FinWise Bancorp (NASDAQ:FINW) outlined what management called a “strong 2025” during its fourth quarter 2025 earnings call, highlighting growth in loan originations, expanding credit-enhanced balances, and increased contributions from both spread and fee income. Executives also discussed credit trends, a one-time impact tied to updated SBA servicing standards, and a 2026 outlook anchored by a normalized quarterly origination baseline.
Full-year momentum and fourth-quarter production
Chairman and CEO Kent Landvatter said FinWise grew net income 26% in 2025 and posted a “steady” fourth quarter that reflected the company’s multi-year investments translating into “tangible, sustainable results.”
Landvatter attributed fourth-quarter origination performance to strong production from established partners and a continued ramp in programs launched in recent years. He noted these drivers were partly offset by an expected seasonal slowdown from the company’s largest student lending partner. While quarterly originations may fluctuate due to seasonality, management said it believes FinWise has reached a “higher and more sustainable” level of production supported by both longstanding partners and newer relationships.
Credit-enhanced balances surpass guidance
Management emphasized growth in its credit-enhanced product, positioning it as a core part of a “lower-risk asset growth strategy.” FinWise ended the quarter with $118 million in credit-enhanced balances, topping both the $115 million outlook provided on the third-quarter call and initial guidance of $50 million to $100 million.
Landvatter said the structure requires fintech partners to maintain a deposit account at FinWise against which charge-offs are recovered. In prepared remarks, CFO Bob Wahlman also tied several fourth-quarter financial line items to the increase in credit-enhanced balances, including higher net interest income, higher non-interest income from credit enhancement income, and higher non-interest expense from guarantee and servicing costs owed to strategic partners supporting these programs.
Credit, SBA trends, and a servicing-related charge-off acceleration
Bank CEO Jim Noone said overall credit trends remained stable and aligned with expectations. However, he said FinWise refined SBA servicing and administrative standards during the quarter, which accelerated the classification of certain loans to non-performing status and led to earlier recognition of charge-offs. Noone said the company increased borrower thresholds required to qualify for a one-time, short-term deferment and described the change as a prudent, forward-looking enhancement to risk management.
Quarterly net charge-offs were $6.7 million in the fourth quarter, up from $3.1 million in the prior quarter. Of the total:
- $1.5 million was attributable to the credit-enhanced balance sheet program, which management said is reimbursed through the cash reserve strategic partners are required to maintain at FinWise.
- Of the remaining $5.2 million, $1.2 million was tied to the updated servicing standards implemented during the quarter.
Provision for loan losses was $17.7 million in the fourth quarter, compared with $12.8 million in the prior quarter. Management said the increase was driven primarily by growth in the credit-enhanced loan portfolio and higher net charge-offs associated with the updated servicing standards. The company also emphasized that provisions related to the credit-enhanced portfolio are offset by “credit enhancement income” recognized in non-interest income.
Non-performing loan (NPL) balances rose modestly in the period, with management noting the net increase in NPLs was less than $1 million, bringing total NPLs to $43.7 million at quarter-end. Noone said this was below prior guidance that $10 million to $12 million could migrate to NPL during the quarter, attributing the lower migration to proactive efforts disposing of collateral securing NPLs. Of total NPLs, $24.2 million (55%) was guaranteed by the federal government, and $19.5 million was unguaranteed.
In SBA lending, Noone said production pipelines remained healthy and secondary market premiums continued to be attractive. SBA 7(a) originations declined quarter-over-quarter due primarily to extended SBA processing delays tied to staffing cuts and the impact of a government shutdown. After the government reopened in November, FinWise increased sales of the guaranteed portion of SBA loans to take advantage of favorable premiums, contributing to elevated gain on sale income.
Fourth-quarter financial results and balance sheet trends
Wahlman reported fourth-quarter net income of $3.9 million and diluted earnings per share of $0.27. He said results were impacted by higher net charge-offs, which increased provision expense on the traditional banking portfolio and reduced net income by $1.1 million after taxes, or $0.08 per share—an impact management later described as a one-time event related to the servicing and administration changes.
Net interest income increased to $24.6 million from $18.6 million in the prior quarter, driven primarily by a $76.5 million increase in credit-enhanced balances held for investment, which carry higher contractual rates. Net interest margin increased to 11.42% from 9.01% in the prior quarter, with management again tying the change largely to credit-enhanced portfolio growth.
Non-interest income rose to $22.3 million from $18.0 million, primarily due to higher credit enhancement income, partly offset by lower strategic program fees due to lower origination volumes. Non-interest expense increased to $23.7 million from $17.4 million, driven by higher credit enhancement guarantee and servicing expenses associated with credit-enhanced loan growth.
Total end-of-period assets reached $977 million. Average interest-bearing deposits increased to $567.4 million from $523.9 million, with management citing increased certificates of deposit to fund loan growth and higher non-interest-bearing demand deposits related to collateral deposits from certain strategic programs anticipating seasonal student lending activity in January 2026.
2026 outlook, pipeline commentary, and AI initiatives
For 2026, management provided modeling assumptions across several key items. Wahlman said originations in the first four weeks of January were tracking at a quarterly run rate of approximately $1.4 billion. For full-year 2026, the company said it remained comfortable using $1.4 billion per quarter as a baseline that normalizes for student lending seasonality, then applying a 5% growth rate for a “reasonable” annual outlook. In Q&A, management said there was “no reason” to expect student lending seasonality would not return in 2026.
Additional outlook items included:
- Credit-enhanced balances: organic growth of $8 million to $10 million per month on average in 2026, with potential month-to-month variability.
- Quarterly net charge-offs (non-credit enhanced loans): approximately $3.5 million as a modeling assumption.
- NPL balances: as much as $10 million in watchlist loans could migrate to NPL in the first quarter of 2026, with management noting migration can be “lumpy.”
- Tax rate: use 26% for modeling purposes.
On funding costs, management said certificate of deposit costs tend to move with the Federal Reserve’s rate actions and would likely decline gradually as CDs reprice over maturities ranging from three months to one year.
Landvatter also reiterated confidence in FinWise’s BIN sponsorship and payments strategy, including MoneyRails, though he said the ramp has been more measured than originally anticipated and the timing of some funding-related benefits may be more meaningful in 2027 than 2026 due to concentration limits and deposit mix considerations. Management cited examples of MoneyRails usage, including salary deduction repayments on FinWise-originated loans and funding transactions through RTP and FedNow, but did not disclose volumes running through MoneyRails.
Finally, management discussed a disciplined approach to AI adoption. The company said it already uses AI in areas including coding, quality assurance, and BSA/AML, and is exploring expanded use cases—such as compliance, operations automation, policy alignment, regulatory compliance support, cybersecurity and fraud detection, and workflow analysis—while emphasizing secure, controlled implementation to protect sensitive data.
About FinWise Bancorp (NASDAQ:FINW)
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.
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