FINW

Image source: The Motley Fool. Wednesday, July 29, 2026 at 5:00 p.m. ET Chief Executive Officer - James F. Noone Chief Financial Officer - Robert E. Wahlman Executive Chairman - Kent R. Landvatter Operator: Greetings, and welcome to the FinWise Bancorp Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press 0. on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to the speakers. Please go ahead. James F. Noone: Good afternoon, and thank you for joining us today for FinWise Bancorp's Second Quarter 2020 Earnings Conference Call. Earlier today, we filed our earnings release and investor deck and posted them to our investor website at investors.finwisebancorp.com. Today's conference call is being recorded and webcast on the company's investor website. As previously mentioned. On today's call, management's prepared remarks and answers to your questions may contain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ from those discussed today. Forward looking statements represent management's current estimates. Expectations and beliefs and FinWise Bancorp assumes no obligation to update any forward looking statements in the future. We encourage listeners to review the more detailed discussions related to these forward looking statements including factors that may negatively impact them contained in the company's earnings press release and filings with the Securities and Exchange Commission. Hosting the call today are CEO, James F. Noone CFO, Robert E. Wahlman and Executive Chairman, Kent R. Landvatter. Jim, please go ahead. Good afternoon, everyone. Our second quarter earnings of $0.15 per share were short of our expectations. Driven by higher provision expense on the loans where we retain credit risk. We are proactively managing these credit trends, and will continue to empower our credit and compliance teams to identify and reduce risk across the portfolio. As they did during the second quarter resulting in meaningful reductions in our NPA balances. I would like to start by giving you more detail on credit quality. Total provision for credit losses was $22.7 million for the second quarter, compared to $10.6 million in the prior quarter. Of the $39.4 million related to credit enhancement loans. Which is offset by corresponding credit enhancement income and does not affect net results. The remaining $6 million in provision reflected increased provisioning in the core loan portfolio. Driven by losses recognized on the liquidation of nonperforming loans higher reserves on nonperforming and classified, and the more conservative servicing standards we have implemented. As noted earlier, nonperforming loan balances declined in the second quarter, from nearly $50 million last quarter to approximately $38 million this quarter. A meaningful improvement driven primarily by a reduction in SBA 7(a) loans classified as non accrual. This was the result of loan collateral resolutions and paydowns. Of this $38 million approximately 19 million is guaranteed by the federal government and the remaining $19 million is unguaranteed. Total net charge offs, excluding those from loans with credit enhancement, were $5.2 million. Slightly above our guided range of 4 million to $5 million Net charge offs within the core portfolio remain concentrated in the loans with the identified attributes we discussed last quarter. Approximately 80% of this quarter's charge offs within the core portfolio came from this legacy pool. This is a finite well defined pool with approximately $50 million in performing balances outstanding. At the end of the quarter. We are proactively managing this portfolio and will provide additional updates in future quarters as we continue to make progress. Let me walk through net charge offs in each of our 3 key portfolios in more detail. First, SBA net charge offs were 2.9 million versus $2.2 million in the prior quarter. With the vast majority tied to legacy credits referenced earlier. This largely reflects specific industry and loan attributes which we have materially tightened by policy changes. These charge offs are likely to remain elevated over the next few quarters. Second, net charge offs on strategic programs with credit enhancement were 7.9 million versus $4.8 million in Q1. The sequential increase continues to reflect normal seasoning of a larger credit enhanced portfolio, and FinWise is fully reimbursed for any losses. Finally, net charge offs on strategic program loans without credit enhancement were $2.3 million in Q2, versus $2.3 million in Q1. Reflecting normal repayment behavior across the balances we manage here. To summarize, we remain very comfortable with the overall quality of our portfolio. The issues we have described are ring fenced, understood, finite, and being actively managed. Outside of this pool, credit performance across the book remains healthy and as generally expected. In terms of originations, we delivered $1.6 billion this quarter. Ahead of our expectations for 1.4 billion and down modestly from an elevated $1.7 billion in the prior quarter. The sequential change reflects seasonally lower volume in the student loan program. Partially offset by growth across several of our established programs. This resilience in origination reflects the benefit of a more diversified partner base, which is a deliberate part of our strategy and increasingly lets us absorb variability in any single program. We are also pleased to announce on this call the contract signing of a new strategic partnership subsequent to the end of the second quarter. And we expect to share the partner's name in the coming quarters as we get closer to launching the products with them. This is a well established prepaid card provider that will use a combination of our BIN sponsorship and money rail services. The cards issued under this program will be offered on the Mastercard network. And based on the current pace of implementation, we expect the program to go live during the fourth quarter. This partner chose FinWise for our expertise in BIN sponsorship. And our disciplined approach to program execution. The same qualities that continue to differentiate us in the market. Our sales pipeline remains very strong, and we anticipate signing additional and more meaningful deals before year end. it is worth putting this in context. The pipeline we are seeing today built by our expanded sales team, and led by our Chief FinTech Officer, Sarah Greta, is materially stronger, and potentially more meaningful to our bottom line than the pipeline we had just a few years ago. This quarter, we also welcomed a new salesperson with years of industry experience, across both lending and cards. Bringing our business development team to 5 including our Chief Fintech Officer, Turning to our credit enhanced product, balances were $121 million at the end of the second quarter. As we noted in the tallied press release last week, our prior guidance of approximately $217 million in credit enhanced balances by year end 2026 no longer applies. Reflecting the change in how those balances are now structured. We are pleased with the trade off, since we retain the full and higher economics described earlier. Importantly, we still expect some further growth in credit enhanced balances in 2026. The largest partner we mentioned last quarter, whose pace had slowed is picking back up. We also remain in active discussions with several prospects. We will continue to provide quarterly updates going forward. Looking ahead, meaningful credit enhanced balance growth, beyond 2026 will come from new partner additions. The product continues to be a meaningful growth driver for our long term plans, and building that pipeline is where our focus needs to be. In closing, taken together, this quarter reinforces our conviction in the company's strong long term quarter trajectory and in our 3 key priorities. First, we will continue to empower our credit and compliance teams to prune risk proactively as you are seeing us do within the legacy pool within our core portfolio. Second, we will continue to support the momentum in our sales pipeline. that is already coming through from our business development team. And which we highlight in the investor deck this quarter. Finally, we will continue to support the multiproduct platform we have built at FinWise. Because we believe this carries enormous value for both potential partners and our shareholders. That same model that took us from $100 million in credit enhanced balances in 6 months build the infrastructure, pilot it, market it, then launch the right partners. Is now turning the corner in cards, payments, and deposit sponsorship. So in the same way that our compliance investments positioned us during a previous cycle, these product investments are positioning us for exactly the cycle we are now entering. Believe we will have a very strong period for new partnerships over the next 12 to 24 months. The strategic plan we set out on 3 years ago has not changed. what is changing is the pace of opportunity in front of us. And my job is to make sure we capitalize on it, for the long term benefit of our shareholders. I will now turn the call over to our CFO, Robert E. Wahlman, to provide more detail on our financial results. Robert E. Wahlman: Thanks, Jim, and good afternoon, everyone. FinWise reported second quarter net income of 2.1 million and diluted earnings per share of $0.15 Results were driven by strong loan originations growth in net interest income and disciplined expense management, partially offset by a large provision for credit losses in our traditional banking portfolio. Net interest income, was 28.7 million for the second quarter of 2020 