Finwise Bancorp
For the period ended Jun 30, 2026. Filed Aug 12, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 12, 2026
FINW$13.68+0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-12.
0001856365-26-000051
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-12.
0001856365-26-000106
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 167 previous paragraphs and 173 current paragraphs.
118 unchanged; 45 reworded; 10 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 24 previous and 32 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Subsequent Acquisition
Current report
On July 20, 2026, we acquired the technology platform and related assets of Tallied Technologies, Inc. (“Tallied”), the credit card issuance and processing platform that has powered the Bank's co-branded credit card programs. With this acquisition, we now own its card technology stack end-to-end, from application, through issuing, processing and servicing. The Company expects integration and transition costs of approximately $4.0 million in total over the next year. The Company expects the costs to be greater in the next two quarters and to narrow over the following two quarters as it fully integrates the platform into the bank and eliminates duplicative third-party vendor and platform costs. The transaction results in the credit card receivable being reclassified from the credit enhanced portfolio to credit card loan receivable beginning in the third quarter of 2026.
Current report
•We generated $2.1 million and $4.1 million of net income for the three months ended June 30, 2026 and 2025, respectively, and $4.9 million and $7.3 million of net income for the six months ended June 30, 2026 and 2025, respectively. Net income declined primarily due to an increase in the provision for credit losses, driven by higher net charge-offs within the traditional banking portfolio.
Current report
Net interest income increased for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in average interest-earning assets of $133.8 million, partially offset by lower yields on interest-earning assets, and an increase in the average interest-bearing liabilities of $94.2 million mainly attributable to the increase in brokered deposits used to fund our loan growth.
Current report
The increase in our provision for credit losses for the three and six months ended June 30, 2026, compared to the same period in 2025, was primarily related to growth in the credit enhanced loan portfolio 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.
Current report
The increase in total non-interest income for the three months ended June 30, 2026, compared to the same period in 2025, 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 in 2026, as well as the increase in other miscellaneous income as the Company prevailed in litigation with an offboarded strategic partner, which resulted in an increase in miscellaneous income of $0.5 million. These increases were partially offset by a decrease in BFG investment fair value.
Current report
The total ratio of annualized NCO to average loans outstanding was higher during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to higher net charge-offs in the commercial real estate and commercial and industrial portfolios, reflecting our adoption of more conservative servicing and administrative standards for SBA and commercial real estate loans, which accelerated the classification and charge-off of nonperforming loans with identified risk characteristics.
Current report
The total ratio of annualized NCO to average loans outstanding was higher during the six months ended June 30, 2026, as compared to the same prior year period, primarily due to higher charge-off activity across the commercial real estate owner-occupied, commercial and industrial, and residential real estate portfolios, as the Company recognized losses in connection with the liquidation of non-performing loans and increased provisioning on loans with characteristics common to those migrating to nonperforming status over the prior 18 months.
Current report
Stock Repurchase Program
Current report
We have a stock repurchase program authorized by our Board of Directors. The stock repurchase program became effective as of May 19, 2026 and authorizes us to repurchase up to an aggregate amount of 685,000 shares of our common stock in open market transactions, privately negotiated transactions, or any manner that complies with the provisions of Rule 10b-18 of the Exchange Act, as well as pursuant to a trading plan under Rule 10b5-1 under the Exchange Act. Our decision to repurchase shares will depend on a variety of factors, including but not limited to, the market price and trading volume of our common stock, general market and economic conditions, the ongoing assessment of our capital needs, and applicable legal and regulatory requirements. The repurchase program does not obligate us to purchase any particular number of shares and may be limited or terminated at any time without prior notice. During the three months ended June 30, 2026, we repurchased and retired 29,736 shares for $0.4 million. See Note 1 - Summary of Significant Accounting Policies for more information.
Removed paragraphs (4)
Previous report
•We generated $2.7 million and $3.2 million of net income for the three months ended March 31, 2026 and 2025, respectively. The decrease in net income was primarily impacted by higher net-charge offs, which led to an increased provision for credit losses within our traditional banking portfolio.This increase in provision for credit losses had a negative impact on our after-tax net income for the period.
Previous report
The increase in our provision for credit losses for the three months ended March 31, 2026, compared to the same period in 2025, was primarily related to growth in the credit enhanced loan portfolio as well as higher net charge-offs resulting from migration of formerly performing loans to nonperforming status and deterioration of estimated collateral values of loans reviewed individually for impairment. The increase in the core portfolio’s provision for credit losses from the prior year period results from the increased estimate of losses on the higher balances of the non-guaranteed nonperforming loans.
Previous report
The total ratio of annualized NCO to average loans outstanding remained consistent during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to a higher growth rate in the quarterly average balances of Strategic Program loans related to the credit enhanced program when compared to the growth rate of net charge-offs in that program.
Previous report
The total ratio of annualized NCO to average loans outstanding was lower during the three months ended March 31, 2026, as compared to the same prior year period due to a higher growth rate in the average balances of Strategic Program loans related to the credit enhanced program when compared to the growth rate of net charge-offs in that program.
Reworded paragraphs (45)
Previous wording
There have been no material changes during the three months ended March 31, 2026 to the methods we used and judgments we made relating to critical accounting estimates from those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2025 Form 10-K.
Current wording
There have been no material changes during the six months ended June 30, 2026 to the methods we used and judgments we made relating to critical accounting estimates from those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2025 Form 10-K.
