FinWise Bancorp Reports Strong Loan Growth Amid Rising Credit Risks in Q2 2025 Earnings Call

FinWise Bancorp reported strong loan growth, with a 17% QoQ and 27% YoY increase, and its tangible book value per share rose to $1,351. However, the net interest margin declined to 7.81%, and provision for credit losses increased to $4.7 million, indicating rising credit risk. The company is optimistic about its bin and payment products but remains dependent on wholesale funding.

FinWise Bancorp (NASDAQ: FINW) delivered robust financial results for the second quarter of 2025, with significant growth in loan originations and a marked improvement in earnings. The company reported a net income of $4.1 million, up 28.4% from $3.2 million in the first quarter of 2025. This impressive performance was driven by a 17.3% sequential increase in loan originations, reaching $1.5 billion, and a 26.7% year-over-year growth to $1.2 billion in the prior year. The bank's efficiency ratio improved to 59.5%, indicating better expense management relative to revenue.

Despite the strong growth in loan originations, FinWise Bancorp faced a decline in its net interest margin, which fell to 7.81% from 8.27% in the first quarter of 2025. This contraction was partly attributed to a strategic shift towards higher-quality, lower-yielding loans and interest reversals on nonaccrual loans. Additionally, the provision for credit losses increased to $4.7 million, up from $3.3 million in the first quarter and $2.4 million in the second quarter of 2024. The increase in nonperforming loans, which reached $39.7 million, was partially offset by SBA-guaranteed loans amounting to $21.2 million.

The company's tangible book value per share rose to $1,351, reflecting a 10.8% year-over-year increase. This growth underscores FinWise Bancorp's strong financial position, which allows the company to remain optimistic about its business and payment products. However, the bank's dependency on wholesale funding remains a concern, as it may impact its future financial performance.

FinWise Bancorp's Q2 2025 results highlight the bank's ability to generate substantial loan growth while maintaining a disciplined approach to expense management. The company's strategic focus on higher-quality, lower-yielding loans, despite the decline in net interest margin, demonstrates its commitment to long-term sustainability. The increase in nonperforming loans and credit losses, however, suggests that FinWise Bancorp must continue to monitor and manage credit risk effectively.

References:
[1] https://www.stocktitan.net/news/FINW/fin-wise-bancorp-reports-second-quarter-2025-zvh0s6h0b0y8.html