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What changed in Finwise Bancorp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Finwise Bancorp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+464 added−463 removedSource: 10-K (2026-03-23) vs 10-K (2025-03-26)

Top changes in Finwise Bancorp's 2025 10-K

464 paragraphs added · 463 removed · 329 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

85 edited+23 added−12 removed154 unchanged
Biggest changeSome Strategic Programs require the service provider pay a fee to the Bank if it enters into a similar strategic relationship with another bank or financial institution. 11 Table of Contents On October 13, 2021, we formed FinWise Investment, LLC, a limited liability company, as a wholly owned subsidiary of the Company to hold and manage private investments made by the Company and the Bank.
Biggest changeOn October 13, 2021, we formed FinWise Investment, LLC, a limited liability company, as a wholly owned subsidiary of ours to hold and manage private investments made by us and the Bank. We currently hold and, in the future, may acquire equity in certain of our Strategic Program service providers through this subsidiary.
Our loan committee is comprised of our Chief Executive Officer, our President, our Chief Credit Officer, our Chief Financial Officer, certain other members of management and select senior loan officers, which is primarily responsible for day-to-day implementation and oversight of our loan approval procedures. The levels of lending authority are periodically reviewed by the Bank’s board of directors.
Our loan committee is comprised of our Chief Executive Officer/President, our Chief Credit Officer, our Chief Financial Officer, certain other members of management and select senior loan officers, which is primarily responsible for day-to-day implementation and oversight of our loan approval procedures. The levels of lending authority are periodically reviewed by the Bank’s board of directors.
The Bank’s loans are also subject to Utah law and federal laws applicable to consumer credit transactions, such as the: • Federal Truth-In-Lending Act governing disclosures of credit terms to consumer borrowers; • Home Mortgage Disclosure Act requiring financial institutions to provide information to enable public officials to determine whether a financial institution is fulfilling its obligations to meet the housing needs of the community it serves; • Equal Credit Opportunity Act prohibiting discrimination on the basis of race, creed or other prohibitive factors in extending credit; 19 Table of Contents • Real Estate Settlement Procedures Act which requires lenders to disclose certain information regarding the nature and cost of real estate settlements, and prohibits certain lending practices, as well as limits escrow account amounts in real estate transactions; • Fair Debt Collection Act governing the manner in which consumer debts may be collected by collection agencies; • Fair and Accurate Credit Transactions Act which establishes additional rights for consumers to obtain and correct credit reports, addresses identity theft, and establishes additional requirements for consumer reporting agencies and financial institutions that provide adverse credit information to a consumer reporting agency; and • The rules and regulations of various federal agencies charged with the responsibility of implementing such federal laws.
The Bank’s loans are also subject to Utah law and federal laws applicable to consumer credit transactions, such as the: • Federal Truth-In-Lending Act governing disclosures of credit terms to consumer borrowers; 20 Table of Contents • Home Mortgage Disclosure Act requiring financial institutions to provide information to enable public officials to determine whether a financial institution is fulfilling its obligations to meet the housing needs of the community it serves; • Equal Credit Opportunity Act prohibiting discrimination on the basis of race, creed or other prohibitive factors in extending credit; • Real Estate Settlement Procedures Act which requires lenders to disclose certain information regarding the nature and cost of real estate settlements, and prohibits certain lending practices, as well as limits escrow account amounts in real estate transactions; • Fair Debt Collection Act governing the manner in which consumer debts may be collected by collection agencies; • Fair and Accurate Credit Transactions Act which establishes additional rights for consumers to obtain and correct credit reports, addresses identity theft, and establishes additional requirements for consumer reporting agencies and financial institutions that provide adverse credit information to a consumer reporting agency; and • The rules and regulations of various federal agencies charged with the responsibility of implementing such federal laws.
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. We are required to pay assessments to the FDIC on a quarterly basis. The assessment amount is the product of multiplying the assessment base by the assessment amount.
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. We are required to pay assessments to the FDIC on a quarterly basis. The assessment amount is the product of multiplying the assessment base by the assessment rate.
Tangible equity is defined in the assessment rule as Tier 1 Capital and is calculated monthly, unless the insured depository institution has less than $1 billion in assets, in which case the insured depository institution calculates Tier 1 Capital on an end-of-quarter basis.
Tangible equity is defined in the assessment rule as Tier 1 Capital and is calculated monthly, unless the insured depository institution has less than $1.0 billion in assets, in which case the insured depository institution calculates Tier 1 Capital on an end-of-quarter basis.
The Company continues to monitor states in which it has a physical presence with respect to consumer privacy protection compliance obligations. Cybersecurity Federal banking regulators, as well as the U.S. Securities and Exchange Commission (“SEC”) and related self-regulatory organizations, regularly issue guidance regarding cybersecurity that is intended to enhance cybersecurity risk management among financial institutions.
The Company continues to monitor states in which it has a physical presence with respect to consumer privacy protection compliance obligations. Cybersecurity Federal banking regulators, as well as the Securities and Exchange Commission (“SEC”) and related self-regulatory organizations, regularly issue guidance regarding cybersecurity that is intended to enhance cybersecurity risk management among financial institutions.
Depending upon the capital category to which an institution is assigned, the regulators' corrective powers include: requiring the submission of a capital restoration plan; placing limits on asset growth and restrictions on activities; requiring the institution to issue additional capital stock (including additional voting stock) or to be acquired; restricting transactions with affiliates; restricting the interest rate the institution may pay on deposits; ordering a new election of directors of the institution; requiring that senior executive officers or directors be dismissed; prohibiting the institution from accepting deposits from correspondent banks; requiring the institution to divest certain subsidiaries; prohibiting the payment of principal or interest on subordinated debt; and ultimately, appointing a receiver for the institution.
Depending upon the capital category to which an institution is assigned, the regulators' corrective powers include: requiring the submission of a capital restoration plan; placing limits on asset growth and restrictions on activities; requiring the institution to issue additional capital stock (including additional voting stock) or 16 Table of Contents to be acquired; restricting transactions with affiliates; restricting the interest rate the institution may pay on deposits; ordering a new election of directors of the institution; requiring that senior executive officers or directors be dismissed; prohibiting the institution from accepting deposits from correspondent banks; requiring the institution to divest certain subsidiaries; prohibiting the payment of principal or interest on subordinated debt; and ultimately, appointing a receiver for the institution.
Competition The banking and financial services industry is highly-competitive, and we compete with a wide range of financial institutions within our markets, including local, regional and national commercial banks, credit unions, and non-bank financial service providers such as financial technology companies and other financial intermediaries for certain of our products and services.
Competition The banking and financial services industry is highly-competitive, and we compete with a wide range of financial institutions within our markets, including local, regional and national commercial banks, credit unions, and non-bank financial service providers such as financial technology companies, private credit lenders and other financial intermediaries for certain of our products and services.
Eligibility criteria to utilize CBLR instead of the Basel III risk-based capital ratios include having total assets less than $10 billion and off-balance sheet exposures that were less than 25% of total assets, among others. The Company and the Bank qualified for and elected to use CBLR beginning in the first quarter of 2020.
Eligibility criteria to utilize CBLR instead of the Basel III risk-based capital ratios include having total assets less than $10 billion and off-balance sheet exposures that is less than 25% of total assets, among others. The Company and the Bank qualified for and elected to use CBLR beginning in the first quarter of 2020.
The majority of originations of Strategic Program loans as described above are not maintained by us as loans held-for-investment.