Previous wording
•For the three months ended March 31, 2026, originations increased to $1.7 billion from $1.3 billion when compared to the three months ended March 31, 2025. New strategic programs and organic growth through certain established strategic programs contributed to the increase in loan originations.
Current wording
•For the three months ended June 30, 2026, originations increased to $1.6 billion from $1.5 billion when compared to the three months ended June 30, 2025. For the six months ended June 30, 2026, originations increased to $3.4 billion from $2.7 billion when compared to the six months ended June 30, 2025. New strategic programs and organic growth through certain established strategic programs contributed to the increase in loan originations.
Previous wording
•Net interest margin (“NIM”) was 12.90% for the three months ended March 31, 2026, compared to 8.27% for the three months ended March 31, 2025. NIM is impacted by income earned from interest-earning assets and interest costs incurred on interest-bearing liabilities.
Current wording
•Net interest margin (“NIM”) was 13.69% for the three months ended June 30, 2026, compared to 7.81% for the three months ended June 30, 2025. NIM was 13.29% for the six months ended June 30, 2026, compared to 8.03% for the six months ended June 30, 2025. NIM is impacted by income earned from interest-earning assets and interest costs incurred on interest-bearing liabilities and increased significantly for the three and six months ended June 30, 2026 compared to the same periods in 2025 due to the growth of the credit enhanced loan program.
Previous wording
•Total assets decreased by $77.7 million to $899.4 million as of March 31, 2026 compared to December 31, 2025, principally due to decreases in interest-bearing cash deposits, loans held-for-sale and loans-held-for-investment.
Current wording
•Total assets decreased by $51.8 million to $925.3 million as of June 30, 2026 compared to December 31, 2025, principally due to decreases in interest-bearing cash deposits and loans-held-for-investment, partially offset by an increase in Strategic Program loans held-for-sale.
Previous wording
Net interest income increased for the three months ended March 31, 2026, compared to the same period in 2025 primarily due to an increase in the Bank’s average balance of credit enhanced loans, an increase in average balances in the Strategic Program loans held-for-sale portfolio of $45.0 million, and a a change in estimate 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 where previously it had been estimated that a portion was attributable to originations costs, or finders fee, and was reported net in interest income.
Current wording
Net interest income increased for the three months ended June 30, 2026, compared to the same period in 2025, 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 we retain. We now estimate 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.
Previous wording
NIM increased to 12.90% for the three months ended March 31, 2026 from 8.27% for the three months ended March 31, 2025 primarily attributable to the growth of the credit enhanced loan portfolio and the change in estimated allocation of the excess interest as previously described above and the average balance growth in the credit enhanced portfolio.
Current wording
NIM increased to 13.69% for the three months ended June 30, 2026 from 7.81% for the three months ended June 30, 2025 and increased to 13.29% for the six months ended June 30, 2026 from 8.03% for the six months ended June 30, 2025, primarily from the 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.
Previous wording
Average Balances and Yields. The following table presents average balances for assets and liabilities, the total dollar amounts of interest income from interest-earning assets, the total dollar amounts of interest expense on interest-bearing liabilities, the resulting average yields and costs, and NIM. The yields and costs for the periods indicated are derived by dividing the annualized income or expense by the average balances for assets or liabilities, respectively, for the periods presented. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yield/rates. Average balances have been calculated using daily averages.
Current wording
Average Balances and Yields. The following tables present average balances for assets and liabilities, the total dollar amounts of interest income from interest-earning assets, the total dollar amounts of interest expense on interest-bearing liabilities, the resulting average yields and costs, and NIM. The yields and costs for the periods indicated are derived by dividing the annualized income or expense by the average balances for assets or liabilities, respectively, for the periods presented. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yield/rates. Average balances have been calculated using daily averages.
Previous wording
The following table presents the components of the provision for credit losses for the periods indicated:
Current wording
The following tables present the components of the provision for credit losses for the periods indicated:
Previous wording
The following table presents the components of non-interest income for the periods indicated:
Current wording
The following tables present the components of non-interest income for the periods indicated:
Previous wording
The increase in total non-interest income for the three months ended March 31, 2026, compared to the same period in 2025 was primarily due to increases in credit enhanced loan balances which generated higher credit enhancement income. Additionally, the increased sales of the guaranteed portions of SBA 7(a) loans led to an increase in gains on loan sales, higher originations resulted in increased Strategic Program fees, and acquisition of the credit card portfolio introduced interchange income to FinWise.
Current wording
The increase in total non-interest income for the six months ended June 30, 2026, compared to the six months ended June 30, 2025 was primarily due to increases in credit enhanced loan balances which resulted in growth in the provision for credit losses which in turn resulted in higher credit enhancement income as a reciprocal to the provision for credit losses on credit enhanced loans. Additionally, the increased sales of the guaranteed portions of SBA 7(a) loans led to an increase in gains on loan sales of $0.6 million, an increase in loan origination volume led to higher Strategic Program fees of $0.6 million, and the acquisition of a credit card portfolio in November 2025 introduced interchange income to FinWise.
Previous wording
The following table presents the components of non-interest expense for the periods indicated:
Current wording
The following tables presents the components of non-interest expense for the periods indicated:
Previous wording
The increase in total non-interest expense for the three months ended March 31, 2026, compared to the same period in 2025, 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 mainly from increased headcount.
