Finwise Bancorp · NASDAQ:FINW
Finwise Bancorp — Q4 2024 Earnings Presentation
34 slides from Finwise Bancorp's earnings presentation, Jan 30, 2025
Slide 1: Fintech Banking and Payments Solutions Investor Presentation
(7 FINWISE BAN dR Fintech Banking and Payments Solutions Investor Presentation January 2025
Slide 2: Disclaimers - Safe Harbor Statement
2 Disclaimers "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995 This presentation contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the cur
Slide 3: FinWise Overview
FinWise Overview Differentiated Business Model • Banking and payments solutions provider to fintechs • Resilient and profitable model with compelling growth opportunities • Compliance oversight and risk management-first culture • Lower risk loan portfolio with disciplined underwriting and collateral
Slide 4: Current Business Model and Balance Sheet Strategy by Business
Equipment Leasing Programs Balance Sheet Strategy: • Originate for Investment • Originations through vendor finance, additional third-party originators, direct channels • Diversify balance sheet Fintech Banking & Payments Solutions (includes Strategic Program Lending) Balance Sheet Strategy: • Mostl
Slide 5: Revenue and Interest Income Sources by Business
5 Interest Income • Monthly fee driven by originated loan volume • On loans held for a few days before sold • On loans held for investment • Incorporated in Strategic Program Lending (SPL) monthly fee • Contractual interest earned on loans maintained on our bal. sheet • Note: payments to Fintechs of
Slide 6: Select Fintech Brands We Currently Support
6 Select Fintech Brands We Currently Support Note: Upstart, Elevate and Reach are not on MoneyRailsTM, but FinWise does handle Payment Processing for them. During 4Q24, we signed an agreement with a strategic lending program that we have not yet formally announced as it is still in its piloting stag
Slide 7: Strategic Program Lending - Program Diversification Has Improved
Strategic Program Lending (SPL) - Program Diversification Has Improved Note: Strategic Program Lending concentration shown since 1Q22 to highlight longer-term pattern in recent years 7
Slide 8: Our Culture - Strong Compliance and Risk Management
Our Culture - Strong Compliance and Risk Management 8 Consistent Investment in Personnel & Infrastructure Provides Regulatory Oversight Support to Fintechs Note: FTEs shown as of the end of each respective quarter; does not include FTEs in Governance and Operations. 38% of FTEs in IT, Compliance, Ri
Slide 9: Growth Strategy: A Broader Banking & Payments Offering
Growth Strategy: A Broader Banking & Payments Offering Business Model Prior to 2025 Business Model Starting in 2025 1SBA 7(a) includes Guaranteed and Unguaranteed loans; Guaranteed loans are guaranteed by U.S Small Business Administration. Note: "Fintech Banking & Payments Solutions" is used to desc
Slide 10: Sizable Addressable Market
Sizable Addressable Market 1 Source: Matt Harris, Blake Adams, Adam Davis, and Jeff Tijsse, "Embedded Finance: What It Takes to Prosper in the New Value Chain", 2022 (Bain & Company, Inc.) 10 2021 2026 Estimated U.S. Market for Platforms and Enablers1 (Total Revenue Across Payments, Lending, Banking
Slide 11: Potential Long-term Benefits from Fintech Banking and Payments Solutions
Potential Long-term Benefits from Fintech Banking and Payments Solutions Offering Revenue Expands and diversifies potential sources of revenue Deposits Helps diversify deposit composition and reduce cost of funds through relationship-banking Credit Quality Increases percentage of Prime loans Profita
Slide 12: Differentiators of Fintech Banking and Payments Solutions Offering
Differentiators of Fintech Banking and Payments Solutions Offering Payments (MoneyRailsTM) • Ease of Use. Brings multiple payments types under one application. Ability to see all payments through a single source • Payment Control. Allows service providers (fintechs) to embed multiple options to move
Slide 13: Payments (MoneyRails) Platform - The Value of a Ledger
Payments (MoneyRailsTM) Platform - The Value of a Ledger 13 Secure, Efficient API-driven Solutions for Fintechs and Commercial Customers • The Ledger provides a strong foundation with controls, standing instructions and connectors for third-party integrations • Highly secured platform with ability t
Slide 14: Payments (MoneyRails) Benefits to Fintechs We Support
Payments (MoneyRailsTM) Benefits to Fintechs We Support 14 A Centralized, Secure Platform and Ledger that Facilitates Movement of Money
Slide 15: Components of Model Enable Scaling and Regulatory Oversight
Components of Model Enable Scaling and Regulatory Oversight Our Technology:Product: Enterprise Data Warehouse -Proprietary and rigorous regulatory process -FinWise controls the data internally Lending programs, including closed and open-ended consumer and commercial • Verify borrower information • V
Slide 16: Representative Fintech Onboarding - a Thorough Selection Process
Risk-based due diligence process involving 3rd-Party Oversight, BSA, Credit & ISO If Fintech is approved, FinWise team continues to negotiate, including defining potential product and terms Fintech is sent to Implementations Team and put into Scoping to fully define requirements of implementation Pi