Strategic Program Loans Held-for-Sale The majority of originations of Strategic Program loans as described above are not maintained by us as loans held-for-investment.
We control credit risk both through disciplined underwriting of each transaction, as well as active credit management processes and procedures to manage risk and minimize loss throughout the life of a loan, and our loan policies establish the basic guidelines governing our lending operations. Underwriting .
We control credit risk both through disciplined underwriting of each transaction, as well as active credit management processes and procedures to manage risk and minimize loss throughout the life of a loan, and our loan policies establish the basic guidelines governing our lending operations. Traditional Loan Portfolio Underwriting .
During the year ended December 31, 2024, the Bank paid an assessment to the UDFI of $0.1 million. Capital Adequacy Guidelines Bank holding companies and banks are subject to various regulatory capital requirements administered by state and federal agencies.
During the year ended December 31, 2025, the Bank paid an assessment to the UDFI of $0.1 million. Capital Adequacy Guidelines Bank holding companies and banks are subject to various regulatory capital requirements administered by state and federal agencies.
Any loan, line of credit, or letter of credit (including any unfunded commitments), and any interest the Bank obtains in such loans made by another lender, to individuals, sole proprietorships, partnerships, corporations, or other business enterprises for commercial, industrial, agricultural, or professional purposes, but not for personal expenditure purposes are included in this category.
Any loan, line of credit, or letter of credit (including any unfunded commitments), and any interest the Bank obtains in such loans made by another lender, to individuals, sole proprietorships, partnerships, 7 Table of Contents corporations, or other business enterprises for commercial, industrial, agricultural, or professional purposes, but not for personal expenditure purposes are included in this category.
We have principally relied on wholesale funding sources (brokered deposits, health savings accounts, and institutional deposits) to fund our lending activities but also have core deposits, and have utilized borrowings when we deem appropriate.
We have principally relied on wholesale funding sources (brokered deposits, health savings accounts, and institutional deposits) to fund our lending activities but also have core deposits, on-line deposits and have utilized borrowings when we deem them appropriate.
Our construction and development loans typically have terms that range from six months to nine months but may be extended depending on factors such as the type and size of the development and the financial strength of the borrower/guarantor. Loans are typically structured with an interest only construction period and mature at the completion of construction. Consumer Loans .
Our construction and development loans typically have terms that range from six months to nine months but may be extended depending on factors such as the type and size of the development and the financial strength of the borrower/guarantor. Loans are typically structured with an interest only construction period and mature at the completion of construction. Strategic Programs .
Furthermore, we are prohibited from engaging in asset purchases or sales transactions with our officers, directors, or principal shareowners unless the transaction is on market terms and, if the transaction represents greater than 10% of the capital and surplus of the bank, a majority of the bank’s disinterested directors has approved the transaction.
Furthermore, we are prohibited from engaging in asset purchases or sales transactions with our officers, directors, or 17 Table of Contents principal shareowners unless the transaction is on market terms and, if the transaction represents greater than 10% of the capital and surplus of the bank, a majority of the bank’s disinterested directors has approved the transaction.
Our Strategic Programs include a broad array of products for both prime and subprime borrowers including both consumer and commercial loans that may be secured or unsecured, and open- or closed-end products, depending on the particular market targeted by the 10 Table of Contents Bank and the specific Strategic Program service provider.
Our Strategic Programs include a broad array of products for both prime and subprime borrowers including both consumer and commercial loans that may be secured or unsecured, and open- or closed-end products, depending on the particular market targeted by the Bank and the specific Strategic Program service provider.
The terms of our Strategic Programs generally require each Strategic Program platform to establish a reserve deposit account with the Bank or another financial institution, intended to protect the Bank in the event a purchaser of loan receivables originated through our Strategic Programs cannot meet its contractual obligation to purchase.
The terms of our Strategic Programs generally require each Strategic Program platform to establish a reserve deposit account with the Bank or another financial institution, intended to protect the Bank in the event a purchaser of loan 8 Table of Contents receivables originated through our Strategic Programs cannot meet its contractual obligation to purchase.
On February 5, 2024, the transaction was consummated and the Company issued an aggregate 339,176 shares of the Company’s common 6 Table of Contents stock in a private placement to the sellers in exchange for the additional membership interest in BFG. The second transaction increased the Company’s total ownership interest in BFG to 20%.
On February 5, 2024, the transaction was consummated and the Company issued an aggregate 339,176 shares of the Company’s common stock in a private placement to the sellers in exchange for the additional membership interest in BFG. The second transaction increased the Company’s total ownership interest in BFG to 20%.
The Bank in its sole capacity has the discretion to determine whether to sell or retain the guaranteed portion of any or all SBA loans it funds. Fees are not paid based on the secondary market premium received or the amount sold. 7 Table of Contents Commercial Leases .
The Bank in its sole capacity has the discretion to determine whether to sell or retain the guaranteed portion of any or all SBA loans it funds. Fees are not paid based on the secondary market premium received or the amount sold. Commercial Leases .
Bank holding companies also are required to consult with the Federal Reserve before materially increasing dividends. It is also the Federal Reserve’s policy that bank holding companies should not maintain dividend levels that undermine their ability to be a source of strength to its banking subsidiaries.
Bank holding 18 Table of Contents companies also are required to consult with the Federal Reserve before materially increasing dividends. It is also the Federal Reserve’s policy that bank holding companies should not maintain dividend levels that undermine their ability to be a source of strength to its banking subsidiaries.
Our investment policy is reviewed and approved annually by our board of directors. Overall investment objectives are established by our board through our investment policy and monitored through our asset-liability management committee. Day-to-day activities pertaining to the securities portfolio are conducted under the supervision of our Chief Financial 12 Table of Contents Officer.
Our investment policy is reviewed and approved annually by our board of directors. Overall investment objectives are established by our board through our investment policy and monitored through our asset-liability management committee. Day-to-day activities pertaining to the securities portfolio are conducted under the supervision of our Chief Financial Officer.
In addition, as a Utah state-chartered bank that is not a member of the Federal Reserve, the Bank is subject to primary regulation, supervision, and examination by the FDIC and the UDFI. The Bank’s deposits are insured by the FDIC through the Deposit Insurance Fund (“DIF”).
In 14 Table of Contents addition, as a Utah state-chartered bank that is not a member of the Federal Reserve, the Bank is subject to primary regulation, supervision, and examination by the FDIC and the UDFI. The Bank’s deposits are insured by the FDIC through the Deposit Insurance Fund (“DIF”).
The FDIA provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution (including the claims of the FDIC as a subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver will have priority over other general unsecured claims against the institution.
The FDIA provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution (including the claims of the FDIC as a subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver will have priority over other general unsecured claims against the 15 Table of Contents institution.
We record any necessary charge-offs promptly and maintain adequate allowance levels for probable loan losses incurred in the loan portfolio. Management regularly reviews the status of the watch list and classified assets portfolio as well as the larger credits in the portfolio.
We record any necessary charge-offs promptly and maintain adequate allowance levels for probable loan losses incurred in the loan portfolio. Management regularly reviews the status of the watch list and classified assets portfolio as 9 Table of Contents well as the larger credits in the portfolio.
The majority of our commercial real estate loans are owner occupied commercial real estate loans which comprise 8.8% of the Bank's loans held-for-investment portfolio. Construction loans are typically disbursed as construction progresses and carry variable interest rates.
The majority of our commercial real estate loans are owner occupied commercial real estate loans which comprise 14.3% of the Bank's loans held-for-investment portfolio. Construction loans are typically disbursed as construction progresses and carry variable interest rates.