compared to 28.1 million for the prior quarter. The increase from the prior quarter was primarily due to growth the credit enhanced loan portfolio and a decrease in non performing loans. Which resulted in a lower reversal of interest on non accrual loans and contributed to an increase in the average yield on loans held for investment. Net interest income also improved as a result of a decrease in average interest bearing liabilities and the related cost of funds. These increases were partially offset by a decline in average balances within the traditional loan portfolio. Net interest margin for second quarter of 2020 was 13.69% compared to 12.90% for the prior quarter. This sequential quarter increase is in line with growth in the credit enhanced loan portfolio a decrease in nonaccrual loans, and a decrease in the yield on interest bearing liabilities. As we have said before, we suggest thinking about net interest income and net interest margin in 2 ways. Including and excluding excess credit enhanced income. Noninterest income 25.6 million versus $14.6 million in the prior quarter, primarily due to an increase in credit enhancement income. Which corresponds to the provision for credit losses on credit enhanced loans and resulted from the credit enhancement portfolio growth. In addition, the company prevailed in litigation with an off boarded strategic partner, which resulted in an increase in miscellaneous income of 450 thousand and a decrease in other expenses of 300 thousand. Noninterest expense was 28.9 million versus 28.3 million in the prior quarter. Primarily due to increases in credit enhancement guarantee and servicing expenses largely resulting from an increase in interest income attributable to the credit enhanced loan portfolio growth. Otherwise, operating expenses were flat quarter over quarter. The efficiency ratio was 53.1% versus 66.3%. Excluding the offsetting credit enhanced accounting effects, the efficiency ratio was 63.9% in the second quarter versus 65% in the first quarter of 2020. Let me briefly review the financials of the Tallied acquisition. As noted in last week's release, we expect roughly $4 million in total integration and transition costs over the coming year. Weighted toward the next 2 quarters and narrowing thereafter. As we eliminate duplicative vendor and platform expenses. These estimates exclude amortization of the acquired platform intellectual property, and customer relationships. These are noncash items requiring that the assets be mark to market and amortized. We expect to complete the initial purchase accounting including the asset valuations by the end of the third quarter of 2020 and we will provide an update then. Total assets were 925 million up from 899 million primarily due to increases in the company's credit enhancement loans the credit enhancement asset, and the loans held for sale portfolio. Partly offset by a decrease in other loans held for investment. Deposits increased to 694 million versus 675 million. Driven by growth in interest bearing demand deposits and time certificates of deposit. Partially offset by a decrease in noninterest bearing demand deposits. Reflecting a shift in customer partner balances toward the interest bearing products. We also continue to operate from a very strong capital position, with a bank leverage ratio of 18.1%. Over double the well capitalized minimum. And a holding company leverage ratio of over 22%. Finally, as of 06/30/2026, the company has repurchased a total of 29.7 thousand shares for approximately $400 thousand under the company's share repurchase program announced in May 2026. Which provides for the purchase of up to 685 thousand of the company's issued and outstanding shares. Outside of blackout periods, we prioritize repurchases when our shares trade below tangible book value. Reflecting our conviction that this is an attractive use of capital at those levels. Let me provide forward outlook on some key metrics as we have done in prior quarters. Loan originations for second half of 2020, While there may be variability quarter to quarter, we believe originations can come in around $1.6 billion in the third quarter reflecting the typical seasonal pickup in student lending. For the fourth quarter, we are comfortable with a baseline estimate of 1.4 billion. SBA loan sales. We will continue to follow our strategy of selling guaranteed portions of our SBA loans as long as market conditions remain favorable. The average gain on sale of loans over the past 2 quarters is a reasonable proxy for the quarterly run rate we would expect for the remainder of the year. Quarterly net charge off. We anticipate an approximate range of 4 million to 5 million in net charge offs for noncredit enhanced loans as a good quarterly number to use in your models for the remainder of this year. Nonperforming loan balances for Q3 2020. We anticipate a migration to non performing loans of approximately $7 million in the third quarter. Net interest margin. We are maintaining our prior outlook that when including credit enhanced balances, the net interest margin is expected to increase. Driven by growth in credit enhanced balances and efforts to lower funding cost. Conversely, excluding excess credit enhanced income, we anticipate a gradual decline in margin consistent with our ongoing risk reduction strategy. Efficiency ratio. We remain focused on driving sustainable positive operating leverage. With a long term goal of steadily lowering our core efficiency ratio. Which excludes credit enhancement accounting effects. That said, there may be periods in which the efficiency ratio may increase. Tax rate. While multiple factors may influence the actual tax rate, we suggest using 27% in your modeling. With that, we would like to open the call for questions and answers. Operator? Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. For participants using the speaker equipment, it may be necessary to pick up the handset before Our first question will come from Joseph Yanchunis with Raymond James. Evan Yee: Hey, good afternoon. Thanks for taking my questions. The 1 is on credit. So NPL declined by $12 million this quarter. Was just curious how much of that improvement came from collateral liquidations versus upgrades or payoffs? And then should we expect a similar pace of resolution over the next few quarters? Thanks. James F. Noone: Yeah. No problem, Joe. We were really happy to have reduced by roughly a quarter our NPA balances during the second quarter. It reflects active resolution work it is not a onetime swing. So I think just generally, the direction of is favorable there. You know, our total risk exposure at quarter end was 19 million. Of the total 38 million in NPA balances. And similar to our NCO comments, you know, we know the loans at risk. Restricted the attributes, and we are actively managing that segment of the portfolio. As far as guidance, I would just point to Bob's comments on, you know, $7 million of potential net migration in Q3. Okay. Brett. And then just another question for me. Are thinking about the $50 million credit card portfolio you acquired from the Tallied acquisition? As your thinking evolve regarding retaining versus selling those receivables, Yeah. So since going public, Joe, you know, we have talked a number of times about our interest acquiring technology platforms that kind of fit our suite of services that we take to market with fintechs You know, the Tallied acquisition fits this strategy really well. And credit card processors do not come up on the market very often. So, you know, as you saw in the press release, we acquired the platform and the related assets of Tallied. Owning the credit card operating system, you know, provides the core component for the tech stack, like the credit card tech stack. And it fits really neatly with you know, what we have built historically with FintechConnect for lending and MoneyRails for payments. So, you know, we look at this really as a technology platform acquisition, rather than a business acquisition. And, you know, it fits pretty well with kind of the scope of services that we offer our partners. Okay. Brett. Thank you for taking my questions. I will step back. No problem. Operator: Next, we will hear from Andrew Terrell with Stephens Inc. Andrew Terrell: Hey. Good afternoon. James F. Noone: Hey, Andrew. Andrew Terrell: Hey. Just to start, Bob, I think you mentioned 3 million to $4 million of charge offs in the prepared remarks was the kind of expectation. 