Release Date: April 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Hi everyone. Thanks for taking the questions here on. Just a question on this latest announcement today on the extended held for sale option for this fintech and how much of the balance in held-for-sale loans did this generate? And I guess what's the outlook going forward? How And how large could it be from one quarter to the next when they're in production?
A: Kent Landvatter, CEO of Finwise Bancorp, responded that the strategy involved providing an extended held for sale option for an established fintech, which is expected to drive some incremental pressure to the overall net interest margin (NIM) in Q2. The impact starts to become muted after Q2 as the balances in the program stabilize. He emphasized that it is a pilot and did not disclose specific balance amounts due to partner sensitivity.
Q: Got it. That's really helpful. So do you think I mean that is going to bring on more more growth coming in more production would be the second half of the year where we can see net interest income start to rise following some more pressure here this quarter onwards with the production you're hearing you're seeing from other products. Do you think we've now seen a stabilization or maybe maybe a floor and net interest income that you can see it grow from here or is this $14 million number decent year for the second quarter this call?
A: Robert Wahlman, CFO of Finwise Bancorp, indicated that as loan balances increase, the total net interest income dollar amount is expected to continue to rise. He also noted that expenses related to new initiatives would impact financials, suggesting a material pickup in expenses in Q2 over Q1, followed by a decelerating rate of growth in expenses in the second half of the year.
Q: Hey, good afternoon. Bob, if I can just go back and maybe square so that expense commentary really quick on the for 2Q expenses, you would expect a similar lift as what we saw in the first quarter relative to 4Q. Was that was that the right way to think about it?
A: Robert Wahlman confirmed that for Q2, expenses are expected to increase similarly to the first quarter relative to the fourth quarter.
Q: Okay. Got it. And then maybe just a bigger picture question. Feels like we've seen a maybe a pickup in the amount of kind of regulatory or consent orders for bad banks over the past kind of 36 months. I guess more of a two-pronged question for me. I guess one of any of these announcements change, how you guys view the regulatory landscape of Bass and what changed specifically how you are investing from a regulatory perspective on a go-forward basis?
A: Kent Landvatter addressed concerns about the regulatory landscape, stating that they do not foresee any upcoming changes that would negatively impact their initiatives. He highlighted that the robust pipeline for new fintech partners is likely a result of fintechs seeking well-regulated banks, underscoring Finwise's commitment to compliance and regulatory adherence.
Q: Great. I appreciate it.. And I'm going to go back to some of the maybe commentary around SBA, you guys put less of the balance sheet and sold a bit less this quarter. It sounds like the expectation is for kind of similarly lower levels on the SBA front but wanted to go back to the commentary on some of the leasing business and commercial real estate, I guess on a on a go forward basis, at least in kind of the short run, should we expect the CRE and then the leasing business drive more performing or proportion wise of the incremental loan growth moving forward?
A: James Noone, President of Finwise Bancorp, clarified that in the near term, the primary driver of loan portfolio growth would be SBA loans, followed by capital leases and then owner-occupied commercial real estate lending. He provided insights into the yield comparisons across these loan types, noting that SBA loans typically offer higher yields compared to the other categories.
Q: Why did you do a buyback? And are you so we're able to invest for growth?
A: Kent Landvatter explained that the decision for a share buyback was based on the current stock price relative to tangible book value, deeming it an accretive decision for shareholders. He reassured that this move does not impede the company's growth prospects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