The Federal Reserve Board or the FRB could prohibit or limit the 17 Table of Contents payment of dividends by a bank holding company if it determines that payment of the dividend would constitute an unsafe or unsound practice.
The Federal Reserve Board or the FRB could prohibit or limit the payment of dividends by a bank holding company if it determines that payment of the dividend would constitute an unsafe or unsound practice.
From time to time, we expect the number and composition of our Strategic Program service providers to change as the business develops, contract terms expire or agreements with service providers are otherwise terminated.
From time to time, we expect the number and composition of our Strategic Program service providers to change as the business develops, contract t erms expire or agreements with service providers are otherwise terminated.
In addition, the Bank’s deposit 14 Table of Contents accounts are insured by the FDIC to the maximum extent permitted by law, and the FDIC has certain enforcement powers over the Bank. The UDFI and the FDIC periodically examine the Bank’s operations and financial condition and compliance with federal consumer-protection laws.
In addition, the Bank’s deposit accounts are insured by the FDIC to the maximum extent permitted by law, and the FDIC has certain enforcement powers over the Bank. The UDFI and the FDIC periodically examine the Bank’s operations and financial condition and compliance with federal consumer-protection laws.
Human Capital Resources As of December 31, 2024, we employed 196 full-time equivalent employees. None of our employees are represented by any collective bargaining unit or are a party to a collective bargaining agreement. We believe the relationship with our employees to be good.
Human Capital Resources As of December 31, 2025, we employed 198 full-time equivalent employees. None of our employees are represented by any collective bargaining unit or are a party to a collective bargaining agreement. We believe the relationship with our employees to be good.
In 16 Table of Contents accordance with the Dodd-Frank Act, the federal banking agencies prohibit incentive-based compensation arrangements that encourage inappropriate risk taking by covered financial institutions (generally institutions that have over $1 billion in assets) and are deemed to be excessive, or that may lead to material losses.
In accordance with the Dodd-Frank Act, the federal banking agencies prohibit incentive-based compensation arrangements that encourage inappropriate risk taking by covered financial institutions (generally institutions that have over $1.0 billion in assets) and are deemed to be excessive, or that may lead to material losses.
While the Bank is our primary asset we also have a 20% membership interest in BFG, a Connecticut limited liability company, a nationally 5 Table of Contents significant referral source for SBA loans and a legal lending facilitator.
While the Bank is our primary asset we also have a 20% membership interest in BFG, a Connecticut limited liability company, a nationally significant referral source for SBA loans and a legal lending facilitator.
The Bank’s legal lending limit on loans to a single borrower was approximately $23.0 million as of December 31, 2024. Strategic Programs Overview . We currently source most of our loan originations through our Strategic Programs.
The Bank’s legal lending limit on loans to a single borrower was approximately $23.0 million as of December 31, 2025. Strategic Program Loan Portfolio Overview . We currently source most of our loan originations through our Strategic Programs.
This is characterized by high customer service standards and an emphasis on regulatory compliance and consumer protections that may not be afforded these customers through a non-bank product. Structure .
This is characterized by high customer service standards and an emphasis on regulatory compliance and consumer protections that may not be afforded these customers through a non-bank product. 11 Table of Contents Structure .
As of December 31, 2024, our commercial non-real estate loans comprised 0.8% of the Bank’s loans held-for-investment portfolio. Residential and Commercial Real Estate Loans . We operate a single branch location in Sandy, Utah. From this branch, we offer commercial and consumer banking services throughout the greater Salt Lake City, Utah MSA.
As of December 31, 2025, our commercial non-real estate loans comprised 0.7% of the Bank’s loans held-for-investment portfolio. Residential and Commercial Real E state Loans . We operate a single branch location in Sandy, Utah. From this branch, we offer commercial and consumer banking services throughout the greater Salt Lake City, Utah MSA.
These agencies may establish higher minimum requirements if, for example, a banking organization previously has received special attention or has a high susceptibility to interest rate risk. Risk-based capital requirements determine the adequacy of capital based on the risk inherent in various classes of assets and off-balance sheet items.
These agencies may establish higher minimum requirements if, for example, a banking organization previously has credit quality issues or has a high susceptibility to interest rate risk or liquidity risk. Risk-based capital requirements determine the adequacy of capital based on the risk inherent in various classes of assets and off-balance sheet items.
The Company was formed in 2002 and acquired 100% of the stock of Utah Community Bank, a local community bank founded in 1999 focusing on real estate lending in and around the Salt Lake City, Utah MSA.
The Company was formed in 2002 and acquired 100% of the stock of Utah Community Bank, a local community bank founded in 1999 focusing on real estate lending in and around the Salt Lake City, Utah metropolitan statistical area (“MSA”).
As of December 31, 2024, our commercial leases comprised 15.1% of the Bank’s loans held-for-investment portfolio. Commercial Non-Real Estate Loans . Commercial non-real estate includes loans made to commercial enterprises that are not secured by real estate.
As of December 31, 2025, our commercial leases comprised 13.4% of the Bank’s loans held-for-investment portfolio. Commercial Non-Real Estate Loans . Commercial non-real estate includes loans made to commercial enterprises that are not secured by real estate.
The majority of the approximately $22.2 million in consumer loans outstanding as of December 31, 2024, that were not generated through our Strategic Programs were originated in connection with our POS lending program.
The majority of the approximately $21.9 million in consumer loans outstanding as of December 31, 2025, that were not generated through our Strategic Programs were originated in connection with our POS lending program.
Securities Portfolio We manage our securities portfolio and cash to maintain adequate liquidity with a secondary focus on yield and returns. Our investment security portfolio totaled $42.5 million as of December 31, 2024.
Securities Portfolio We manage our securities portfolio and cash to maintain adequate liquidity with a secondary focus on yield and returns. Our investment security portfolio totaled $37.7 million as of December 31, 2025.
In December of 2019, we acquired directly from four of the five individuals who acquired our shares in 2018, a 10% ownership interest in BFG in exchange for 950,784 newly issued shares of our common stock, representing 10.9% of our common stock outstanding at the time of purchase.
In December 2019, we acquired directly from certain members of BFG a 10% ownership interest in BFG in exchange for 950,784 newly issued shares of our common stock, representing 10.9% of our common stock outstanding at the time of purchase.
Our core deposits, as of December 31, 2024, constituted 35.6% of our funding sources (our core deposits comprise the sum of demand deposits, FBO demand deposits, NOW accounts, MMDA accounts, savings accounts, and time deposits under $250,000 that are not brokered deposits).
Our core deposits, as of December 31, 2025, constituted 28.6% of our funding sources (our core deposits comprise the sum of demand deposits, FBO demand deposits, NOW accounts, MMDA accounts, savings accounts, and time deposits under $250,000 that are not brokered deposits). The certificates of deposit are predominately brokered deposits.
As of December 31, 2024, our loan portfolio is comprised of 20.7% in unguaranteed portions of SBA 7(a) loans and 34.1% in guaranteed portions of SBA 7(a) loans. The SBA’s 7(a) program provides 75%, 85% and 90% guarantees for eligible SBA 7(a) loans. The maximum 7(a) loan amount is $5 million.
As of December 31, 2025, our loan portfolio is comprised of 17.6% in unguaranteed portions of SBA 7(a) loans and 17.5% in guaranteed portions of SBA 7(a) loans. The SBA’s 7(a) program provides 75%, 85% and 90% guarantees for eligible SBA 7(a) loans. The maximum 7(a) loan amount is $5.0 million.