1, was that correct? And then 2, is that relative to the core portfolio? I think it was $2.93 million charge-off for this quarter. Yeah. James F. Noone: I can take it, Andrew. The NCOs-- most of the $2.9 million in NCOs in the core portfolio came from the legacy pool. That had those, defined attributes, and cohorts. We anticipate that will continue to have NCOs from that group until we like, fully work through them. As we have noted, you know, we expect elevated charge offs over the next few quarters, you know, as we work through those loans. As far as guidance, the you know, in this quarter, the non credit enhanced NCOs did come in slightly above the high end of the range. Which was the 4 to $5 million number I think you are referencing. it is kind of normal quarter to quarter timing on individual resolutions rather than a deterioration there. So we still see 4 to 5 million as kind of the right normalized run rate. For that segment. Okay. Andrew Terrell: So $4 million to $5 million is the core portfolio plus strategic loans without credit enhancement? James F. Noone: that is correct. Okay. Brett. Andrew Terrell: And, you know, as you are working through some of these portfolios, I know you are giving kind of explicit backup guidance. It does not necessarily imply it. But just help us think about like when you feel like you have reached when you feel like you have kind of worked through the majority of this portfolio? Like, when should we start anticipating you know, improvement sequentially in credit quality? Robert E. Wahlman: So, you know, I cannot put a this is Bob. I cannot put a specific quarter count or point to a quarter when we will be through that. Now we have guided to the 4 to $5 million of noncredit enhanced charge offs per quarter. The remainder of 2026, and we expect the SBA vintage-driven elevation to persist over the next few quarters as those vintages consider continue to season and we work through. But the pool is finite and identified, you know, roughly about $50 million. And that is what informs this guidance. So it is a bounded pool with a guided range. But I cannot give you a fixed number of quarters. Or amount. But I would say it is a lot of it is going to come through in the next couple quarters and taper on as we go into 2027. James F. Noone: Yep. Okay. Andrew Terrell: Brett. I appreciate it. And then can you talk about just with the Tallied acquisition, is that included? And they are obviously moving from a credit enhanced position to non credit enhanced, would assume, with the acquisition. Are loss rates against that portfolio baked into your guidance here? Or would that be incremental? And just talk about the credit quality of loan portfolio that you will be acquiring. James F. Noone: Yeah. The credit quality is really high, Andrew. We have experience with this in including during the due diligence of when we onboarded that portfolio that extended back to the original US Bank loan tapes and there is a couple decades worth there of performance. So we know the performance really well. it is really high quality. there is not meaningful charge offs in that portfolio. So, you know, is it baked into the NCO guidance Yes. But it is not-- it is not material to that number. Andrew Terrell: Okay. Brett. I appreciate it. If I could ask 1 more, the appreciate the Slide 12 in the presentation, the pipeline for FinTech partners and despite you giving it this quarter, I will have to ask a question still. Just since it is the first quarter you have shown this, like, can you just characterize for us, Jim, how robust this kind of pipeline that we can now see how robust it is compared to, you know, the past couple of quarters where we could not necessarily see this level of disclosure? James F. Noone: Yep. Yeah. So we thought that would be a helpful slide this quarter. You know, I had mentioned last quarter, Andrew, that the pipeline was stronger. Than I had seen it in the 8 years I have been at the bank. and it is just continuing to compound right now. We added that slide to the investor deck to give you some detail on what it looks like. expected launch dates, and kind of the breadth of product. You know, it does give some color, I think, on why I was so bullish on fintech sales last quarter. I expect that to continue to grow both in number and in breadth of product. You know, Sarah Greta and her team are doing a really great job and we intend to keep executing to convert those into contracts and announcements. And, you know, this announcement that we did with the prepaid partner as part of our earnings call, This quarter is really just the first 1, and you will have more coming in the back half of the year here. Brett. Andrew Terrell: Thank you so much for taking the questions. James F. Noone: Yep. You are welcome. Operator: And as a reminder, if you do have a question, please press 1 on your telephone keypad. Next, we will move to Manuel Navas with Piper Sandler. Manuel Navas: I also appreciate the Slide 12 Are the new partner types considered kind of new partner additions or extra programs with current partners? James F. Noone: So they are-- they are both shown there, Manuel, If you look on that far left hand column, you can see we put that partner type And so while a majority are certainly new partners, Right? Like new fully new partners to the bank. There are 2 existing partners on there where we are adding new products for those 2 new partners. And those are kind of slots 2 and 3 there. Manuel Navas: And the launch dates on here you have a you have 3 programs in the fourth quarter of this year. Would that mean revenue would hit in the launch date? Or would it be a little bit after? James F. Noone: Yeah. So launch means we are operationally live. Revenue would begin accruing, you know, at that point. But 2 things I would point out to you. Just make sure you guys, you know, kinda have this on your radar. 1 is when we make the announcement, that is typically upon contract signing. There might be a few weeks, generally, between when we sign a contract and when we are ready to go live because all of the due diligence is happening kind of concurrent to the contract negotiations. So that is number 1. Number 2, while we are live and kind of revenue-producing day 1 of the launch, there is generally a piloting period and certainly a scaling period with the fintech as their volumes pick up. And, generally, there is at least a few quarters that between when we go live. And when we are comfortable kind of updating whether it is origination guidance or other stuff with you guys. Because we have more of a track record to point to and, you know, more evidence to point to. Manuel Navas: So that is since you have you have announced 1 new partner, at the beginning of this call. This has Yep. 5 further partners in the pipeline that are just on the term sheet side, but that should hopefully pull through. And that would be 5 more additions. Is that the right way to read that? James F. Noone: Yeah. I think 4 of them are signed term sheets. Like fully new partners. Another 1 is where we have got commercial terms agreed to, but not necessarily a time signed term sheet by the time we went to press with the deck. But, yes, generally. Manuel Navas: Tallied just happened. Has its improved product offering platform for you has that enhanced your ability to compete or land any of this pipeline of deals? Is it, like is it is it already relevant, or is it that is still too to help you for down the road? James F. Noone: it is already relevant. it is not demonstrated in the slide that we are referencing. So as far as conversations and calls, is definitively relevant, but it is not part of what is on that slide. Analyst: Awesome. Manuel Navas: How quickly could you act on the buyback? You said you are tangible book value is key Can you start as soon as when can you start from today? Robert E. Wahlman: So we will have a short period to allow the earnings to disseminate But this is Wednesday, and I believe we start on Friday. Manuel Navas: Originations were solid. Can you break down the way it built and kind of beat expectations a little bit this quarter? And why not a little bit higher origination progression going forward? James F. Noone: Sure. Yeah. So the originations were, you know, pretty strong here, Manuel, at $1.6 billion in the quarter. It exceeded our guidance of 1.4 it is up roughly 8% year over year As far as the composition this quarter, you know, the student lending seasonality is the only program level change that was material. And that reduction in Q2 you know, was offset by kind of more measured increases across the board with our programs. So all in all, we are really happy with originations in the quarter. And there is 1 other comment I think I would just make here, which is you know, in March 2023, our originations troughed out at $850 million. And kinda what we told folks at the time was, you know, the fundamentals of the business were sound. The issues at the time were not gonna alter the trajectory. And, you know, we are consistently originating at kinda twice those levels now. So I think it is important to point out it is also important to remember you know, those types of times as we work through the this legacy SBA portfolio. Robert E. Wahlman: You know, we know what it is. We have gone through this before, whether it is with fintech credit, that we retained and some of the NCOs, back in 2022. Or the origination, you know, trough out in 2023 with some of our fintech partners. None of this alters that you are trajectory of the company, and we are very comfortable with kinda how things are trending and managing through whether it is originations or the legacy SBA pool. Manuel Navas: I appreciate that. My last question for me is you kind of break up expectations for new loan growth You kinda chick pulled the guide on the credit enhanced loan growth because a portion of it is tallied. Where should balance sheet loan growth go going forward? And describe if you can, some of the credit enhanced growth on a quarter to quarter basis? What are kind of some of your plans for balance sheet growth? James F. Noone: Yes. So I think we are seeing you know, let's say, more measured growth in a number of our portfolios. Although, you certainly did see our SBA balances were down quarter over quarter. Some of that was loan sales. Some of it was working through, nonperformers. As far as credit enhanced balance sheet, you know, we grew that from 0 to 100 million in a couple quarters. We withdrew the guidance like you said, mostly related to tallied and that having that portfolio having been 1 of the growth engines there and then converting that the direct portfolio as part of the acquisition. Just make guidance there more difficult, I would say. We so we got off to a quick start. We beat