Current wording
The increase in total non-interest expense for the three and six months ended June 30, 2026, compared to the same period in 2025, was primarily due to an increase in credit enhancement servicing and guarantee expenses resulting from growth in credit enhanced loans and salaries and employee benefits mainly from increased headcount.
Previous wording
Our provision for income taxes for the three months ended March 31, 2026 and 2025 resulted in an effective income tax rate of 28.0% and 28.1%, respectively. The effective tax rate differed from the federal statutory rate of 21.0% for the three months ended March 31, 2026 principally due to state and local income taxes and certain non-deductible executive compensation.
Current wording
Our provision for income taxes for the three and six months ended June 30, 2026 and 2025 resulted in an effective income tax rate of 24.0%, 24.5%, 26.3% and 26.1% respectively. The effective tax rate differed from the federal statutory rate of 21.0% for the three and six months ended June 30, 2026 principally due tostate and local income taxes and certain non-deductible executive compensation.
Previous wording
The changes in net income for the three months ended March 31, 2026, compared to the same periods in 2025, were primarily the result of the factors discussed in the foregoing sections.
Current wording
The changes in net income for the three and six months ended June 30, 2026, compared to the same periods in 2025, were primarily the result of the factors discussed in the foregoing sections.
Previous wording
For periods prior to July 1, 2025, our operations were managed and reported as a single segment, and historical financial data by segment was not maintained. Accordingly, it is not practicable to present segment information for prior periods. In the segment reporting below, a non-GAAP subtotal is shown, captioned “Income before other operating expense allocation”. That subtotal presents an income subtotal before consideration of allocated corporate expenses which might be fixed, semi-fixed or otherwise resist changes without regard to a particular line of business. The following table provides segment information for the periods indicated ($ in thousands):
Current wording
For periods prior to July 1, 2025, our operations were managed and reported as a single segment, and historical financial data by segment was not maintained. Accordingly, it is not practicable to present segment information for prior periods. In the segment reporting below, a non-GAAP subtotal is shown, captioned “Income (loss) before other operating expense allocation”. That subtotal presents an income (loss) subtotal before consideration of allocated corporate expenses which might be fixed, semi-fixed or otherwise resist changes without regard to a particular line of business. The following tables provide segment information for the periods indicated (in thousands):
Previous wording
The BaaS segment’s strong performance for the three months ended March 31, 2026 underscores the success of our Strategic Program initiatives, while traditional banking is a core component of our business whose first quarter results were adversely affected by credit quality issues generally related to the SBA portfolio. Treasury and administration remains focused on optimizing liquidity and supporting the funding needs of our other operating segments.
Current wording
The BaaS segment’s strong performance for the three and six months ended June 30, 2026 underscores the success of our Strategic Program initiatives, while traditional banking is a core component of our business whose results were adversely affected by credit quality issues generally related to the SBA portfolio. Treasury and administration remains focused on optimizing liquidity and supporting the funding needs of our other operating segments.
Previous wording
The decrease in interest-bearing deposits in other banks from December 31, 2025 to March 31, 2026, was primarily due to the maturity of higher-cost brokered certificates of deposit prior to the end of the quarter and we opted not to renew or replace them. Aside from minimal balances held with our correspondent banks, the majority of our interest-bearing deposits are held at the Federal Reserve.
Current wording
The decrease in interest-bearing deposits in other banks from December 31, 2025 to June 30, 2026, was primarily due to funding our Strategic Program loans held-for-sale portfolio. Aside from minimal balances held with our correspondent banks, the majority of our interest-bearing deposits are held at the Federal Reserve.
Previous wording
The following table summarizes the weighted-average yields of our investment securities at March 31, 2026. The weighted average yield of investment securities was calculated using the sum of all interest that the investments generate, divided by the average book value. There are no tax-exempt securities.
Current wording
The following table summarizes the contractual maturities and weighted-average yields of our investment securities at June 30, 2026. The weighted average yield of investment securities was calculated using the sum of all interest that the investments generate, divided by the average book value. There are no tax-exempt securities.
Previous wording
There were no sales or transfers of investment securities between classifications during the three months ended March 31, 2026 and 2025.
Current wording
There were no sales or transfers of investment securities between classifications during the six months ended June 30, 2026 and 2025.
Previous wording
Our Strategic Program loans held-for-sale decreased $12.6 million as of March 31, 2026 compared to December 31, 2025, primarily as a result of lower originations for certain programs.
Current wording
Our Strategic Program loans held-for-sale increased $28.7 million as of June 30, 2026 compared to December 31, 2025, primarily as a result of higher originations for certain programs.
Previous wording
(1)SBA loans as of March 31, 2026 and December 31, 2025 include $95.1 million and $102.7 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA.
Current wording
(1)SBA loans as of June 30, 2026 and December 31, 2025 include $66.1 million and $102.7 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA.