The GLBA and the implementing regulations issued by federal regulatory agencies require financial institutions (including banks, insurance agencies, and broker/dealers) to adopt policies and procedures regarding the disclosure of nonpublic personal information about their customers to non-affiliated third parties.
Privacy and Data Security Federal and state law contains extensive consumer privacy protection provisions. The GLBA and the implementing regulations issued by federal regulatory agencies require financial institutions (including banks, insurance agencies, and broker/dealers) to adopt policies and procedures regarding the disclosure of nonpublic personal information about their customers to non-affiliated third parties.
In addition, the SEC recently enacted rules, effective as of December 18, 2023, requiring public companies to disclose material cybersecurity incidents that they experience on Form 8-K within four business days of determining that a material cybersecurity incident has occurred and to disclose on annual basis material information regarding their cybersecurity risk management, strategy, and governance.
In addition, the SEC requires public companies to disclose material cybersecurity incidents that they experience on Form 8-K within four business days of determining that a material cybersecurity incident has occurred and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy, and governance.
We believe that traditional barriers to servicing banking customers have been substantially lowered due to technological advances in the distribution and management of banking products and services.
We are a nationwide lender to consumers and small businesses. We believe that traditional barriers to servicing banking customers have been substantially lowered due to technological advances in the distribution and management of banking products and services.
We actively monitor our investments on an ongoing basis to identify any material changes in our mix of securities. We also review our securities for potential impairment (other-than-temporary impairments) at least quarterly.
We actively monitor our investments on an ongoing basis to identify any material changes in our mix of securities. We also review our securities for potential impairment (other-than-temporary impairments) at least quarterly. Segment Reporting Historically, we managed our business on the basis of one operating and reportable segment.
All the loans generated through this branch are held on our balance sheet. As of December 31, 2024, our branch-based banking operations consisted of approximately $67.7 million in loans (including approximately $64.2 million of residential and commercial real estate loans). Strategic Programs .
All the loans generated through this branch are held on our balance sheet. As of December 31, 2025, our branch-based banking operations consisted of approximately $121.2 million in loans of which the majority are residential and commercial real estate loans.
We also make loans for the acquisition of undeveloped land. As of December 31, 2024, our residential real estate loans comprised 11.1% of the Bank’s loans held-for-investment portfolio, and our commercial real estate loans comprised 9.1% of the Bank’s loans held-for-investment portfolio.
We also make loans for the acquisition of undeveloped land. As of December 31, 2025, our residential real estate loans comprised 10.2% of the Bank’s loans held-for-investment portfolio, and our commercial real estate loans comprised 14.6% of the Bank’s loans held-for-investment portfolio.
We believe that our credit approval process provides for thorough underwriting and efficient decision making. Ongoing Credit Risk Management. In addition to the tailored underwriting process described above, we perform ongoing risk monitoring and review processes for credit exposures.
Ongoing Credit Risk Management. In addition to the tailored underwriting process described above, we perform ongoing risk monitoring and review processes for credit exposures.
Business checking and money market demand accounts associated with Strategic Program relationships held balances of approximately $113.6 million (including $54.0 million held as collateral) as of December 31, 2024. At December 31, 2024, we had $91.6 million in Strategic Program loans held-for-sale.
Business checking and money market demand accounts associated with Strategic Program relationships held balances of approximately $130.8 million (including $53.4 million held as collateral) as of December 31, 2025. At December 31, 2025, we had $146.5 million in Strategic Program loans held-for-sale.
During the year ended December 31, 2024, we originated approximately $19.2 million in POS loans and held approximately $21.2 million of POS loans on our balance sheet as of 8 Table of Contents December 31, 2024. As of December 31, 2024, our consumer loans comprised 4.8% of the Bank’s total loans held-for-investment portfolio. Strategic Program Loans held-for-sale .
During the year ended December 31, 2025, we originated approximately $11.6 million in POS loans and held approximately $21.9 million of POS loans on our balance sheet as of December 31, 2025. As of December 31, 2025, our consumer loans comprised 3.8% of the Bank’s total loans held-for-investment portfolio.
Item 1. BUSINESS Overview We are FinWise Bancorp, a Utah bank holding company headquartered in Murray, Utah. We operate through our wholly-owned subsidiary, FinWise Bank, a Utah state-chartered bank. We currently operate one full-service banking location in Sandy, Utah. We are a nationwide lender to consumers and small businesses.
Item 1. BUSINESS Overview We are FinWise Bancorp, a Utah bank holding company headquartered in Murray, Utah. We operate through our wholly-owned subsidiary, FinWise Bank, a Utah state-chartered bank. Our business is conducted through three reportable segments: traditional banking, banking as a service (“BaaS”) and treasury & administration. We currently operate one full-service banking location in Sandy, Utah.
During the year ended December 31, 2024, we originated approximately $68.2 million in SBA 7(a) loans and held approximately $255.1 million of SBA 7(a) loans on our balance sheet as of December 31, 2024 of which $158.7 million was guaranteed by the SBA and $96.3 million was unguaranteed.
During the year ended December 31, 2025, we originated approximately $116.7 million in SBA 7(a) loans and held approximately $205.6 million of SBA 7(a) loans on our balance sheet as of December 31, 2025 of which $102.7 million was guaranteed by the SBA and $102.9 million was unguaranteed.
We select service providers for our Strategic Programs applying third party guidance promulgated by the FDIC, including comprehensive onboarding due diligence covering strategic, operational, transaction, compliance, credit and other risks, and evaluating any potential reputational impact.
Selection and Oversight . We approve service providers for our Strategic Programs considering third party guidance promulgated by the Federal Deposit Insurance Corporation (“ FDIC”) and our own guidelines and policies, including comprehensive onboarding due diligence covering strategic, operational, transaction, compliance, credit and other risks, and evaluating any potential reputational impact.
We utilize a high degree of automation in this program and track loan applications, analyze credit and approve loans by deploying a combination of internal and “off-the-shelf” technology solutions.
Loan terms are generally 60 months and interest rates current range from 7.0% to 14.5%. We utilize a high degree of automation in this program and track loan applications, analyze credit and approve loans by deploying a combination of internal and “off-the-shelf” technology solutions.
Federal law provides the federal banking regulators with broad power to take prompt corrective action to resolve the problems of undercapitalized institutions.
The Company and Bank continue to qualify for and elect to use the CBLR capital alternative. Federal law provides the federal banking regulators with broad power to take prompt corrective action to resolve the problems of undercapitalized institutions.
The Bank has engaged with other Strategic Program service providers since we established our first Strategic Program in 2016 and we may enter into Strategic Programs with other service providers in the future. Selection and Oversight .
The Bank has engaged with other Strategic Program service providers since we established our first Strategic Program in 2016 and we may enter into Strategic Programs with other service providers in the future. Underwriting. We review and approve the credit approval models prior to the launch of the lending program with the Strategic Partner.
FinWise Bancorp serves as a registered bank holding company with respect to the Bank, subject to regulation and examination by the Utah Department of Financial Institutions (“UDFI”) and the Federal Reserve Board. FinWise Bancorp currently does not engage in any material business activity other than those relating to owning all of the capital stock of FinWise Bank.
FinWise Bancorp serves as a registered bank holding company with respect to the Bank, subject to regulation and examination by the Utah Department of Financial Institutions (“UDFI”) and the Federal Reserve Board.