expectations. And we have to bring in additional partners to grow meaningfully from here. But we do have some growth you know, in the other partners. it is just more gradual And so that is part of why we pulled guidance on the Credit Enhanced this quarter. Thank you for the commentary. Manuel Navas: Yes, you are welcome. Operator: And we do have a question that has come in via email. And we will let Juan Arias handle that. Please go ahead, sir. Juan Arias: Thanks, operator. The question think this is for Bob. How should we think about the earnings trajectory in the second half of 2020 and into 2027, relative to the first half of 2020, what are the key earnings and growth drivers investors should be focused on. Robert E. Wahlman: Well, that is a great question. it is driven by a lot considerations, key assumptions, and variables as to what drives our revenues and what drives our expenses. And maybe that is the best way to approach it. I will go through what I think of being the key assumptions first, the key drivers first, and that is the first 1 we oftentimes talk about is originations. And we provided color there today. Originations for Q3, we expect to be around 1.6. In Q4, we expect to be baseline of 1.4. But variables that can affect that include how the strength of the lending season and, of course, the economy always significantly influences the originations. The second item and was also talked about here that when I think about the key driver is what is happening with the credit portfolio, which is 1 of our key areas of growth. Now while we lose tally from credit enhancement, it does move into the core portfolio where we actually pick up additional revenue related to tally on the on the interchange. You know, we do not pick up any additional interest income, but we pick up all the interchange. But in addition to that, we just Jim was just talking about what is going to be growth in the credit enhanced portfolio. You know, we expect it to be more muted than what it was a year ago, but we do expect the existing partners to continue to expand their portfolio. So we will see some growth there. Third key item, and we spent a lot of time talking about that, is the provision for loan loss. We have said that it is about 4 to $5 million. On the noncredit enhanced portfolio. With the with the strategic partner retained portfolio running just over $2 million. So and that is pretty steady over time. But the core but the core or traditional portfolio has been running high this year, but we do see that as we talked about tapering as we leave 2026 and we hit into 2027. So some benefits there. And expenses is, I guess, the fourth key item. And, again, you know, it has been steady. For some period, pretty consistent for several quarters now. And excluding the tally transition expenses, we expect that the operating expenses will remain very flat or flattish through 2026. But grow as we move forward as we bring on additional partners. So when you take a look at that, I mean, our core business is a core business Our core businesses and our activities are generating a consistent level of profitability. What is hurting us is the provision for loan loss. From a p and l perspective driven in large part by the charge offs in the traditional loan portfolio. So kind of summing all that up and what I think about it, you know, I am looking at the second half of 2020-- 2020, and I think this is 1 way that you can look at it. Thinking about it is that to view-- 1 way you can look at it is to view the first quarter of 2020 as a proxy for Q3 and Q4. it is been a very stable environment. And the charge-offs are-- and the provision is probably going to be about there. But then to make any adjustments you think appropriate for what happening on the other portfolios. Originations are growing a little bit and so forth. The credit enhanced portfolio growing a little bit. Expense is flat. But whatever you think are appropriate there. But that is-- that is my crystal ball. Look at this. Thank you. Operator: And we do have a follow-up question. We will hear from Manuel Navas with Piper Sandler. Manuel Navas: I appreciate the commentary. I just want to jump on to kind of make sure I understand the progression well. The core portfolio provisioning rose this quarter on some heightened losses. But the expectation is that those while the heightened losses might be a little might be higher in the second half than previously expected. They should be lower than the second quarter. Is that the right projection on my part? Robert E. Wahlman: From a provisioning from a provisioning perspective, the answer to that question is yes. Provisioning in the second quarter was $6 million compared to I think roughly-- and this is excluding the credit enhanced, roughly, you know, in that 4 to $5 range that we said. So, yeah, we expect the second quarter to be a bit of an outlier. Manuel Navas: Got it. Okay. that is helpful and then Okay. And the shifting of the credit enhanced portfolio, you are taking on the Tallied portfolio. Is the Tallied portfolio going to have less growth than what you could have had with it if it had continued independently. Because it seems like you could think of these 2 portfolios, your Credit Enhanced portfolio and the Tallied portfolio, and say that they are gonna have the same growth that you had previously in your guidance, are you slowing the Tallied growth? James F. Noone: No, there is no change to what the expected growth rate is with Tallied, Manuel, Just because it is become a direct portfolio versus a credit enhanced portfolio. it is just that when that changed, you know, in conjunction with the fact that we had another partner whose growth had slowed and certainly had not met expectations earlier in the year. It just kinda made sense to pull the guidance. Manuel Navas: Got it. Okay. This is helpful to clarify. Thank you. Thank you for the time and the commentary. James F. Noone: You are welcome. Operator: And that will conclude today's conference call. We thank you for your participation. You may disconnect your lines at this time. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributed the Q2 earnings miss primarily to elevated provision expenses within a specific, finite pool of legacy SBA 7(a) loans. The company is proactively pruning risk by liquidating nonperforming loans and implementing more conservative servicing standards to stabilize the core portfolio. Origination resilience was driven by a diversified partner base, which successfully absorbed seasonal declines in student lending through growth in other established programs. Strategic positioning is shifting toward a multi-product platform, leveraging the Tallied acquisition to integrate credit card operating systems with existing lending and payment rails. Management emphasized that current credit challenges are 'ring-fenced' and do not alter the long-term trajectory or fundamental soundness of the business model. The sales pipeline is characterized as materially stronger and broader than in previous years, reflecting the impact of an expanded business development team. Origination guidance for the second half of 2020 assumes a seasonal peak of $1.6 billion in Q3 followed by a baseline of $1.4 billion in Q4. Net charge-offs for non-credit enhanced loans are expected to remain elevated in the $4 million to $5 million range per quarter as legacy vintages continue to season. Management withdrew prior 2026 credit-enhanced balance guidance due to the Tallied portfolio shifting from a partnership to a direct-held model. The company anticipates a strong period for new partnership launches over the next 12 to 24 months, with several deals expected to sign before year-end. Operating expenses are projected to remain flat through the remainder of 2020, excluding approximately $4 million in integration costs related to the Tallied acquisition. A $22.7 million total provision for credit losses was recorded, though A portion of noninterest expense was driven by increases in credit enhancement guarantee and servicing expenses, which are offset by credit enhancement income. with no net bottom-line impact. Nonperforming loan balances improved by approximately $12 million during the quarter, primarily through collateral resolutions and paydowns in the SBA portfolio. The company successfully resolved litigation with an off-boarded partner, resulting in a $450,000 increase in miscellaneous income and a $300,000 expense reduction. A new share repurchase program was initiated, with management prioritizing buybacks when the stock trades below tangible book value. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that the $12 million NPL decline resulted from active resolution work rather than one-time swings. They anticipate a potential migration of $7 million to NPL status in Q3 as they continue to work through the identified legacy pool. The acquisition is viewed as a technology platform play rather than a business acquisition, providing a core credit card operating system. This tech stack is intended to complement existing 'FintechConnect' and 'MoneyRails' infrastructure to offer a full suite of services to partners. Management expects elevated charge-offs to persist for the next few quarters as the $50 million legacy pool seasons. They anticipate credit trends will begin to taper as the company moves into 2027. While several programs are slated for Q4 launches, management noted there is typically a piloting and scaling period of several quarters before meaningful volume is reached. Revenue begins accruing on day one of operational launch, but guidance updates usually wait until a track record is established.

