losses over the life of the loans that are subject to such credit enhancement is recorded, a credit enhancement asset reflecting the future recovery of those estimated credit losses pursuant to the strategic partner's guarantee to assume the Bank's credit losses on each of the loans in the respective guaranteed portfolio is also recorded on the balance sheet in the form of non-interest income (credit enhancement income). Reimbursement or indemnification for incurred losses is provided for in the form of a deposit reserve account that is replenished periodically by the respective Strategic Program service provider. The credit enhancement asset is reduced as credit enhancement payments and recoveries are received from the Strategic Program service provider or taken from its cash reserve account. If the Strategic Program service provider is unable to fulfill its contracted obligations under its credit enhancement agreement, then the Bank could be exposed to the loss of the reimbursement and credit enhancement income as a result of this counterparty risk. In the event the Strategic Program service provider is not able to perform according to the contractual terms, the Bank is entitled to receive all the income on the loans. The Bank incurs expenses for the amounts owed to the strategic partner for the credit guarantee and for servicing of the credit enhanced portfolio, if applicable (credit enhancement program expenses). See the following reconciliations of non-GAAP measures for the impact of the credit enhancement on our financial condition and results. Note that these amounts are supplemental and are not a substitute for an analysis based on GAAP measures.
The following non-GAAP measures are presented to illustrate the impact of certain credit enhancement program expenses on total interest income on loans held-for-investment and average yield on loans held-for-investment:
| As of and for the Three Months Ended | As of and for the Three Months Ended | As of and for the Three Months Ended | |||||||||||||||||||||||||||||||||
| ($ in thousands; unaudited) | 12/31/2025 | 9/30/2025 | 12/31/2024 | ||||||||||||||||||||||||||||||||
| Total Average Loans HFI | Total Interest Income on Loans HFI | Average Yield on Loans HFI | Total Average Loans HFI | Total Interest Income on Loans HFI | Average Yield on Loans HFI | Total Average Loans HFI | Total Interest Income on Loans HFI | Average Yield on Loans HFI | |||||||||||||||||||||||||||
| Before adjustment for credit enhancement | $ | 594,967 | $ | 23,150 | 15.44 | % | $ | 550,534 | $ | 16,313 | 11.76 | % | $ | 454,474 | $ | 13,348 | 11.68 | % | |||||||||||||||||
| Less: credit enhancement program expenses | (7,685 | ) | (1,968 | ) | (6 | ) | |||||||||||||||||||||||||||||
| Net of adjustment for credit enhancement program expenses | $ | 594,967 | $ | 15,465 | 10.31 | % | $ | 550,534 | $ | 14,345 | 10.34 | % | $ | 454,474 | $ | 13,342 | 11.68 | % | |||||||||||||||||
| As of and for the Year Ended | As of and for the Year Ended | ||||||||||||||||||||||
| 12/31/2025 | 12/31/2024 | ||||||||||||||||||||||
| ($ in thousands; unaudited) | Total Average Loans HFI | Total Interest Income on Loans HFI | Average Yield on Loans HFI | Total Average Loans HFI | Total Interest Income on Loans HFI | Average Yield on Loans HFI | |||||||||||||||||
| Before adjustment for credit enhancement | $ | 535,671 | $ | 65,203 | 12.17 | % | $ | 417,207 | $ | 51,194 | 12.27 | % | |||||||||||
| Less: credit enhancement program expenses | (9,755 | ) | (9 | ) | |||||||||||||||||||
| Net of adjustment for credit enhancement program expenses | $ | 535,671 | $ | 55,448 | 10.35 | % | $ | 417,207 | $ | 51,185 | 12.27 | % | |||||||||||
Total interest income on loans held-for-investment net of credit enhancement program expenses and the average yield on loans held-for-investment net of credit enhancement program expenses are non-GAAP measures that include the impact of credit enhancement program expenses on total interest income on loans held-for-investment and the respective average yield on loans held-for-investment, the most directly comparable GAAP measures.