Authority limits are based on the total exposure of the borrower, the loan product, and are conditioned on the loan conforming to the standards contained in the loan policy. Any loan policy 9 Table of Contents exceptions are appropriately monitored and fully disclosed to the approving authority.
Authority limits are based on the total exposure of the borrower, the loan product, and are conditioned on the loan conforming to the standards contained in the loan policy. Any loan policy exceptions are appropriately monitored and fully disclosed to the approving authority. We believe that our credit approval process provides for thorough underwriting and efficient decision making.
Consumer loans consist primarily of loans originated through our Point of Sale (“POS”) program. Since 2011, the Bank has offered collateralized and uncollateralized loans without prepayment penalties to finance the purchase of retail goods and services. Loan applications are submitted at the point-of-sale through an online portal.
As of December 31, 2025, our Strategic Program held-for-investment loans comprised of 22.2% of the Bank’s loan portfolio. Consumer Loans . Consumer loans consist primarily of loans originated through our Point of Sale (“POS”) program. Since 2011, the Bank has offered collateralized and uncollateralized loans without prepayment penalties to finance the purchase of retail goods and services.
Historically, all of the loans originated through our POS lending program have been held on our balance sheet. We target super prime (FICO score of 720 and higher), prime (FICO score of 661 through 719) and near-prime (FICO score of 640 through 660) borrowers. Loan terms are generally 60 months and interest rates current range from 7.0% to 14.5%.
Loan applications are submitted at the point-of-sale through an online portal. Historically, all of the loans originated through our POS lending program have been held on our balance sheet. We target super prime (FICO score of 720 and higher), prime (FICO score of 661 through 719) and near-prime (FICO score of 640 through 660) borrowers.
On July 25, 2023, the Company entered into a definitive agreement, as amended, to purchase from certain members of BFG an additional 10% membership interest in exchange for shares of the Company’s common stock.
Other than the Right of First Refusal and Option Agreement and the Standstill Agreement, there are no other agreements between us and BFG or among our respective shareholders. 21 Table of Contents On July 25, 2023, the Company entered into a definitive agreement, as amended, to purchase from certain members of BFG an additional 10% membership interest in exchange for shares of the Company’s common stock.
We cannot predict whether or when potential legislation or new regulations will be enacted, and if enacted, the effect that new legislation or any implemented regulations and supervisory policies would have on our financial condition and results of operations. 13 Table of Contents Moreover, bank regulatory agencies can be more aggressive in responding to concerns and trends identified in examinations, which could result in an increased issuance of enforcement actions to financial institutions requiring action to address credit quality, liquidity, risk management, and capital adequacy, as well as other safety and soundness concerns.
Moreover, bank regulatory agencies can be more aggressive in responding to concerns and trends identified in examinations, which could result in an increased issuance of enforcement actions to financial institutions requiring action to address credit quality, liquidity, risk management, and capital adequacy, as well as other safety and soundness concerns.
Such views may have an impact on the ability of any bank holding company to complete a merger transaction as an acquiror, a target, or in a “merger of equals.
Such views may have an impact on the ability of any bank holding company to complete a merger transaction as an acquiror, a target, or in a “merger of equals.” Regulation of FinWise Bank The Bank is a Utah state-chartered bank and the operations and investments of our Bank are subject to the supervision, examination, and reporting requirements of the UDFI and the FDIC.
In consideration of marketing and referral services provided to the Bank, BFG receives a fee for SBA loans referred to the Bank that are closed and funded by the Bank. The fees on each SBA loan referred to the Bank by BFG are determined on a loan-by-loan basis and based on the amount and terms of the principal SBA loan.
The fees on each SBA loan referred to the Bank by BFG are determined on a loan-by-loan basis and based on the amount and terms of the principal SBA loan. Such fees are disclosed on SBA Form 159 and filed with SBA for each funded loan.
In turn, the Strategic Program service providers, subject to the Bank’s approval and oversight, serve as sub-servicer and perform typical primary servicing duties including loan collections, modifications, charging-off, reporting and monitoring. Funding and Deposits Our deposits serve as the primary funding source for lending, investing and other general banking purposes.
In turn, the Strategic Program service providers, subject to the Bank’s approval and oversight, serve as sub-servicer and perform typical primary servicing duties including loan collections, modifications, charging-off, reporting and monitoring. Fees and Other Economics. The Bank may earn fees on its Strategic Programs as delineated in each Strategic Program contract and may vary by contract.
During the year ended December 31, 2024, we originated approximately $4.9 billion in Strategic Program loans and had approximately $20.1 million in Strategic Program loans held-for-investment on our balance sheet at December 31, 2024. As of December 31, 2024, our Strategic Program held-for-investment loans comprised of 4.3% of the Bank’s loan portfolio.
During the year ended December 31, 2025, we originated approximately $5.7 billion in Strategic Program loans and had approximately $129.8 million in Strategic Program loans held-for-investment on our balance sheet at December 31, 2025, of which $108.1 million was associated with the credit enhanced program.
AML rules and policies are developed by a bureau within the Financial Crimes Enforcement Network (“FinCEN”), but compliance by individual institutions is overseen by its primary federal regulator. 18 Table of Contents Privacy and Data Security Federal and state law contains extensive consumer privacy protection provisions.
For many of these 19 Table of Contents tasks a bank must keep records to be made available to its primary federal regulator. AML rules and policies are developed by a bureau within the Financial Crimes Enforcement Network (“FinCEN”), but compliance by individual institutions is overseen by its primary federal regulator.
In other Strategic Programs, the Bank may choose not to retain any loans or interest until the Strategic Program service provider has satisfied certain audit requirements of the Bank. Fees and Other Economics. The Bank may earn fees on its Strategic Programs as delineated in each Strategic Program contract and may vary by contract.
In other Strategic Programs, the Bank may choose not to retain any loans or interest until the Strategic Program service provider has satisfied certain audit requirements of the Bank. Credit Enhanced . The Bank offers an enhanced balance sheet solution to select Strategic Partners.
The following table presents the composition of our loans held-for-investment portfolio by lending program, as of December 31, 2024: ($ in thousands) Total Loans % of Loans in Category of Total Loans SBA $ 255,056 54.8 % Commercial leases 70,153 15.1 % Commercial, non-real estate 3,691 0.8 % Residential real estate 51,574 11.1 % Strategic Program loans 20,122 4.3 % Commercial real estate: Owner occupied 41,046 8.8 % Non-owner occupied 1,379 0.3 % Consumer 22,212 4.8 % Total $ 465,233 100.0 % Note: SBA loans in the table above include $158.7 million of SBA 7(a) loan balances that are guaranteed by the SBA.
Loans Held-for-Investment The following table presents the composition of our loans held-for-investment portfolio by lending program, as of December 31, 2025: ($ in thousands) Total Loans % of Loans in Category of Total Loans SBA $ 205,615 35.1 % Commercial leases 78,743 13.4 % Commercial, non-real estate 4,201 0.7 % Residential real estate 59,602 10.2 % Strategic Program loans 129,768 22.2 % Commercial real estate: Owner occupied 84,016 14.3 % Non-owner occupied 1,638 0.3 % Consumer 21,926 3.8 % Total $ 585,509 100.0 % Note: SBA loans in the table above include $102.7 million of SBA 7(a) loan balances that are guaranteed by the SBA.
Service providers may also be required to pay minimum monthly fees to the Bank or reimburse the Bank for certain agreed-upon expenses.