This article first appeared on GuruFocus. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Loan originations of $1.6 billion exceeded expectations of $1.4 billion, driven by diversified partner base. Non-performing loan balances declined meaningfully from nearly $50 million to approximately $38 million, driven by collateral resolutions and paydowns. Net interest margin improved to 13.69% from 12.90% in the prior quarter, aided by credit enhanced portfolio growth and lower funding costs. Signed a new strategic partnership with a well-established prepaid card provider, expected to launch in Q4 2026. Sales pipeline is materially stronger than prior years, with multiple new partner additions expected before year-end. Earnings per share of $0.15 fell short of expectations due to higher provision expense on loans where credit risk is retained. Total provision for credit losses surged to $22.7 million from $10.6 million in the prior quarter, with $6 million related to core portfolio deterioration. Net charge-offs in the core portfolio were $5.2 million, slightly above the guided range of $4 to $5 million, concentrated in a legacy pool. Credit enhanced balance growth guidance for year-end 2026 was withdrawn due to structural changes, including the Tally acquisition. SBA net charge-offs increased to $2.9 million from $2.2 million, with elevated levels expected over the next few quarters as legacy credits are worked through. Warning! GuruFocus has detected 1 Warning Sign with FINW. Is FINW fairly valued? Test your thesis with our free DCF calculator. Q: How much of the NPL decline came from collateral liquidations versus upgrades or payoffs, and should we expect a similar pace of resolution?A: CEO Jim Noon: The reduction in NPL balances by roughly a quarter reflects active resolution work and is not a one-time swing. The direction of travel is favorable. Total risk exposure at quarter end was $19 million of the $38 million in NPA balances. For guidance, CFO Bob Wallman noted a potential net migration of $7 million in Q3. Q: How should we think about the earnings trajectory in the second half of 2026 and into 2027?A: CFO Bob Wallman: Key drivers include originations (Q3 ~$1.6B, Q4 baseline ~$1.4B), growth in the credit enhanced portfolio (more muted but with existing partner expansion), provision for loan losses (expected to taper as we leave 2026), and expenses (flat through 2026, excluding tally transition costs). The core business is generating consistent profitability, with the provision for loan losses being the main P&L headwind. One way to view Q3 and Q4 is to use Q1 2026 as a proxy, adjusting for portfolio changes. Q: Can you characterize how robust the fintech partner pipeline is compared to past quarters?A: CEO Jim Noon: The pipeline is stronger than I have seen in 8 years at the bank and continues to compound. The new slide in the investor deck provides detail on expected launch dates and product breadth. The prepaid partner announcement is just the first of several expected in the back half of the year. Q: Are the new partner types on slide 12 new partner additions or extra programs with current partners?A: CEO Jim Noon: They are both. The majority are fully new partners, but there are two existing partners on the list where we are adding new products. Q: With the tally acquisition, is the credit quality of that portfolio baked into your NCO guidance?A: CEO Jim Noon: Yes, the credit quality is really high. We have decades of performance data from the original US Bank loan tapes. There are not meaningful charge-offs in that portfolio, so it is baked into the NCO guidance but is not material to that number. Q: When should we start anticipating improvement in credit quality as you work through the legacy portfolio?A: CFO Bob Wallman: We expect the SBA vintage-driven elevation to persist over the next few quarters as those vintages season. The pool is finite and identified at roughly $50 million. A lot of it will come through in the next couple of quarters and taper as we go into 2027. Q: How quickly can you act on the buyback?A: CFO Bob Wallman: We will have a short period to allow the earnings to disseminate. We believe we can start on Friday. Q: Can you break down the origination beat this quarter and the progression going forward?A: CEO Jim Noon: Originations were strong at $1.6 billion, exceeding guidance of $1.4 billion and up roughly 8% year-over-year. The only material program-level change was student lending seasonality, which was offset by measured increases across other programs. We are happy with the quarter. Q: Where should balance sheet loan growth go going forward, and can you describe the credit enhanced growth?A: CEO Jim Noon: We saw more measured growth in a number of portfolios. SBA balances were down due to loan sales and working through nonperformers. For credit enhanced balances, we grew from $0 to $100 million quickly. We withdrew guidance mostly related to tally converting to a direct portfolio. We need to bring in additional partners to grow meaningfully from here, but we do have some gradual growth in other partners. Q: Is the core portfolio provisioning expected to be lower in the second half than in the second quarter?A: CFO Bob Wallman: Yes, provisioning in the second quarter was $6 million, compared to the guided range of $4 to $5 million. We expect the second quarter to be a bit of an outlier. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

- Loan Originations of $1.6 Billion -- Net Income of $2.1 Million -- Diluted Earnings Per Share of $0.15 - MURRAY, Utah, July 29, 2026 (GLOBE NEWSWIRE) -- FinWise Bancorp (NASDAQ: FINW) (“FinWise”, the “Company”, “we”, “our”, or “us”), parent company of FinWise Bank (the “Bank”), today announced results for the quarter ended June 30, 2026. Second Quarter 2026 Highlights Loan originations totaled $1.6 billion, compared to $1.7 billion for the quarter ended March 31, 2026, and $1.5 billion for the second quarter of the prior year Net interest income was $28.7 million, compared to $28.1 million for the quarter ended March 31, 2026, and $14.7 million for the second quarter of the prior year Net income was $2.1 million, compared to $2.7 million for the quarter ended March 31, 2026, and $4.1 million for the second quarter of the prior year Diluted earnings per share (“EPS”) were $0.15 for the quarter, compared to $0.20 for the quarter ended March 31, 2026, and $0.29 for the second quarter of the prior year Efficiency ratio1 was 53.1%, compared to 66.3% for the quarter ended March 31, 2026, and 59.5% for the second quarter of the prior year Nonperforming loan balances were $37.7 million as of June 30, 2026, compared to $49.8 million as of March 31, 2026, and $39.7 million as of June 30, 2025. Nonperforming loan balances guaranteed by the Small Business Administration (“SBA”) were $19.0 million, $26.7 million, and $21.2 million as of June 30, 2026, March 31, 2026, and June 30, 2025, respectively “Our second quarter earnings of $0.15 per share were short of our expectations driven by higher provision expense on the loans where we retain credit risk. The higher provision resulted primarily from losses incurred on sale of property collateralizing, and increased reserves on, classified loans. We will continue to empower our credit and compliance teams to identify and prune risk proactively as they did this quarter, reducing our non-performing loan balance by $12.1 million from $49.8 million last quarter to $37.7 million this quarter,” said Jim Noone, CEO of FinWise Bancorp. "While we are actively managing risk in the portfolio, the business continues to make solid progress. We delivered $1.6 billion in originations from an increasingly diversified partner base. Tangible book value per share grew to $14.55 and we signed a new strategic program with a well-established prepaid card provider that will use a combination of our BIN Sponsorship and MoneyRails services. Our sales pipeline today is materially stronger, and potentially more meaningful to our bottom line. And our recently announced acquisition of the Tallied Technologies platform makes FinWise more competitive for new partners that require a broad product offering. Taken together, FinWise remains well-positioned for sustained growth and firmly focused on translating that strength and momentum into lasting value for our shareholders.” ________________________1 See “Reconciliation of GAAP to Non-GAAP Financial Measures” for a reconciliation of this non-GAAP measure. Selected Financial and Other Data Loan OriginationsLoan originations totaled $1.6 billion for the second quarter of 2026, a decrease from the $1.7 billion recorded in the prior quarter and an increase from the $1.5 billion recorded in the prior year period. The quarter-over-quarter decrease was primarily driven by seasonally lower origination volume in the student loan program, partially offset by continued growth in several of the Company's other established programs. The year-over-year increase was primarily driven by this same growth across established programs. Consistent with the change in originations, average balances of loans held for sale and held for investment decreased slightly compared to the prior quarter, but increased compared to the prior-year period. Net Interest Income and Net Interest MarginNet interest income was $28.7 million for the second quarter of 2026, compared to $28.1 million for the prior quarter and $14.7 million for the prior year period. The increase from the prior quarter was primarily due to growth in the credit-enhanced loan portfolio and a decrease in the migration of performing loans to nonperforming loans, which resulted in a lower reversal of interest on nonaccrual loans and contributed to an increase in the average