Previous wording
As of March 31, 2026 and December 31, 2025, we had total SBA 7(a) loans of $202.4 million and $205.6 million, respectively, representing 34.6% and 35.1% of our total loans held-for-investment, respectively. Loans are sourced primarily through our referral relationship with BFG. Although BFG actively markets throughout the United States, we have developed a lending presence in the New York and New Jersey geographies due to its physical location in New York. The maximum SBA 7(a) loan amount is $5.0 million. Underwriting is generally based on commercial credit metrics where the primary repayment source is borrower cash flow, secondary is personal guarantor cash flow and tertiary is the sale of collateral pledged. These loans may be secured by commercial and residential mortgages as well as liens on business assets. In addition to typical underwriting metrics, we review the nature of the business, use of proceeds, length of time in business and management experience to help us target loans that we believe have lower credit risk. The SBA 7(a) program generally provides 50%, 75%, 85% and 90% guarantees for eligible SBA 7(a) loans. The guaranty is conditional and covers a portion of the risk of payment default by the borrower, but not the risk of improper underwriting, closing or servicing by the lender. As such, prudent underwriting, closing and servicing processes are essential to effective utilization of the SBA 7(a) program. We will sell interests in the SBA-guaranteed portion (typically 75% of the principal balance) of a majority of the loans we originate at a premium in the secondary market while retaining all servicing rights and the unguaranteed portion when market pricing for SBA loans are favorable. We will retain both the guaranteed portion and unguaranteed portion on our balance sheet when market pricing for SBA loans is less favorable and to season the new SBA loans to obtain optimal pricing. During the first quarter the Company sold $25.9 million of the guaranteed principal balances of SBA loans.
Current wording
As of June 30, 2026 and December 31, 2025, we had total SBA 7(a) loans of $164.0 million and $205.6 million, respectively, representing 28.7% and 35.1% of our total loans held-for-investment, respectively. Loans are sourced primarily through our referral relationship with BFG. Although BFG actively markets throughout the United States, we have developed a lending presence in the New York and New Jersey geographies due to its physical location in New York. The maximum SBA 7(a) loan amount is $5.0 million. Underwriting is generally based on commercial credit metrics where the primary repayment source is borrower cash flow, secondary is personal guarantor cash flow and tertiary is the sale of collateral pledged. These loans may be secured by commercial and residential mortgages as well as liens on business assets. In addition to typical underwriting metrics, we review the nature of the business, use of proceeds, length of time in business and management experience to help us target loans that we believe have lower credit risk. The SBA 7(a) program generally provides 50%, 75%, 85% and 90% guarantees for eligible SBA 7(a) loans. The guaranty is conditional and covers a portion of the risk of payment default by the borrower, but not the risk of improper underwriting, closing or servicing by the lender. As such, prudent underwriting, closing and servicing processes are essential to effective utilization of the SBA 7(a) program. We will sell interests in the SBA-guaranteed portion (typically 75% of the principal balance) of a majority of the loans we originate at a premium in the secondary market while retaining all servicing rights and the unguaranteed portion when market pricing for SBA loans are favorable. We will retain both the guaranteed portion and unguaranteed portion on our balance sheet when market pricing for SBA loans is less favorable and to season the new SBA loans to obtain optimal pricing. During the six months ended June 30, 2026, the Company sold $50.9 million of the guaranteed principal balances of SBA loans.
Previous wording
As of March 31, 2026 and December 31, 2025, we had total commercial leases of $78.9 million and $78.7 million, respectively, representing 13.5% and 13.4% of our total loans held-for-investment, respectively. Underwriting for smaller credit requests from customers is generally based on an internal credit scorecard, incorporating several customer and structure attributes including: severity and aging of delinquency; number of credit inquiries; loan-to-value ratio; term; and payment-to-income ratio. We periodically update our underwriting scorecard, which can have an impact on our credit tier scoring. Underwriting for larger credit requests from customers is generally based on commercial credit metrics where the primary repayment source considered is borrower cash flow, secondary is personal guarantor cash flow (when applicable) and tertiary is the sale of collateral pledged. The nature of the business, use of proceeds, length of time in business, management experience, repayment ability, credit history, ratio calculations and assessment of collateral adequacy are also underwriting considerations. These leases are generally secured by liens on business assets leased or purchased with Company funds. Historically, we have retained these leases on our balance sheet for investment; however, we may sell leases to certain purchasers from time to time.
Current wording
As of June 30, 2026 and December 31, 2025, we had total commercial leases of $83.1 million and $78.7 million, respectively, representing 14.5% and 13.4% of our total loans held-for-investment, respectively. Underwriting for smaller credit requests from customers is generally based on an internal credit scorecard, incorporating several customer and structure attributes including: severity and aging of delinquency; number of credit inquiries; loan-to-value ratio; term; and payment-to-income ratio. We periodically update our underwriting scorecard, which can have an impact on our credit tier scoring. Underwriting for larger credit requests from customers is generally based on commercial credit metrics where the primary repayment source considered is borrower cash flow, secondary is personal guarantor cash flow (when applicable) and tertiary is the sale of collateral pledged. The nature of the business, use of proceeds, length of time in business, management experience, repayment ability, credit history, ratio calculations and assessment of collateral adequacy are also underwriting considerations. These leases are generally secured by liens on business assets leased or purchased with Company funds. Historically, we have retained these leases on our balance sheet for investment; however, we may sell leases to certain purchasers from time to time.
Previous wording
Commercial non-real estate loans consist of loans and leases made to commercial enterprises that are not secured by real estate. As of March 31, 2026 and December 31, 2025, we had total commercial non-real estate loans of $3.9 million and $4.2 million, respectively, representing 0.7% and 0.7% of our total loans held-for-investment, respectively. Any loan, lease, line of credit, or letter of credit (including any unfunded commitments) and any interest obtained in such loans made by another lender to individuals, sole proprietorships, partnerships, corporations, or other business enterprises for commercial, industrial, agricultural, or professional purposes, not secured by real estate, but not for personal expenditure purposes are included in this category. For example, commercial vehicle term loans and commercial working capital term loans are included in this product loan category. Underwriting is generally based on commercial credit metrics where the primary repayment source is borrower cash flow, secondary is personal guarantor cash flow (when applicable) and tertiary is the sale of collateral pledged. The nature of the business, use of proceeds, length of time in business, management experience, repayment ability, credit history, ratio calculations and assessment of collateral adequacy are all considerations. These loans are generally secured by liens on business assets. Historically, we have retained these loans on our balance sheet for investment.
