What FinWise Bancorp (FINW) Said on Its Q3 Earnings Call

Key Points

• FinWise reported strong Q3 results: Net income was $10 million, or $0.73 per diluted share, as loan originations reached $2.1 billion and net interest income rose 17% to $41.9 million.
• Credit-enhanced lending nearly doubled to $146.2 million, with management expecting about $20 million of additional organic growth in Q4. However, executives cautioned that unusually favorable charge-offs will likely normalize to roughly $4 million per quarter.
• The Tallied acquisition added credit-card technology and produced a $6.5 million bargain purchase gain, while FinWise exited the associated receivables business. Management forecast Q4 originations of $1.5 billion to $1.6 billion and highlighted a strong pipeline of potential fintech and payments partners.

FinWise Bancorp NASDAQ: FINW reported third-quarter 2026 net income of $10 million, or $0.73 per diluted share, as loan originations rose and its credit-enhanced lending portfolio expanded. Continuing operations generated $10.4 million of net income, while discontinued operations recorded a $0.4 million loss.

Management said quarterly results reflected progress in expanding the company’s lending, card and payments capabilities while managing its balance sheet for capital efficiency. The company originated $2.1 billion in loans during the quarter, exceeding its prior expectations, driven by stronger student-lending activity and a credit-enhanced consumer lending program that ramped during the period.

Credit-Enhanced Portfolio Nearly Doubles

Credit-enhanced loan balances reached $146.2 million at Sept. 30, up 97% from $74.2 million at the end of June after adjusting prior figures for the reclassification of Tallied credit card receivables to discontinued operations.

Chief Executive Officer Jim Noone said growth was aided by a partner that had been slower to ramp in the first half of the year. He said the company expects approximately $20 million of additional organic growth in credit-enhanced balances in the fourth quarter. For 2027, management suggested modeling roughly 5% growth in those balances until additional partners launch.

Noone said long-term expansion in the product will depend largely on adding new partners. He outlined FinWise’s process for managing partner risk, including due diligence on compliance, financial strength, cybersecurity and controls, as well as stress testing loan vintages and charge-off scenarios. Partners are required to maintain cash reserves that can be used to cover losses, and those reserves must be replenished weekly under contractual terms.

Net interest income increased 17% from the second quarter to $41.9 million. Chief Financial Officer Bob Wahlman said the increase reflected the expanding credit-enhanced portfolio, improved credit performance and interest received on a tax refund. Net interest margin was 19.58%.

Wahlman said that, excluding excess credit-enhancement income, the company still expects net interest margin to gradually decline as part of its risk-reduction strategy. However, including credit-enhanced balances, FinWise expects margin to rise over time as that portfolio grows faster than funding costs.

Credit Trends Improve, Though Management Expects Normalization

Net charge-offs on non-credit-enhanced loans declined to $2.6 million from $5.2 million in the second quarter. Nonperforming loan balances fell slightly to $37.1 million from $37.7 million, with approximately 48% of the quarter-end balance guaranteed by the federal government.

Noone said the quarter’s charge-off results were “unusually favorable” and should not be viewed as a new run rate. The company now expects approximately $4 million in quarterly net charge-offs for non-credit-enhanced loans in the fourth quarter and as a more normalized level over time. It also anticipates $5 million to $7 million in migration to nonperforming loans during the fourth quarter.

FinWise is pursuing a securitization involving a portion of its unguaranteed Small Business Administration loan balances. Noone said the company anticipates transferring those balances at par, with a credit enhancement for securitization investors through FinWise’s retained interest. Management said its charge-off outlook is independent of any potential securitization transaction.

Tallied Deal Adds Technology, Produces Purchase Gain

During the quarter, FinWise completed its transaction involving Tallied, acquiring credit card technology, program-management capabilities and an experienced team. The company decided that holding credit card receivables does not fit its long-term strategy and approved a plan to exit that business while retaining the technology platform and servicing capabilities.

As a result, the credit card portfolio and related assets and liabilities are reported as discontinued operations, while the retained platform and employees remain in continuing operations. The transaction generated a $6.5 million bargain purchase gain that was recorded in non-interest income.

Non-interest income totaled $60.8 million, supported by higher credit-enhancement income, the Tallied gain and increased strategic program fees. Non-interest expense was $42.7 million, including higher credit-enhancement guarantee and servicing costs. Excluding credit-enhancement expenses, non-interest expense increased $2.8 million, primarily due to compensation, Tallied-related employees and other operating costs.

Executive Chairman Kent Landvatter said upfront acquisition and integration costs related to Tallied should decline as the business is incorporated into FinWise’s core operations, though the company did not provide an expense forecast. The quarterly efficiency ratio was 41.6%.

Partner Pipeline, Capital Position and Outlook

FinWise said its pipeline of prospective fintech partners remains strong. During the quarter, it signed a payments-partner contract, following a prepaid-partner agreement announced in the prior quarter. Noone said pipeline partners under contract or term sheet are generally larger and have greater long-term revenue potential, though the company does not include new partners in its origination guidance before they develop a track record.

Management said those opportunities may begin to contribute meaningful revenue between late 2027 and 2028, depending on launch timing and pilot progress.

The company also mutually agreed to end its sponsorship relationship with Upstart effective Sept. 30. FinWise said Upstart contributed an immaterial amount of originations and revenue during the third quarter, and the termination is not expected to materially affect its financial condition or operating results.

FinWise disclosed that two other partners have indicated they may pursue bank charters, though their agreements extend into late 2028 and early 2029. Landvatter said the company expects partner turnover periodically and has built its sales platform and broader product offerings to diversify its business.

• Total assets were $958.3 million at Sept. 30.
• Total deposits were $707.6 million.
• The bank leverage ratio was 18.1%, compared with the 8% level required to be considered well-capitalized.
• FinWise repurchased 159,099 shares for $2.2 million during the quarter.

For the fourth quarter, management said loan originations were tracking between $1.5 billion and $1.6 billion based on the first four weeks of October. It described that range as a reasonable quarterly run rate for 2027, with approximately 5% growth as the year progresses, excluding contributions from new partners.

About FinWise Bancorp (NASDAQ:FINW)

FinWise Bancorp is the bank holding company for FinWise Bank, a Utah-chartered financial institution headquartered in Murray, Utah. Through its subsidiary, the company provides banking and lending services to consumers, small businesses and commercial customers.

FinWise Bank operates a strategic lending platform that partners with fintech companies, loan originators and other third parties to support the origination and servicing of consumer and small-business loans. Its offerings also include commercial lending, small business lending, Small Business Administration loans, commercial real estate financing and other credit products.

The bank additionally serves customers through its Utah community banking business, which provides deposit accounts and traditional banking services.

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