yield on loans held-for-investment. These increases were partially offset by a decline in average balances within held for investment portfolio. The increase from the prior year period was primarily due to the increase in the credit enhanced loans and a change in estimate, based on additional information and experience, on the allocation of interest received on credit enhanced loans in excess of the amount FinWise retains. FinWise now estimates that all excess interest is attributable to servicing and credit guarantee expense, whereas in the prior year it had been estimated that a portion was attributable to origination costs, or finders' fees, and was reported in net interest income. Net interest margin for the second quarter of 2026 was 13.69%, compared to 12.90% for the prior quarter and 7.81% for the prior year period. The increase in net interest margin from the prior quarter results from the growth in the credit-enhanced loan portfolio, a decrease in nonaccrual loans, and a decrease in average interest-bearing liabilities. The increase in net interest margin from the prior-year period results from growth in the higher yielding credit-enhanced portfolio average balance and higher yields on loans held for investment, the change in estimated allocation of excess interest as previously described, and slightly lower rates paid on deposits. Provision for Credit Losses The Company’s provision for credit losses was $22.7 million for the second quarter of 2026, compared to $10.6 million for the prior quarter and $4.7 million for the prior year period. The increase from the prior quarter was primarily due to growth in the credit-enhanced loan programs and increased provisioning in the core loan portfolio as the Company recognized losses in liquidating, and increased reserves on, non-performing loans and classified other loans. The Company has also adopted more conservative servicing and administrative standards for the SBA and commercial real estate products specific to those characteristics identified as common to many of the loans migrating to non-performing status over the past 18 months. This change has accelerated the classification of nonperforming loans and provisioning for loans with those identified characteristics. The year-over-year increase in the Strategic Program loans with credit enhancement provision was primarily related to growth in the credit-enhanced portfolio. Non-interest Income The increase in non-interest income from the prior quarter was primarily due to an increase in credit enhancement income, which corresponds to the provision for credit losses on credit-enhanced loans and increased for the quarter ended June 30, 2026. In addition, the Company prevailed in litigation with an offboarded strategic partner, which resulted in an increase in miscellaneous income of $0.5 million. The increase in non-interest income compared to the prior-year period was primarily due to an increase in credit enhancement income, driven by growth in credit-enhanced loan balances. The increase was also attributable to interchange income, a new revenue stream during the period, as well as the increase in other miscellaneous income as previously described. These increases were partially offset by a decrease in BFG investment fair value. Non-interest Expense The increase in non-interest expense from the prior quarter resulted primarily from increases in credit enhancement guarantee and servicing expenses largely resulting from an increase in interest income attributable to the credit enhanced loan portfolio. Excluding the credit enhancement related expenses, non-interest expense declined $0.2 million. The increase in non-interest expense from the prior year period was primarily due to an increase in credit enhancement guarantee and servicing expenses resulting from growth in credit enhanced loans and salaries and employee benefits principally from increased headcount. FinWise’s efficiency ratio was 53.1% for the second quarter, compared to 66.3% for the prior quarter and 59.5% for the prior year period. We expect the efficiency ratio to continue to improve as we realize increased revenues from interest earned on our growing credit enhanced loan balances. Tax RateThe Company’s effective tax rate was 24.0% for the second quarter of 2026, compared to 28.0% for the prior quarter and 24.5% for the prior year period. The decrease from the prior quarter and prior year period was principally due to the apportionment of income between states with various tax rates. Net IncomeNet income was $2.1 million for the second quarter of 2026, compared to $2.7 million for the prior quarter and $4.1 million for the prior year period. The changes in net income for the three months ended June 30, 2026 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 $925.3 million as of June 30, 2026, an increase from $899.4 million as of March 31, 2026 and an increase from $842.5 million as of June 30, 2025. The increase in total assets from March 31, 2026 was primarily due to increases in the Company’s credit enhancement loans of $11.7 million, credit enhancement asset of $8.5 million, and loans held-for-sale portfolio of $41.3 million. These increases were offset in part by a decrease in loans held-for-investment (excluding the credit enhanced loans) of $26.9 million and an increase in the allowance for credit loss of $9.5 million. The increase in total assets compared to June 30, 2025 was primarily due to increases in the Company’s credit enhancement loans of $109.1 million, credit enhancement asset of $29.4 million, and loans held-for-sale portfolio of $27.9 million. These increases were offset in part by a decrease in loans held-for-investment (excluding the credit enhanced loans) of $69.9 million and an increase in the allowance for credit losses of $31.2 million. The following table provides the composition and gross balances of loans held-for-investment (“HFI”) as of the dates indicated: Note: SBA loans as of June 30, 2026, March 31, 2026 and June 30, 2025 include $66.1 million, $95.1 million and $144.3 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA. Total gross loans HFI as of June 30, 2026 decreased $12.9 million and increased $41.3 million compared to March 31, 2026 and June 30, 2025, respectively. The declines in the SBA portfolio resulted primarily from sales of the guaranteed portions of SBA 7(a) loans and increased charge-offs, reflecting ongoing portfolio and credit risk management. The credit enhanced portfolio of the Strategic Program loans as of June 30, 2026 increased $11.7 million and $109.1 million compared to March 31, 2026 and June 30, 2025, respectively, reflecting our 2025 strategic initiative to develop the credit enhanced portfolio. The following table presents the Company’s deposit composition as of the dates indicated: The increase in total deposits as of June 30, 2026 from March 31, 2026 was primarily due to growth in interest-bearing demand deposits and time certificates of deposit, partially offset by a decrease in noninterest-bearing demand deposits, reflecting a shift in customer/partner balances toward interest-bearing products. Time certificates of deposit balances grew primarily during the latter part of the second quarter, which contributed to the period-end increase, while average time certificates of deposit balances for the quarter declined compared to the prior quarter, as reflected in the average balance table. The increase in total deposits as of June 30, 2026 from June 30, 2025 was primarily driven by growth in interest-bearing demand deposits and time certificates of deposit, which were utilized to fund loan growth and enhance the Company's liquidity profile. Total shareholders’ equity as of June 30, 2026 increased $2.6 million to $199.2 million from $196.6 million at March 31, 2026. Compared to June 30, 2025, total shareholders’ equity increased by $17.2 million from $182.0 million. The increases from March 31, 2026 and June 30, 2025 were primarily due to net income generated throughout the respective periods. Bank Regulatory Capital RatiosThe 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: The increase in the leverage ratio from the prior quarter was primarily due to growth in capital from earnings exceeding the relative growth in average asset balances. The slight increase from the prior year period resulted primarily from growth in capital from earnings exceeding the relative growth in the loan portfolio and average assets. The Bank’s capital levels as of June 30, 2026 remain sufficiently above the regulatory well-capitalized guidelines as of June 30, 2026. Share Repurchase ProgramAs of June 30, 2026, the Company has repurchased a total of 29,736 shares for $0.4 million under the Company’s share repurchase program announced in May 2026, which provides for the purchase of up to 685,000 of the Company’s issued and outstanding shares, from time to time, on or before the program's expiration date, in the open market, in privately-negotiated transactions, or otherwise, subject to applicable laws and regulations. Asset QualityThe recorded balances of nonperforming loans were $37.7 million, or 6.6% of total loans held-for-investment, as of June 30, 2026, compared to $49.8 million, or 8.5% of total loans held-for-investment, as of March 31, 2026 and $39.7 million, or 7.5% of total loans held-for-investment, as of June 30, 2025. The balances of nonperforming loans guaranteed by the SBA were $19.0 million, $26.7 million, and $21.2 million as of June 30, 2026, March 31, 2026 and June 30, 2025, respectively. The decrease in nonperforming loans from the prior quarter and prior year period was primarily attributable to an increase in the sales of real property collateralizing the nonperforming SBA 7(a) and commercial real estate and the resulting paydown of the loan balance. The Company’s allowance for credit losses to total loans held-for-investment was 8.3% as of June 30, 2026 compared to 6.5% as of March 31, 2026 and 3.1% as of June 30, 2025. 