Service providers may also be required to pay minimum monthly fees to the Bank or reimburse the Bank for certain agreed-upon expenses. Some Strategic Programs require the service provider pay a fee to the Bank if it enters into a similar strategic relationship with another bank or financial institution.
In taking the statistical approach, we rely on data and automation to inform our credit decision-making. We create standardized underwriting criteria that are uniformly and consistently applied to each product. When originating with a third party, we review and approve the credit approval models prior to the launch of the lending program.
In taking the statistical approach, we rely on data and automation to inform our credit decision-making. We create standardized underwriting criteria that are uniformly and consistently applied to each product. Loan Approval Authority . Our lending activities follow written, non-discriminatory underwriting standards and loan origination procedures established by our board of directors and management.
Lending Activities We maintain a diversified loan portfolio in terms of the types of loan products it contains and customer characteristics, with a focus on individual consumers and small businesses.
FinWise Bancorp currently does not engage in any material business activity other than those relating to owning all of the capital stock of FinWise Bank. 6 Table of Contents Lending Activities We maintain a diversified loan portfolio in terms of the types of loan products it contains and customer characteristics, with a focus on individual consumers and small businesses.
Many of our competitors are much larger financial institutions that have greater financial resources than we do and compete aggressively for market share. These competitors attempt to gain market share through their financial product mix, pricing strategies and banking center locations.
These competitors attempt to gain market share through their financial product mix, pricing strategies and banking center locations.
Our relationship with BFG is an important component of our diversification strategy. Since the launch of our SBA lending program in 2014, BFG has been the primary source of SBA loan referrals for the Bank.
Our relationship with BFG is an important component of our diversification strategy as BFG has been the primary source of SBA loan referrals for the Bank. In consideration of marketing and referral services provided to the Bank, BFG receives a fee for SBA loans referred to the Bank that are closed and funded by the Bank.
Some of our competitors are not currently subject to the regulatory restrictions and the level of regulatory supervision applicable to us. Interest rates on loans and deposits, as well as prices on fee-based services, are typically significant competitive factors within the banking and financial services industry.
Interest rates on loans and deposits, as well as prices on fee-based services, are typically significant competitive factors within the banking and financial services industry. Many of our competitors are much larger financial institutions that have greater financial resources than we do and compete aggressively for market share.
See Note 8 - Capital Requirements to the consolidated financial statements included in Part II, Item 8 for additional regulatory capital information, including the Bank’s and Company’s leverage ratio as of December 31, 2024. 15 Table of Contents Safety and Soundness Standards The federal banking agencies have adopted guidelines designed to assist the federal banking agencies in identifying and addressing potential safety and soundness concerns before capital becomes impaired.
Safety and Soundness Standards The federal banking agencies have adopted guidelines designed to assist the federal banking agencies in identifying and addressing potential safety and soundness concerns before capital becomes impaired.
Parents or holding companies of other insured depository institutions are required to report separately from their subsidiary depository institutions. In November 2023, The FDIC finalized a special assessment to recoup losses to the DIF from protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.
Parents or holding companies of other insured depository institutions are required to report separately from their subsidiary depository institutions.
We offer strategic program loans for loan amounts up to $2.0 million with terms not to exceed 72 months. The Bank’s current Strategic Program service providers include Upstart, Elevate, Reach (formerly Liberty Lending), Plannery, Empower, Earnest, PowerPay, Stride, LendingPoint, OppFi, Mulligan Funding, American First Finance.
The Bank’s current Strategic Program service providers inclu de Upstart, Elevate, Reach (formerly Liberty Lending), Plannery, Backd, Albert, Tilt, Earnest, PowerPay, Clasp, LendingPoint, OppLoans, Mulligan Funding, and American First Finance.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny disruption of our relationship with BFG or reduction in SBA 7(a) loan referrals could materially adversely impact our business, financial condition, results of operation and growth plans. 25 Table of Contents Because a significant portion of our loan portfolio held-for-investment within our local lending program, owner occupied commercial lending program and SBA 7(a) lending program is secured by real estate, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
Biggest changeNegative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses. 25 Table of Contents As of December 31, 2025 , approxim ately $121.2 million, or 20.7%, of our total gross loans held-for-investment were local lending or owner occupied commercial lending program loans with real estate as a primary or secondary component of collateral.
We have a substantial physical presence in the Salt Lake City, Utah, region that is prone to events such as seismic activity, drought, water scarcity and severe weather. This region has experienced and may continue to experience, climate-related events and at an increasing rate.
We have a substantial physical presence in the Salt Lake City, Utah, region that is prone to events such as seismic activity, drought, water scarcity and severe weather. This region has experienced and may continue to experience, climate-related events at an increasing rate.
Section 162(m) of the Code generally limits to $1 million annual deductions for compensation paid to “covered employees” of any “publicly held corporation.” A “publicly held corporation” includes any company that issues securities required to be registered under Section 12 of the Securities Exchange Act of 1934 or companies required to file reports under Section 15(d) of the Exchange Act, determined as of the last day of the company’s taxable year.
Section 162(m) of the Code generally limits to $1.0 million annual deductions for compensation paid to “covered employees” of any “publicly held corporation.” A “publicly held corporation” includes any company that issues securities required to be registered under Section 12 of the Securities Exchange Act of 1934 or companies required to file reports under Section 15(d) of the Exchange Act, determined as of the last day of the company’s taxable year.
Several online banking operations as well as the online banking programs of conventional banks have instituted Fintech Banking and Payment Solutions strategies similar to ours. As a consequence, we have encountered competition in this area and anticipate that we will continue to do so in the future.
Furthermore, several online banking operations as well as the online banking programs of conventional banks have instituted Fintech Banking and Payment Solutions strategies similar to ours. As a consequence, we have encountered competition in this area and anticipate that we will continue to do so in the future.
As a consequence, Section 162(m) of the Code limited the deductibility of compensation to our covered employees to $1 million beginning with the year ended December 31, 2021.
As a consequence, Section 162(m) of the Code limited the deductibility of compensation to our covered employees to $1.0 million beginning with the year ended December 31, 2021.
We may not be able to measure and limit our credit risk adequately, which could lead to unexpected losses. Our business depends on our ability to successfully measure and manage credit risk.
We may not be able to measure and limit our credit risk adequately, which could lead to unexpected losses. Our business substantially depends on our ability to successfully measure and manage credit risk.
Our Articles and Bylaws provide that the United States District Court for the District of Utah and any Utah state court sitting in Salt Lake County, Utah will, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to the Company or the Company’s shareholders, (c) any action asserting a claim against us or any of our directors or officers arising pursuant to the Utah Revised Business Corporation Act, our Articles, or our Bylaws, or (d) any other action asserting a claim against us or any of our directors or officers that is governed by the internal affairs doctrine.
Our Articles and Bylaws provide that the United States District Court for the District of Utah and any Utah state court sitting in Salt Lake County, Utah will, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any 44 Table of Contents derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to the Company or the Company’s shareholders, (c) any action asserting a claim against us or any of our directors or officers arising pursuant to the Utah Revised Business Corporation Act, our Articles, or our Bylaws, or (d) any other action asserting a claim against us or any of our directors or officers that is governed by the internal affairs doctrine.
Our commercial and consumer banking clients who participate in our real estate lending program and SBA 7(a) lending program are concentrated in certain geographic areas and we are sensitive to adverse changes in those regional economies. The success of our real estate lending programs depends substantially upon the general economic conditions in Utah, which we cannot predict with certainty.