Current wording
Commercial non-real estate loans consist of loans and leases made to commercial enterprises that are not secured by real estate. As of June 30, 2026 and December 31, 2025, we had total commercial non-real estate loans of $3.5 million and $4.2 million, respectively, representing 0.6% and 0.7% of our total loans held-for-investment, respectively. Any loan, lease, line of credit, or letter of credit (including any unfunded commitments) and any interest obtained in such loans made by another lender to individuals, sole proprietorships, partnerships, corporations, or other business enterprises for commercial, industrial, agricultural, or professional purposes, not secured by real estate, but not for personal expenditure purposes are included in this category. For example, commercial vehicle term loans and commercial working capital term loans are included in this product loan category. Underwriting is generally based on commercial credit metrics where the primary repayment source is borrower cash flow, secondary is personal guarantor cash flow (when applicable) and tertiary is the sale of collateral pledged. The nature of the business, use of proceeds, length of time in business, management experience, repayment ability, credit history, ratio calculations and assessment of collateral adequacy are all considerations. These loans are generally secured by liens on business assets. Historically, we have retained these loans on our balance sheet for investment.
Previous wording
Residential real estate loans include construction, lot and land development loans that are for the purpose of acquisition and development of property to be improved through the construction of residential buildings, and loans secured by other residential real estate. As of March 31, 2026 and December 31, 2025, we had total residential real estate loans of $62.5 million and $59.6 million, respectively, representing 10.7% and 10.2% of our total loans held-for-investment, respectively. Construction loans are usually paid off through the conversion to permanent financing from third-party lending institutions. Lot loans may be paid off as the borrower converts to a construction loan. At the completion of the construction project, if the loan is converted to permanent financing by us or if scheduled loan amortization begins, it is then reclassified from construction to single-family dwelling. Underwriting of construction and development loans typically includes analysis of the general market conditions associated with the area and type of project being funded in addition to the borrower’s financial condition and ability to meet the required debt obligation. These loans are generally secured by mortgages for residential property located primarily in the Salt Lake City, Utah MSA, and we obtain guarantees from responsible parties. Historically, we have retained these loans on our consolidated balance sheets for investment.
Current wording
Residential real estate loans include construction, lot and land development loans that are for the purpose of acquisition and development of property to be improved through the construction of residential buildings, and loans secured by other residential real estate. As of June 30, 2026 and December 31, 2025, we had total residential real estate loans of $70.5 million and $59.6 million, respectively, representing 12.3% and 10.2% of our total loans held-for-investment, respectively. Construction loans are usually paid off through the conversion to permanent financing from third-party lending institutions. Lot loans may be paid off as the borrower converts to a construction loan. At the completion of the construction project, if the loan is converted to permanent financing by us or if scheduled loan amortization begins, it is then reclassified from construction to single-family dwelling. Underwriting of construction and development loans typically includes analysis of the general market conditions associated with the area and type of project being funded in addition to the borrower’s financial condition and ability to meet the required debt obligation. These loans are generally secured by mortgages for residential property located primarily in the Salt Lake City, Utah MSA, and we obtain guarantees from responsible parties. Historically, we have retained these loans on our balance sheet for investment.
Previous wording
Through our Strategic Program service providers, we issue unsecured and secured consumer and business loans to borrowers within certain approved credit profiles nationwide. Although we have generally sold most of these loans, we may choose to hold more of the funded loans and/or receivables based on a number of factors including the amount of our available capital. As of March 31, 2026 and December 31, 2025, we had total Strategic Program loans held-for-investment of $129.9 million and $129.7 million, respectively, representing 22.3% and 22.2% of our total loans held-for-investment, respectively. Loans originated through the Strategic Program are limited to predetermined Bank underwriting criteria, which has been approved by our board of directors. The primary form of repayment on these loans is from the borrower’s personal or business cash flow. Secured loans are secured by liens on consumer or business assets, as applicable. We reserve the right to sell any portion of funded loans and/or receivables directly to the Strategic Program service providers or other investors. We generally retain the legal right to service all these loans, but contract with the Strategic Program service provider or another approved sub-servicer to service these loans on our behalf.
Current wording
Through our Strategic Program service providers, we issue unsecured and secured consumer and business loans to borrowers within certain approved credit profiles nationwide. Although we have generally sold most of these loans, we may choose to hold more of the funded loans and/or receivables based on a number of factors including the amount of our available capital. As of June 30, 2026 and December 31, 2025, we had total Strategic Program loans held-for-investment of $144.6 million and $129.7 million, respectively, representing 25.3% and 22.2% of our total loans held-for-investment, respectively. Loans originated through the Strategic Program are limited to predetermined Bank underwriting criteria, which has been approved by our board of directors. The primary form of repayment on these loans is from the borrower’s personal or business cash flow. Secured loans are secured by liens on consumer or business assets, as applicable. We reserve the right to sell any portion of funded loans and/or receivables directly to the Strategic Program service providers or other investors. We generally retain the legal right to service all these loans, but contract with the Strategic Program service provider or another approved sub-servicer to service these loans on our behalf.