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 $13.1 million, $9.4 million and $2.8 million for the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively. The increase in net charge-offs from the prior quarter and the second quarter of 2025 resulted primarily from higher net charge-offs associated with credit enhanced strategic program loans as that program increased in size and matured. FinWise is reimbursed in full for the losses on the credit enhanced loan portfolio. Charge-offs for the traditional bank portfolio totaled $3.3 million in the second quarter compared to $2.3 million in the prior quarter and $0.9 million in the second quarter of 2025. Charge-offs increased compared to the prior quarter and year reflecting resolution of specific loans, particularly in the strategic programs loans that are credit enhanced and the retained portion of the SBA 7(a) loans. The following table presents a summary of changes in the allowance for credit losses and credit quality data for the periods indicated: Recent AcquisitionOn July 20, 2026, the Company acquired the technology platform and related assets of Tallied Technologies, Inc., the credit card issuance and processing platform that has powered the Bank's co-branded credit card programs. With this acquisition, the Company now owns its card technology stack end-to-end, from application, through issuing, processing and servicing. FinWise expects integration and transition costs of approximately $4.0 million in total over the next year (amount excludes amortization of acquired assets) with costs tapering over the period. The transaction results in the credit card receivable being reclassified from credit enhancement assets to credit card loan receivable beginning in the third quarter of 2026 as FinWise retains the credit risk while capturing additional interchange and fees subsequent to the transaction. Webcast and Conference Call InformationFinWise will host a conference call today at 5:00 PM ET to discuss its financial results for the second quarter of 2026. 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 13760730. 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. About FinWise BancorpFinWise 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. We periodically provide information for investors on our corporate website, finwisebancorp.com, and our investor relations website, investors.finwisebancorp.com. This includes press releases and other information about financial performance, reports filed or furnished with the SEC, information on corporate governance, and details related to our annual meeting of shareholders. "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995This 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, in particular the recent advancements in artificial intelligence and the risks that such technology presents; 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, including the ongoing conflicts in Iran and Middle East that can increase levels of political and economic unpredictability, contribute to rising energy and commodity prices, and increase the volatility of financial markets; 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, including the Company’s ability to manage integration costs; further negative ratings outlooks or downgrades of the long-term credit rating of the United States; and potential government shutdowns 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. 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. [email protected]@finwisebank.com The following table presents the impact of the credit enhancement program on our efficiency ratio: The following table reconciles the total provision for credit losses on a GAAP basis to a non-GAAP measure that excludes amounts attributable to credit-enhanced Strategic Program loans: 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 GAAP to 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: 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: 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: 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: 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: 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 June 30, 2026, March 31, 2026 and June 30, 2025 was approximately $120.8 million, $109.1 million and $11.7 million, respectively.

Interested in FinWise Bancorp? Here are five stocks we like better. Second-quarter earnings declined amid higher credit costs: FinWise reported net income of $2.1 million, or $0.15 per diluted share. Core-portfolio provisions rose to $6 million, although total provisions were largely offset by matching credit-enhancement income. Credit quality remains a concern despite lower nonperforming balances: Nonperforming loans fell to about $38 million, but legacy SBA charge-offs are expected to remain elevated, with quarterly net charge-offs on non-credit-enhanced loans projected at $4 million to $5 million through the rest of 2026. Loan production and fintech expansion remained strong: Originations reached $1.6 billion, exceeding guidance, and the company announced a new prepaid-card partnership expected to launch in the fourth quarter. FinWise also expects about $4 million in Tallied integration costs and withdrew its year-end credit-enhanced balance target. FinWise Bancorp’s CEO Talks Strategy Behind Fintech Success FinWise Bancorp (NASDAQ:FINW) reported second-quarter 2026 net income of $2.1 million, or $0.15 per diluted share, as higher loan originations and net interest income were partly offset by increased provisions for credit losses in its traditional banking portfolio. Chief Executive Officer Jim Noone said earnings fell short of management’s expectations because of higher provisions on loans for which the bank retains credit risk. He said the company is taking actions to address the affected credits, including giving its credit and compliance teams authority to identify and reduce risk. → This Tiny AI Supplier Could Be More Important Than the Chipmakers Total provision for credit losses was $22.7 million in the second quarter, up from $10.6 million in the first quarter. Of the total, $16.7 million was tied to credit-enhancement loans and was offset by corresponding credit-enhancement income, meaning it did not affect net results, according to Noone. The remaining $6 million of provision expense reflected higher reserves in the core loan portfolio. Management attributed the increase to losses recognized during the liquidation of nonperforming loans, higher reserves on nonperforming and classified credits, and more conservative servicing standards. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? Nonperforming loan balances decreased to approximately $38 million from nearly $50 million in the prior quarter, primarily because of collateral resolutions and paydowns of SBA 7(a) loans classified as nonaccrual. About $19 million of the remaining balance is federally guaranteed, while the other $19 million is unguaranteed, Noone said. Net charge-offs excluding credit-enhanced loans totaled $5.2 million, slightly above FinWise’s previously discussed $4 million to $5 million range. About 80% of core-portfolio charge-offs came from a defined legacy pool, which had roughly $50 million of performing balances at quarter-end. SBA net charge-offs were $2.9 million, compared with $2.2 million in the first quarter. Credit-enhanced strategic-program loan charge-offs were $7.9 million, up from $4.8 million, though FinWise said it is fully reimbursed for those losses. Strategic-program loans without credit enhancement recorded $2.3 million in net charge-offs, unchanged from the prior quarter. → Innovative ETF Strategies That Are Paying Off This Summer Noone said charge-offs in legacy SBA credits are likely to remain elevated for the next few quarters. CFO Robert Wahlman said the bank expects approximately $4 million to $5 million in quarterly net charge-offs for non-credit-enhanced loans through the rest of 2026 and anticipates about $7 million of loans could migrate to nonperforming status in the third quarter. Wahlman said the second quarter’s $6 million core-portfolio provision should be viewed as somewhat of an outlier, with provisioning expected to be lower in the second half. FinWise originated $1.6 billion of loans during the quarter, exceeding its $1.4 billion expectation but declining from $1.7 billion in the first quarter. Management said lower seasonal student-loan volume was partly offset by growth across established programs. For the second half, FinWise expects originations of about $1.6 billion in the third quarter, supported by the typical seasonal pickup in student lending, and a baseline of $1.4 billion in the fourth quarter. The company also announced that it signed a strategic partnership after the quarter ended with an established prepaid-card provider. The partner will use FinWise’s BIN sponsorship and MoneyRails services for Mastercard-branded cards. Management expects the program to go live in the fourth quarter but did not identify the partner. Noone said FinWise’s sales pipeline has strengthened as the company expanded its business-development team. He said the firm expects to sign additional and potentially more meaningful deals before year-end. In response to an analyst question, management said its investor presentation showed several prospective programs, primarily with new partners, along with two expanded offerings for existing partners. Net interest income increased to $28.7 million from $28.1 million in the first quarter. Wahlman