The following non-GAAP measures are presented to illustrate the impact of certain credit enhancement program expenses on net interest income and net interest margin:
| As of and for the Three Months Ended | As of and for the Three Months Ended | As of and for the Three Months Ended | |||||||||||||||||||||||||||||||||
| 12/31/2025 | 9/30/2025 | 12/31/2024 | |||||||||||||||||||||||||||||||||
| ($ in thousands; unaudited) | Total Average Interest- Earning Assets | Net Interest Income | Net Interest Margin | Total Average Interest- Earning Assets | Net Interest Income | Net Interest Margin | Total Average Interest- Earning Assets | Net Interest Income | Net Interest Margin | ||||||||||||||||||||||||||
| Before adjustment for credit enhancement | $ | 853,304 | $ | 24,568 | 11.42 | % | $ | 819,749 | $ | 18,607 | 9.01 | % | $ | 617,737 | $ | 15,529 | 10.00 | % | |||||||||||||||||
| Less: credit enhancement program expenses | (7,685 | ) | (1,968 | ) | (6 | ) | |||||||||||||||||||||||||||||
| Net of adjustment for credit enhancement program expenses | $ | 853,304 | $ | 16,883 | 7.85 | % | $ | 819,749 | $ | 16,639 | 8.05 | % | $ | 617,737 | $ | 15,523 | 10.00 | % | |||||||||||||||||
| As of and for the Year Ended | As of and for the Year Ended | ||||||||||||||||||||||
| 12/31/2025 | 12/31/2024 | ||||||||||||||||||||||
| ($ in thousands; unaudited) | Total Average Interest- Earning Assets | Net Interest Income | Net Interest Margin | Total Average Interest- Earning Assets | Net Interest Income | Net Interest Margin | |||||||||||||||||
| Before adjustment for credit enhancement | $ | 782,005 | $ | 72,183 | 9.23 | % | $ | 589,880 | $ | 58,912 | 9.99 | % | |||||||||||
| Less: credit enhancement program expenses | (9,755 | ) | (9 | ) | |||||||||||||||||||
| Net of adjustment for credit enhancement program expenses | $ | 782,005 | $ | 62,428 | 7.98 | % | $ | 589,880 | $ | 58,903 | 9.99 | % | |||||||||||
Net interest income and net interest margin net of credit enhancement program expenses are non-GAAP measures that include the impact of credit enhancement program expenses on net interest income and net interest margin, the most directly comparable GAAP measures.
Non-interest expenses less credit enhancement program expenses is a non-GAAP measure presented to illustrate the impact of credit enhancement program expenses on non-interest expense:
| ($ in thousands; unaudited) | Three Months Ended December 31, 2025 | Three Months Ended September 30, 2025 | Three Months Ended December 31, 2024 | Year Ended December 31, 2025 | Year Ended December 31, 2024 | ||||||||||||||
| Total non-interest expense | $ | 23,651 | $ | 17,449 | $ | 13,564 | $ | 70,333 | $ | 52,835 | |||||||||
| Less: credit enhancement program expenses | (7,685 | ) | (1,968 | ) | (6 | ) | (9,755 | ) | (9 | ) | |||||||||
| Total non-interest expense less credit enhancement program expenses | $ | 15,966 | $ | 15,481 | $ | 13,558 | $ | 60,578 | $ | 52,826 | |||||||||
Total non-interest expense less credit enhancement program expenses is a non-GAAP measure that illustrates the impact of credit enhancement program expenses on non-interest expense, the most directly comparable GAAP measure.
Total non-interest income less credit enhancement income is a non-GAAP measure to illustrate the impact of credit enhancement income resulting from credit enhanced loans on non-interest income:
| ($ in thousands; unaudited) | Three Months Ended December 31, 2025 | Three Months Ended September 30, 2025 | Three Months Ended December 31, 2024 | Year Ended December 31, 2025 | Year Ended December 31, 2024 | ||||||||||||||
| Total non-interest income | $ | 22,282 | $ | 18,052 | $ | 5,603 | $ | 58,483 | $ | 22,485 | |||||||||
| Less: credit enhancement income | (12,801 | ) | (8,762 | ) | (25 | ) | (23,924 | ) | (111 | ) | |||||||||
| Total non-interest income less credit enhancement income | $ | 9,481 | $ | 9,290 | $ | 5,578 | $ | 34,559 | $ | 22,374 | |||||||||
Total non-interest income less indemnification income is a non-GAAP measure that illustrates the impact of credit enhancement income on non-interest income. The most directly comparable GAAP measure is non-interest income.
The following non-GAAP measure is presented to illustrate the effect of the credit enhancement program that creates the credit enhancement on the allowance for credit losses:
| ($ in thousands; unaudited) | As of December 31, 2025 | As ofSeptember 30, 2025 | As ofDecember 31, 2024 | ||||||||
| Allowance for credit losses | $ | 36,796 | $ | 25,778 | $ | 13,176 | |||||
| Less: allowance for credit losses related to credit enhanced loans | (22,411 | ) | (11,214 | ) | (111 | ) | |||||
| Allowance for credit losses excluding the effect of the allowance for credit losses related to credit enhanced loans | $ | 14,385 | $ | 14,564 | $ | 13,065 | |||||
The allowance for credit losses excluding the effect of the allowance for credit losses related to credit enhanced loans is a non-GAAP measure that reflects the effect of the credit enhancement program on the allowance for credit losses. The total outstanding balance of loans held-for-investment with credit enhancement as of December 31, 2025, September 30, 2025 and December 31, 2024 was approximately $117.9 million, $41.4 million and $0.9 million, respectively.