Previous wording
The Strategic Program loans with credit enhancement are distinct from our traditional loan portfolio in that the sponsoring fintech company guarantees the credit and fraud losses associated with these loans. Credit enhanced Strategic Program loans totaled $109.1 million and $108.1 million as of March 31, 2026 and December 31, 2025, representing 18.7% and 18.5% of our total loans held-for-investment, respectively. This significant increase reflects the expansion of the credit enhanced program and its impact on our balance sheet. The Reconciliations of Non-GAAP Financial Measures section of this report below further details the impact of the credit enhancement program on our allowance for credit losses and related non-GAAP financial measures.
Current wording
The Strategic Program loans with credit enhancement are distinct from our traditional loan portfolio. A specified percentage of the outstanding Strategic Program loan balances, representing interest and potentially other revenue sources associated with the program, is retained in a restricted deposit account, from which FinWise recovers its share of any charged-off principal and interest on the related loans. Interest and fees collected in excess of the amounts needed to maintain the deposit balance at the required level are paid to the fintech. In addition, the sponsoring fintech company guarantees that FinWise is reimbursed for the credit and fraud losses associated with these loans. Credit enhanced Strategic Program loans totaled $120.8 million and $108.1 million as of June 30, 2026 and December 31, 2025, representing 21.1% and 18.5% of our total loans held-for-investment, respectively. This significant increase reflects the expansion of the credit enhanced program and its impact on our balance sheet. The Reconciliations of Non-GAAP Financial Measures section of this report below further details the impact of the credit enhancement program on our allowance for credit losses and related non-GAAP financial measures.
Previous wording
Strategic Program loans without credit enhancement totaled $20.8 million and $21.6 million as of March 31, 2026 and December 31, 2025, representing 3.6% and 3.7% of our total loans held-for-investment, respectively. Unlike the credit enhanced loans, these non-credit enhanced loans do not benefit from a third-party guarantee or indemnification of credit and fraud losses by the Strategic Program service provider. As a result, the Bank retains the full credit and fraud losses associated with these loans, and they are subject to our standard credit risk management, monitoring, and allowance for credit losses under the CECL model. The accounting for non-credit enhanced Strategic Program loans is consistent with our other held-for-investment loan portfolios. While the non-credit enhanced Strategic Program loans represent a smaller portion of our overall loan portfolio, they provide additional diversification and support our broader fintech strategy.
Current wording
Strategic Program loans without credit enhancement totaled $23.9 million and $21.6 million as of June 30, 2026 and December 31, 2025, representing 4.2% and 3.7% of our total loans held-for-investment, respectively. Unlike the credit enhanced loans, these non-credit enhanced loans do not benefit from a third-party guarantee or indemnification of credit and fraud losses by the Strategic Program service provider. As a result, the Bank retains the full interest and fee income as well as the credit and fraud losses associated with these loans, and they are subject to our standard credit risk management, monitoring, and allowance for credit losses under the CECL model. The accounting for non-credit enhanced Strategic Program loans is consistent with our other held-for-investment loan portfolios. While the non-credit enhanced Strategic Program loans represent a smaller portion of our overall loan portfolio, they provide additional diversification and support our broader fintech strategy.
Previous wording
Commercial real estate loans include loans to individuals, sole proprietors, partnerships, corporations, or other business enterprises for commercial, industrial, agricultural, or professional purposes, secured by real estate, but not for personal expenditure purposes. As of March 31, 2026 and December 31, 2025, we had total commercial real estate loans of $88.1 million and $85.7 million, respectively, representing 15.1% and 14.6% of our total loans held-for-investment, respectively. Of these amounts, $86.1 million and $84.0 million represented owner occupied properties as of March 31, 2026 and December 31, 2025, respectively. Underwriting is generally based on commercial credit metrics where the primary repayment source is borrower cash flow, secondary is personal guarantor cash flow (when applicable) and tertiary is the sale of collateral pledged. The nature of the business, use of proceeds, length of time in business, management experience, repayment ability, credit history, ratio calculations and assessment of collateral adequacy are all considerations. In addition to real estate, these loans may also be secured by liens on business assets. Historically, we have retained these loans on our balance sheet for investment.
Current wording
Commercial real estate loans include loans to individuals, sole proprietors, partnerships, corporations, or other business enterprises for commercial, industrial, agricultural, or professional purposes, secured by real estate, but not for personal expenditure purposes. As of June 30, 2026 and December 31, 2025, we had total commercial real estate loans of $88.7 million and $85.7 million, respectively, representing 15.5% and 14.6% of our total loans held-for-investment, respectively. Of these amounts, $86.6 million and $84.0 million represented owner occupied properties as of June 30, 2026 and December 31, 2025, respectively. Underwriting is generally based on commercial credit metrics where the primary repayment source is borrower cash flow, secondary is personal guarantor cash flow (when applicable) and tertiary is the sale of collateral pledged. The nature of the business, use of proceeds, length of time in business, management experience, repayment ability, credit history, ratio calculations and assessment of collateral adequacy are all considerations. In addition to real estate, these loans may also be secured by liens on business assets. Historically, we have retained these loans on our balance sheet for investment.