said the increase reflected growth in the credit-enhanced loan portfolio, lower nonaccrual balances, and reduced average interest-bearing liabilities and funding costs. Those benefits were partly offset by lower average balances in the traditional loan portfolio. Net interest margin rose to 13.69% from 12.90% sequentially. Management maintained its outlook for margin to increase when including credit-enhanced balances, supported by credit-enhanced portfolio growth and lower funding costs. Excluding excess credit-enhanced income, however, FinWise expects a gradual margin decline as it pursues its risk-reduction strategy. Noninterest income rose to $25.6 million from $14.6 million, largely because of credit-enhancement income that corresponded with the associated loan-loss provision. The company also recorded $450,000 in miscellaneous income and a $300,000 reduction in other expenses after prevailing in litigation with an off-boarded strategic partner. Noninterest expense was $28.9 million, compared with $28.3 million in the first quarter. Excluding credit-enhancement accounting effects, the efficiency ratio improved to 63.9% from 65.0%. Total assets reached $925.3 million at June 30, up from $899.4 million at the end of the first quarter. Deposits increased to $693.8 million from $674.9 million. The bank reported an 18.1% leverage ratio, while the holding company leverage ratio exceeded 22%. Management discussed the Tallied acquisition as a technology-platform transaction designed to expand FinWise’s card-processing capabilities and complement its Fintech Connect lending and MoneyRails payments offerings. The company expects approximately $4 million of integration and transition costs over the coming year, concentrated in the next two quarters, excluding non-cash amortization related to acquired assets. FinWise withdrew its prior guidance for approximately $217 million in credit-enhanced balances by year-end, citing changes in the structure of balances associated with Tallied and slower-than-expected growth at another partner. Management said it still expects some credit-enhanced balance growth this year, though more meaningful growth beyond 2026 will depend on adding new partners. As of June 30, FinWise had repurchased 29,736 shares for approximately $400,000 under its May 2026 authorization to buy up to 685,000 shares. Wahlman said the company prioritizes repurchases outside blackout periods when the stock trades below tangible book value. FinWise Bancorp is the bank holding company for FinWise Bank, a digital‐first community bank headquartered in Lindon, Utah. The company specializes in providing commercial lending and deposit products to marketplace lending platforms, fintech companies and small to mid‐sized businesses across the United States. FinWise Bancorp operates through its wholly owned subsidiary, FinWise Bank, which is FDIC‐insured and leverages a technology‐driven model to deliver banking services efficiently. The company's primary business activities include participant financing arrangements for marketplace lenders and other fintech platforms, as well as direct commercial loans. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "FinWise Bancorp Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

FinWise Bancorp (FINW) came out with quarterly earnings of $0.15 per share, missing the Zacks Consensus Estimate of $0.24 per share. This compares to earnings of $0.29 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -37.50%. A quarter ago, it was expected that this company would post earnings of $0.33 per share when it actually produced earnings of $0.2, delivering a surprise of -39.39%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. FinWise Bancorp, which belongs to the Zacks Banks - Southwest industry, posted revenues of $54.34 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 18.09%. This compares to year-ago revenues of $25.07 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. FinWise Bancorp shares have lost about 22.2% since the beginning of the year versus the S&P 500's gain of 8.5%. While FinWise Bancorp has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for FinWise Bancorp was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.34 on $54.7 million in revenues for the coming quarter and $1.18 on $203.33 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Southwest is currently in the top 18% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the broader Zacks Finance sector, Goldman Sachs BDC (GSBD), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This specialty finance company is expected to post quarterly earnings of $0.31 per share in its upcoming report, which represents a year-over-year change of -18.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Goldman Sachs BDC's revenues are expected to be $80.37 million, down 11.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report FinWise Bancorp (FINW) : Free Stock Analysis Report Goldman Sachs BDC, Inc. (GSBD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Happen (HAPN) came out with quarterly earnings of $0.5 per share, beating the Zacks Consensus Estimate of $0.42 per share. This compares to earnings of $0.33 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +19.05%. A quarter ago, it was expected that this company that connects borrowers and lenders online would post earnings of $0.38 per share when it actually produced earnings of $0.44, delivering a surprise of +15.79%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Happen, which belongs to the Zacks Banks - Southwest industry, posted revenues of $262.86 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.14%. This compares to year-ago revenues of $248.43 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Happen shares have lost about 4.7% since the beginning of the year versus the S&P 500's gain of 8.3%. While Happen has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Happen was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.44 on $265.94 million in revenues for the coming quarter and $1.75 on $1.04 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Southwest is currently in the top 18% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. FinWise Bancorp (FINW), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on July 29. This company is expected to post quarterly earnings of $0.24 per share in its upcoming report, which represents a year-over-year change of -17.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. FinWise Bancorp's revenues are expected to be $46.02 million, up 83.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Happen Inc. (HAPN) : Free Stock Analysis Report FinWise Bancorp (FINW) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

PCB Bancorp (PCB) came out with quarterly earnings of $0.73 per share, in line with the Zacks Consensus Estimate . This compares to earnings of $0.62 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this company would post earnings of $0.67 per share when it actually produced earnings of $0.74, delivering a surprise of +10.45%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. PCB Bancorp, which belongs to the Zacks Banks - Southwest industry, posted revenues of $30.7 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 1.93%. This compares to year-ago revenues of $29.29 million. The company has not been able to beat consensus revenue estimates over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. PCB Bancorp shares have added about 34.4% since the beginning of the year versus the S&P 500's gain of 9.6%. While PCB Bancorp has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for PCB Bancorp was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.74 on $32.1 million in revenues for the coming quarter and $2.95 on $126.05 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Southwest is currently in the top 18% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. FinWise Bancorp (FINW), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on July 29. This company is expected to post quarterly earnings of $0.24 per share in its upcoming report, which represents a year-over-year change of -17.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. FinWise Bancorp's revenues are expected to be $46.02 million, up 83.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PCB Bancorp (PCB) : Free Stock Analysis Report FinWise Bancorp (FINW) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Wall Street expects a year-over-year decline in earnings on higher revenues when FinWise Bancorp (FINW) reports results for the quarter ended June 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on July 29. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. This company is expected to post quarterly earnings of $0.24 per share in its upcoming report, which represents a year-over-year change of -17.2%. Revenues are expected to be $46.02 million, up 83.6% from the year-ago quarter. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For FinWise Bancorp, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -8.33%. On the other hand, the stock currently carries a Zacks Rank of #3. So, this combination makes it difficult to conclusively predict that FinWise Bancorp will beat the consensus EPS estimate. Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that FinWise Bancorp would post earnings of $0.33 per share when it actually produced earnings of $0.20, delivering a surprise of -39.39%. Over the last four quarters, the company has beaten consensus EPS estimates two times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. FinWise Bancorp doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report FinWise Bancorp (FINW) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research