FinWise Bancorp's Q4 2024: Navigating Contradictions in Loan Growth, Strategic Partnerships, and Balance Sheet Strategies

These are the key contradictions discussed in FinWise Bancorp's latest 2024Q4 earnings call, specifically including: Loan Origination Growth Trends, Strategic Partner Updates, BIN Sponsorship and Payments Initiatives Performance, and the Impact of SBA Loan Sales on the Balance Sheet Strategy:



Revenue and Origination Growth:
- FinWise Bancorp originated $1.3 billion in loans during the fourth quarter, bringing the total for fiscal year 2024 to $5 billion, a 16% increase from the prior year.
- The growth was driven by a rebound in originations from existing programs and continued stability expected in 2025, with new programs beginning to scale up.

SBA Loan Performance:
- FinWise's SBA 7(a) loan originations increased in Q4 compared to Q3, with a 1.5% sequential quarter increase in SBA guaranteed balances.
- The growth was attributed to a gradual pickup in qualified applicants due to slightly lower rates, although loan sales also contributed to gains on sale income.

Credit Enhancement and Strategic Initiatives:
- FinWise added 4 new lending programs, 2 with credit enhancement, 1 payments program, and 1 credit card program in 2024.
- The expansion was part of a strategic initiative to diversify revenue sources and enhance long-term growth, with expectations of incremental contributions from these new programs in 2025.

Capitalization and Risk Management:
- The company is well capitalized, significantly above federal regulatory standards, with approximately 38% of total staff employed within compliance, risk management, BSA, and IT functions.
- This strong capitalization and investment in risk management infrastructure have positioned FinWise to manage regulatory exams and maintain market share.

Credit Quality and NPL Management:
- The provision for credit losses increased to $3.9 million in Q4, primarily due to net charge-offs on non-guaranteed SBA loans, and NPL balances rose to $36.4 million.
- The company's strict collateral policy and portfolio management efforts helped mitigate net charge-offs and reduce delinquency, although higher interest rates continue to impact NPLs.