Previous wording
Consumer lending provides financing for personal, family, or household purposes on a nationwide basis. Most of these loans are originated through our loan origination system platform and come from a variety of sources, including other approved merchant or dealer relationships and lending platforms. As of March 31, 2026 and December 31, 2025, we had total consumer loans of $18.6 million and $21.9 million, respectively, representing 3.3% and 3.8% of our total loans held-for-investment, respectively. We use a debt-to-income (“DTI”) ratio test to determine whether an applicant will be able to service the debt. The DTI ratio compares the applicant’s anticipated monthly expenses and total monthly obligations to the applicant’s monthly gross income. Our policy is to limit the DTI ratio to 45% after calculating interest payments related to the new loan. Loan officers, at their discretion, may make exceptions to this ratio if the loan is within their authorized lending limit. DTI ratios of no more than 50% may be approved subject to an increase in interest rate. Strong offsetting factors such as higher discretionary income or large down payments are used to justify exceptions to these guidelines. All exceptions are documented and reported. While the loans are generally for the purchase of goods which may afford us a purchase money security interest, these loans are underwritten as if they were unsecured. On larger loans, we may file a Uniform Commercial Code (“UCC”) financing form. Historically, we have retained these loans on our balance sheet for investment.
Current wording
Consumer lending provides financing for personal, family, or household purposes on a nationwide basis. Most of these loans are originated through our loan origination system platform and come from a variety of sources, including other approved merchant or dealer relationships and lending platforms. As of June 30, 2026 and December 31, 2025, we had total consumer loans of $17.0 million and $21.9 million, respectively, representing 3.0% and 3.8% of our total loans held-for-investment, respectively. We use a debt-to-income (“DTI”) ratio test to determine whether an applicant will be able to service the debt. The DTI ratio compares the applicant’s anticipated monthly expenses and total monthly obligations to the applicant’s monthly gross income. Our policy is to limit the DTI ratio to 45% after calculating interest payments related to the new loan. Loan officers, at their discretion, may make exceptions to this ratio if the loan is within their authorized lending limit. DTI ratios of no more than 50% may be approved subject to an increase in interest rate. Strong offsetting factors such as higher discretionary income or large down payments are used to justify exceptions to these guidelines. All exceptions are documented and reported. While the loans are generally for the purchase of goods which may afford us a purchase money security interest, these loans are underwritten as if they were unsecured. On larger loans, we may file a Uniform Commercial Code (“UCC”) financing form. Historically, we have retained these loans on our balance sheet for investment.
Previous wording
We had a total of $49.8 million in nonperforming assets as of March 31, 2026, which included $26.7 million of SBA 7(a) loan balances that are guaranteed by the SBA. We had $43.7 million in nonperforming assets which included $0.5 million in material loan modifications at December 31, 2025. The amount of nonperforming assets as of December 31, 2025 includes $24.2 million of SBA 7(a) loan balances that are guaranteed by the SBA. The increase in nonperforming assets from the prior year was primarily attributable to the increase in the SBA 7(a) loan portfolio being classified as nonaccrual mainly due to the negative impact of sustained elevated interest rates on our small business borrowers. Due to elevated interest rates, the slowdown of consumer spending and the variable rate nature of our SBA portfolio, the risk of default has become and continues to be elevated and may result in additional delinquencies in future periods.
Current wording
We had a total of $37.7 million in nonperforming assets as of June 30, 2026, which included $19.0 million of SBA 7(a) loan balances that are guaranteed by the SBA. We had $43.7 million in nonperforming assets which included $0.5 million in material loan modifications at December 31, 2025. The amount of nonperforming assets as of December 31, 2025 includes $24.2 million of SBA 7(a) loan balances that are guaranteed by the SBA. The decrease in nonperforming assets from the prior year was primarily attributable to a decrease in the SBA 7(a) loan portfolio being classified as nonaccrual mainly due to paydowns.
Previous wording
(1)Recoveries related to Strategic Program loans that were reimbursed fully on the credit enhanced portfolio totaled $4.9 million and $1.0 thousand for the three months ended March 31,2026 and March 31, 2025, respectively.
Current wording
(1) Recoveries related to Strategic Program loans that were reimbursed fully on the credit enhanced portfolio totaled $7.8 million and $1.0 thousand for the three months ended June 30, 2026 and June 30, 2025, respectively, and $12.7 million and $2.0 thousand for the six months ended June 30, 2026 and June 30, 2026, respectively.
Previous wording
The following table shows the allocation of the ACL and the percentage of loans in each category to total loans as of March 31, 2026 and December 31, 2025. The ACL related to Strategic Programs constitutes 76.2% and 77.0% of the total ACL while comprising 22.3% and 22.2%, respectively, of total loans held-for-investment as of March 31, 2026 and December 31, 2025, respectively. The percentage of ACL related to Strategic Program loans retained reflects the increased credit risks associated with certain retained Strategic Program loans.
Current wording
The following table shows the allocation of the ACL and the percentage of loans in each category to total loans as of June 30, 2026 and December 31, 2025. The ACL related to Strategic Programs constitutes 78.9% and 77.0% of the total ACL while comprising 25.3% and 22.2%, respectively, of total loans held-for-investment as of June 30, 2026 and December 31, 2025, respectively. The percentage of ACL related to Strategic Program loans retained reflects the increased credit risks associated with certain retained Strategic Program loans.