Our commercial and consumer banking clients who participate in our real estate lending program and SBA 7(a) lending program are concentrated in certain geographic areas and we are sensitive to adverse changes in those regional economies. The success of our real estate lending programs depends substantially upon the general economic conditions in Utah, which we cannot predict.
We compete with commercial banks, savings banks, credit unions, nonbank financial services companies and other financial institutions operating both within our market areas and nationally, and in respect of our financial technology initiative we also compete with other entities in the financial technology industry, including a limited number of other banks that have developed strategic programs similar to our Strategic Programs.
We compete with commercial banks, savings banks, credit unions, nonbank financial services companies, including the private credit lending market, and other financial institutions operating both within our market areas and nationally, and in respect of our financial technology initiative we also compete with other entities in the financial technology industry, including a limited number of other banks that have developed strategic programs similar to our Strategic Programs.
Item 1A. RISK FACTORS The following risks, some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business or financial performance, which in turn can affect the price of our publicly traded securities. These are not the only risks we face.
Item 1A. RISK FACTORS The following risks, some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business, results of operations or financial performance, which in turn can affect the price of our publicly traded securities. These are not the only risks we face.
We may also be required to spend significant resources to monitor and police our intellectual property rights. Others, including our competitors, may independently develop similar technology, duplicate our products or services or design around our intellectual property, and in such cases we may not be able to assert our intellectual property rights against such parties.
We may also be required to spend significant resources to monitor and police our intellectual property rights. Others, including our competitors, may independently develop similar analytic model technology, duplicate our products or services or design around our intellectual property, and in such cases we may not be able to assert our intellectual property rights against such parties.
During the first quarter of 2023, the media highlighted the risks of an extreme form of deposit run-off, sometimes referred to as a “run on the bank.” The failures of Silicon Valley Bank, Signature Bank, and First Republic Bank in 2023 resulted in significant 30 Table of Contents disruption in the financial services industry and negative media attention, which has also adversely impacted the volatility and market prices of the securities of financial institutions and resulted in outflows of deposits for many other financial institutions.
During the first quarter of 2023, the media highlighted the risks of an extreme form of deposit run-off, sometimes referred to as a “run on the bank.” The failures of Silicon Valley Bank, Signature Bank, and First Republic Bank in 2023 resulted in significant disruption in the financial services industry and negative media attention, which has also adversely impacted the volatility and market prices of the securities of financial institutions and resulted in outflows of deposits for many other financial institutions.
We may experience operational challenges as we implement these new technology enhancements or products, which could impair our ability to realize the anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner. 21 Table of Contents Many of our larger competitors have substantially greater resources to invest in technological improvements.
We may experience operational challenges as we implement these new technology enhancements or products, which could impair our ability to realize the anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner. Many of our larger competitors have substantially greater resources to invest in technological improvements.
If the overall economic climate in the United States generally, or in any of our markets specifically, experiences material disruption, our borrowers may experience difficulties in repaying their loans, the collateral we hold may decrease 23 Table of Contents in value or become illiquid, and the level of delinquencies, nonperforming loans, and charge-offs could rise and require significant additional provisions for loan losses.
If the overall economic climate in the United States generally, or in any of our markets specifically, experiences material disruption, our borrowers may experience difficulties in repaying their loans, the collateral we hold may decrease in value or become illiquid, and the level of delinquencies, nonperforming loans, and charge-offs could rise and require significant additional provisions for loan losses.
Although we have implemented controls to enhance our risk assessment, control and evaluation procedures over third-party reports to ensure compliance with the Company’s accounting policies, any control, design or implementation deficiencies with respect to third-party reports could adversely impact our results of operations or financial condition, or result in our failure to meet our periodic reporting obligations.
Although we have implemented controls to enhance our risk assessment, control and evaluation procedures over third-party reports to ensure compliance with the Company’s 35 Table of Contents accounting policies, any control, design or implementation deficiencies with respect to third-party reports could adversely impact our results of operations or financial condition, or result in our failure to meet our periodic reporting obligations.
To the extent that the “disparate impact” theory continues to 35 Table of Contents apply, we are faced with significant administrative burdens in attempting to comply and potential liability for failures to comply. In addition to reputational harm, violations of FHA and ECOA can result in actual damages, punitive damages, injunctive or equitable relief, attorneys’ fees and civil money penalties.
To the extent that the “disparate impact” theory continues to apply, we are faced with significant administrative burdens in attempting to comply and potential liability for failures to comply. In addition to reputational harm, violations of FHA and ECOA can result in actual damages, punitive damages, injunctive or equitable relief, attorneys’ fees and civil money penalties.
Our proprietary technologies have not been extensively tested during other adverse economic cycles. There is no assurance that our proprietary technologies can accurately predict loan performance during periods of adverse economic conditions. If our proprietary technologies are unable to accurately reflect the credit risk of loans under such economic conditions, we may experience greater than expected losses on such loans.
Our proprietary technologies have not been exposed to other adverse economic cycles. There is no assurance that our proprietary technologies can accurately predict loan performance during periods of adverse economic conditions. If our proprietary technologies are unable to accurately reflect the credit risk of loans under such economic conditions, we may experience greater than expected losses on such loans.
Misconduct by our employees could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use of confidential information. It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases.
Misconduct by our employees could include hiding unauthorized activities from us, 29 Table of Contents improper or unauthorized activities on behalf of our customers or improper use of confidential information. It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases.
Furthermore, our regulators could require us to terminate certain relationships with our Strategic Program service providers or POS merchants or restrict our ability to form new relationships with other Strategic Program service providers or POS merchants, either of which could result in a decrease in our loan originations, which in turn could adversely affect our growth, business prospects, financial condition and results of operations.
Furthermore, our regulators could require us to terminate certain relationships with our Strategic Program service providers or POS merchants or restrict our ability to 33 Table of Contents form new relationships with other Strategic Program service providers or POS merchants, either of which could result in a decrease in our loan originations, which in turn could adversely affect our growth, business prospects, financial condition and results of operations.
These include, without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced financial reporting requirements, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding non-binding shareholder advisory votes on executive compensation or golden parachute payments.
These include, without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced financial reporting requirements, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding non-binding shareholder 43 Table of Contents advisory votes on executive compensation or golden parachute payments.
Alternatively, if a court were to find the 42 Table of Contents choice of forum provision contained in our Articles and Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our Articles and Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition.
Our future success will depend, at least in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience as well as to create additional efficiencies in our operations as we continue to grow and expand our products and service offerings.
Our future success will depend, at least in part, upon our ability to address the needs of our 37 Table of Contents customers by using technology to provide products and services that will satisfy customer demands for convenience as well as to create additional efficiencies in our operations as we continue to grow and expand our products and service offerings.
Small- to medium-sized businesses frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience substantial volatility in operating results, any of which may impair a borrower’s ability to repay a loan.
Small- to medium-sized businesses frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience substantial 26 Table of Contents volatility in operating results, any of which may impair a borrower’s ability to repay a loan.
A reduction in net income could negatively affect the price of our stock. Because of the Dodd-Frank Act and related rulemaking, the Company is subject to more stringent capital requirements.
A reduction in net income could negatively affect our results of operations and the price of our stock. Because of the Dodd-Frank Act and related rulemaking, the Company is subject to more stringent capital requirements.
To administer the Bank Secrecy Act, FinCEN is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and the IRS.
To administer the Bank Secrecy Act, FinCEN is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement 40 Table of Contents Administration and the IRS.
