FinWise Bancorp Q1 FY2026 earnings call

Executive transition with Jim Noon assuming CEO role. First quarter results discussed with earnings shortfall due to SBA portfolio charge-offs. Business has multiple growth engines with credit-enhanced portfolio scaling, cards and payments beginning to contribute. Strong loan originations, core expenses held flat. AI team established for innovation. Credit quality details with charge-offs and provision changes. SBA loan originations and sales discussed.

First quarter loan originations totaled $1.7 billion, up 38% year over year. Credit enhanced balances at quarter end stood at $109 million, an increase of $1 million during the quarter. Interchange income grew to $703,000 in Q1 from $310,000 in the prior quarter. Net charge-offs in Q1 were $9.4 million, with breakdowns in different loan segments. SBA net charge-offs concentrated in legacy credits. Provision for credit losses was $10.6 million in Q1, down from $17.7 million in prior quarter.

Loan originations for Q2 2026 tracking at ~$1.4 billion annual run rate. Full year 2026 loan originations reaffirmed at $1.4 billion baseline with 5% growth. Credit enhanced balances organic growth expected $8 to $10 million per month on average for 2026. Anticipated net charge-offs range for non-credit enhanced loans $4 to $5 million quarterly. Net interest margin outlook with credit enhanced balances and risk reduction strategy. Efficiency ratio focus on driving operating leverage.

Charge-offs in SBA portfolio likely to remain elevated over next few quarters. Seasonality and portfolio maturity impact credit enhanced portfolio charge-offs. Market conditions and partner performance risks.

Q: Can you help size the remaining pool of these legacy SBA credits?

A: About $50 million in performing outstanding balances at end of Q1 with specific attributes.

Q: How to think about NIM change?

A: Change in estimate grosses up interest income and flows through as expense.

Q: Duration of credit enhanced loans?

A: Vary by program, average ~15 months.

Q: Impact of FinTechs pursuing bank charters?

A: Most fintechs still partner with sponsor banks, our pipeline strong.

Q: Top three priorities for first 12 months as CEO?

A: Support business development momentum, empower credit and compliance teams, capitalize on multi-product platform opportunities.