Previous wording
When comparing March 31, 2026 to December 31, 2025, the increase in ACL to total loans held-for-investment was primarily due to the increase of the credit enhanced loan portfolio ACL resulting from the change in portfolio composition. The increase in nonaccrual loans to total loans held-for-investment as shown above was primarily related to SBA loans that were moved to nonaccrual status during 2026. The decrease in the ACL to nonaccrual loans ratio as shown above primarily pertained to growth in the nonaccrual loans concentrated in the SBA product and charge-offs in the period as updated appraisals were obtained.
Current wording
When comparing June 30, 2026 to December 31, 2025, the increase in ACL to total loans held-for-investment was primarily due to the increase of the credit enhanced loan portfolio ACL resulting from the change in portfolio composition. The decrease in nonaccrual loans to total loans held-for-investment as shown above was primarily driven by a decline in nonaccrual loan balances, which more than offset the decrease in total loans held-for-investment during the period. The increase in the ACL to nonaccrual loans ratio as shown above primarily pertained to growth in the credit enhanced loans included in the Strategic Program loans held-for-investment offset in part by the decrease in nonaccrual loan balances during the period.
Previous wording
The following table summarizes net charge-offs (“NCO”), average loans and the ratio of annualized NCO to average loans for the periods indicated:
Current wording
The following tables summarize net charge-offs (“NCO”), average loans and the ratio of annualized NCO to average loans for the periods indicated:
Previous wording
Total assets at March 31, 2026 were $899.4 million, a decrease of $77.7 million from December 31, 2025. The decrease in total assets was primarily due to decreases in interest-bearing cash deposits of $60.7 million, loans held-for-sale portfolio of $12.6 million, and loans held-for-investment, net, of $2.4 million.
Current wording
Total assets at June 30, 2026 were $925.3 million, a decrease of $51.8 million from December 31, 2025. The decrease in total assets was primarily due to decreases in interest-bearing cash deposits of $63.8 million and loans held-for-investment, net, of $27.1 million, partially offset by increases in loans held-for-sale portfolio of $28.7 million, and the credit enhanced asset of $9.5 million.
Previous wording
The decrease in total deposits as of March 31, 2026 compared to December 31, 2025 of $79.7 million was primarily due to reductions in noninterest-bearing demand deposits and certificates of deposit, as excess funds were not required to support the lower level of assets.
Current wording
The decrease in total deposits as of June 30, 2026 compared to December 31, 2025 of $60.8 million was primarily due to reductions in noninterest-bearing demand deposits and certificates of deposit, as excess funds were not required to support the lower level of assets.
Previous wording
As an FDIC-insured institution, our deposits are insured up to applicable limits by the Deposit Insurance Fund (“DIF”) of the FDIC. The Dodd-Frank Act raised the limit for federal deposit insurance to $250,000 for most deposit accounts and increased the cash limit of Securities Investor Protection Corporation protection from $100,000 to $250,000. Our total estimated uninsured deposits were $182.2 million and $204.1 million as of March 31, 2026 and December 31, 2025, respectively. Estimated uninsured deposits at the Bank as of March 31, 2026 include $35.6 million of total deposits contractually required to be maintained at the Bank pursuant to our Strategic Program agreements and an additional $43.0 million of total deposits associated with accounts owned by the parent holding company or the Bank. The maturity profile of our uninsured time deposits, those amounts that exceed the FDIC insurance limit, at March 31, 2026 is as follows:
Current wording
As an FDIC-insured institution, our deposits are insured up to $250,000 per depositor, per insured bank, for each account ownership category. Our total estimated uninsured deposits were $174.4 million and $204.1 million as of June 30, 2026 and December 31, 2025, respectively. Estimated uninsured deposits at the Bank as of June 30, 2026 include $29.0 million of total deposits contractually required to be maintained at the Bank pursuant to our Strategic Program agreements and an additional $52.1 million of total deposits associated with accounts owned by the parent holding company or the Bank. The maturity profile of our uninsured time deposits, those amounts that exceed the FDIC insurance limit, at June 30, 2026 is as follows:
Previous wording
Total liabilities decreased to $702.8 million, or 10.3%, as of March 31, 2026 from $783.9 million as of December 31, 2025 primarily due to a decrease in deposits as discussed above.
Current wording
Total liabilities decreased to $726.1 million, or 7.4%, as of June 30, 2026 from $783.9 million as of December 31, 2025 primarily due to a decrease in deposits as discussed above.
Previous wording
We primarily utilize short-term and long-term borrowings to supplement deposits to fund our lending and investment activities. At March 31, 2026, we had the ability to access $165.0 million from the Federal Reserve Bank on a collateralized basis. The Bank had an available unsecured line of credit with three correspondent banks to borrow up to$16.1 million in overnight funds. We also maintain a $17.0 million line of credit with Federal Home Loan Bank, secured by specific pledged loans. We had no outstanding balances on any unsecured or secured lines of credit as of March 31, 2026.
Current wording
We primarily utilize short-term and long-term borrowings to supplement deposits to fund our lending and investment activities. At June 30, 2026, we had the ability to access $177.0 million from the Federal Reserve Bank on a collateralized basis. The Bank had an available unsecured line of credit with three correspondent banks to borrow up to$16.1 million in overnight funds. We also maintain a $10.8 million line of credit with Federal Home Loan Bank, secured by specific pledged loans. We had no outstanding balances on any unsecured or secured lines of credit as of June 30, 2026.
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