Slide 17: Disciplined Underwriting Process Mitigates Risk
Disciplined Underwriting Process Mitigates Risk... • Credit risk is managed through combination of policy, data and pricing • Disciplined underwriting process and well collateralized portfolio has helped mitigate net charge-offs, even as credit quality normalized due to higher rate environment • Rem
Slide 18: Diversified and Lower Risk Loan Portfolio
...and Leads to a Diversified and Lower Risk Loan Portfolio • Combined SBA Guaranteed and Strategic Program Loans (HFS) increased to a total of 45.0% of the portfolio as of 4Q24 vs 42.7% as of FY23. Both of these products carry lower credit risk: SBA Guaranteed loans are guaranteed by the U.S Small
Slide 19: Deposit Composition
Deposit Composition 19 As of December 31, 2024; Total Period End Deposits: $545 Million Significant opportunity to gradually diversify deposit composition and reduce cost of funds
Slide 20: Disciplined Expense Management While Investing for Growth
Disciplined Expense Management While Investing for Growth Longer-term increase in Total Non- interest Expense has been driven largely by business infrastructure spend, including headcount, to support organic growth and key strategic initiatives. 2025 Commentary: Expense growth to be correlated to re
Slide 21: TBV Growth Has Been a Win for Shareholders
TBV Growth Has Been a Win for Shareholders Tangible Book Value Per Share (Non-GAAP)1 21 1 See Appendix at end of presentation for full description of metric and Non-GAAP reconciliation. Amounts are as of the end of each respective period 2 Bank Peers defined as: Oregon Bancorp, Inc., Quaint Oak Banc
Slide 22: Industry Recognition as a Top-Performing Bank
Industry Recognition as a Top-Performing Bank 22 FinWise Bancorp ranked in top 3 on American Banker's annual list of Top-Performing Publicly Traded Banks with under $2 billion of assets (based on 3-year average ROAE ending 12/31/23) 2022 2023 2022 2023 20242024 Source: https://www.independentbanker.
Slide 23: Selected Financial Information
Selected Financial Information 23
Slide 24: Solid Originations and Significant Balance Sheet Growth
Solid Originations and Significant Balance Sheet Growth 24 1 HFI = Held for Investment. Note: Total Loan Originations are for the quarterly period. Other amounts are as of the end of each respective period
Slide 25: Growing TBVps and Sustained Historical Profitability
Growing TBVps and Sustained Historical Profitability 251See Appendix for more information and Non-GAAP reconciliation. Tangible Book Value per Share (Non-GAAP) as of the end of each respective period. 2ROAE is negatively affected by high capital levels. Profitability partly impacted by infrastructur
Slide 26: Diversified Income Sources
Diversified Income Sources 26 1 Other Non-interest Income includes all other non-interest income items, excluding Strategic Program Fees.
Slide 27: Well Capitalized Above Regulatory Requirements
Well Capitalized Above Regulatory Requirements 27 Note: data as of the end of each respective period. The Bank's capital levels remain significantly above the well-capitalized regulatory requirement of 9%, pursuant to the Community Bank Leverage Ratio framework adopted by the Bank in 2020.
Slide 28: Appendix
\7 FINWISE Appendix
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations 29 (1) Tangible shareholders’ equity: This measure is not a measure recognized under GAAP and is therefore considered to be a non-GAAP financial measure. Tangible shareholders’ equity is defined as total shareholders’ equity less goodwill and other intangible assets. The mos
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations 30 As of and for the Three Months Ended As of and for the Year Ended ($ in thousands; unaudited) 12/31/2024 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 Yie
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations 31 As of and for the Three Months Ended As of and for the Year Ended ($ in thousands; unaudited) 12/31/2024 12/31/2024 Total Average Interest-Earning Assets Net Interest Income Net Interest Margin Total Average Interest- Earning Assets Net Interest Income Net Interest Margin
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations 32 ($ in thousands; unaudited) Three Months Ended December 31, 2024 Year Ended December 31, 2024 Total non-interest expense $ 13,564 $ 52,835 Less: credit enhancement expense (5) (8) Total non-interest expense less credit enhancement expenses $ 13,559 $ 52,827 Non-interest e
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations 33 ($ in thousands; unaudited) As of December 31, 2024 Allowance for credit losses $ (13,176) Less: credit enhancement asset (111) Allowance for credit losses excluding the effect of the credit enhancement asset $ (13,065) The following non-GAAP measure is presented to illus
Slide 34: Glossary of Terms Used
Glossary of Terms Used 34 ACH (The Automated Clearing House). Electronic funds-transfer system that facilitates payments in the U.S. and internationally. The ACH is run by Nacha. API (Application Programming Interface). Set of defined rules that enable different applications to communicate with each