In addition, because of the rapid pace of technological change in our industry, aspects of our business and our products and services rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms or at all.
In addition, because of the rapid pace of technological change in our industry, including the use of AI, aspects of our business and our products and services rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms or at all.
Because of changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, we may recognize realized and/or 29 Table of Contents unrealized losses in future periods, which could have a material adverse effect on our business, financial condition and results of operations.
Because of changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, we may recognize realized and/or unrealized losses in future periods, which could have a material adverse effect on our business, financial condition and results of operations.
If the national, regional and local economies experience worsening economic conditions, including high levels of unemployment, our growth and profitability could be constrained. Our business is significantly 22 Table of Contents affected by monetary and other regulatory policies of the U.S. federal government, its agencies and government-sponsored entities.
If the national, regional and local economies experience worsening economic conditions, including high levels of unemployment, our growth and profitability could be constrained. Our business is significantly affected by monetary and other regulatory policies of the U.S. federal government, its agencies and government-sponsored entities.
Repeal of the OCC rule is expected to create uncertainty regarding whether state or federal laws apply to the Bank’s loans originated in the marketplace with the assistance of our Strategic Program service providers. 38 Table of Contents Several states have also adopted legislation that impacts our Strategic Programs.
Repeal of the OCC rule is expected to create uncertainty regarding whether state or federal laws apply to the Bank’s loans originated in the marketplace with the assistance of our Strategic Program service providers. Several states have also adopted legislation that impacts our Strategic Programs.
The definition of “covered employees” generally includes anyone who served as the chief executive officer or chief financial officer at any time during the taxable year; the three highest compensated executive officers (other than the chief executive officer or the chief financial officer), determined under SEC rules; and any individual who was a covered employee, including of a “predecessor company,” at any point during a taxable year beginning on or after January 1, 2017, even after the employee terminates employment.
The definition of “covered employees” generally includes anyone who served as the chief executive officer during the taxable year; the two highest compensated executive officers (other than the chief executive officer), determined under SEC rules; and any individual who was a covered employee, including of a “predecessor company,” at any point during a taxable year beginning on or after January 1, 2017, even after the employee terminates employment.
Subsequently, in November 37 Table of Contents 2022, the Treasury Department issued a report encouraging the CFPB to increase its supervisory activity with respect to larger nonbank lenders. State regulators have also increased the level of regulatory scrutiny on financial technology companies.
Subsequently, in November 2022, the Treasury Department issued a report encouraging the CFPB to increase its supervisory activity with respect to larger nonbank lenders. State regulators have also increased the level of regulatory scrutiny on financial technology companies.
See “Supervision and Regulation—Capital Adequacy Guidelines.” 33 Table of Contents Federal and state banking agencies periodically conduct examinations of our business, including our compliance with laws and regulations, and our failure to comply with any regulatory actions, if any, could adversely impact us.
See “Supervision and Regulation—Capital Adequacy Guidelines.” Federal and state banking agencies periodically conduct examinations of our business, including our compliance with laws and regulations, and our failure to comply with any regulatory actions, if any, could adversely impact us.
In addition, both we and our Strategic Program service providers may be criticized by third party consumer advocacy groups regarding compliance with fair lending or consumer lending laws and regulations, which may result in negative publicity of our Strategic Program service providers and the Bank.
In addition, both we and our Strategic Program service providers may be criticized by third party consumer advocacy groups regarding compliance with fair lending or consumer lending laws and 32 Table of Contents regulations, which may result in negative publicity of our Strategic Program service providers and the Bank.
The FDIC and UDFI regulate numerous aspects of the Bank’s operations, 32 Table of Contents including adequate capital and financial condition, permissible types and amounts of extensions of credit and investments, permissible non-banking activities and restrictions on dividend payments. The Bank undergoes periodic examinations by the FDIC and UDFI.
The FDIC and UDFI regulate numerous aspects of the Bank’s operations, including adequate capital and financial condition, permissible types and amounts of extensions of credit and investments, permissible non-banking activities and restrictions on dividend payments. The Bank undergoes periodic examinations by the FDIC and UDFI.
The foregoing could adversely affect our growth, business prospects, financial condition and results of operations. 36 Table of Contents The Bank and our Strategic Program service providers may be subject to consumer arbitration or litigation regardless of whether the claims have merit.
The foregoing could adversely affect our growth, business prospects, financial condition and results of operations. The Bank and our Strategic Program service providers may be subject to consumer arbitration or litigation regardless of whether the claims have merit.
We expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities, meaning that either 28 Table of Contents our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest earning assets, or vice versa.
We expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities, meaning that either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest earning assets, or vice versa.
As a result of the foregoing, under present law, we may not be able to deduct all of the compensation paid in 2024 and future years if compensation paid to “covered employees” exceeds the thresholds established by Section 162(m) of the Code. Losing deductions under Section 162(m) of the Code could increase our income taxes and reduce our net income.
As a result of the foregoing, we may not be able to deduct all of the compensation paid in 2025 and future years if compensation paid to “covered employees” exceeds the thresholds established by Section 162(m) of the Code. Losing deductions under Section 162(m) of the Code could increase our income taxes and reduce our net income.
In order to meet the compensation expectations of our prospective and current employees due to inflationary and other factors, we may be required to increase our operating costs or risk losing skilled workers to competitors.
In order to meet the compensation 22 Table of Contents expectations of our prospective and current employees due to inflationary and other factors, we may be required to increase our operating costs or risk losing skilled workers to competitors.
When we originate SBA loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on a loan, we share any loss and recovery related to the loan pro-rata with the SBA.
When we originate SBA 24 Table of Contents loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on a loan, we share any loss and recovery related to the loan pro-rata with the SBA.
Our ability to engage in future mergers and acquisitions depends on various factors, including: (1) our ability to identify 24 Table of Contents suitable merger partners and acquisition opportunities; (2) our ability to finance and complete transactions on acceptable terms and at acceptable prices; and (3) our ability to receive the necessary regulatory and, when required, shareholder approvals.
Our ability to engage in future mergers and acquisitions depends on various factors, including: (1) our ability to identify suitable merger partners and acquisition opportunities; (2) our ability to finance and complete transactions on acceptable terms and at acceptable prices; and (3) our ability to receive the necessary regulatory and, when required, shareholder approvals.
In the event the cash collateral amount is not adequately maintained or is insufficient to cover the losses on the LOC accounts and the Fintech Banking and Payment Solutions customer does not or cannot otherwise meet its partial guaranty or other obligations under its agreement with the Bank, the Bank may incur losses on the LOC accounts.
In the event the cash collateral amount is not adequately maintained or is insufficient to cover the losses on the LOC accounts and the Fintech Banking and Payment Solutions customer does not or cannot otherwise meet its obligations under its agreement with the Bank, the Bank may incur financial losses.
Our agreements with service providers to the Strategic Programs are non-exclusive and do not prohibit the service providers from working with our competitors upon payment of a fee or from offering competing services.
Our agreements with service providers to the Strategic Programs are non-exclu sive and do not prohibit the service providers from working with our competitors upon payment of a fee or from offering competing services.
Risks Related to Our Banking Business As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways by weak economic conditions.
Risks Related to Our Banking Business Our business and operations in the financial services industry may be adversely affected in numerous and complex ways by weak economic conditions.
These and other changes are more fully discussed above under “Supervision and Regulation.” Regulatory or legislative changes to laws applicable to the financial industry, if enacted or adopted, may impact the profitability of our business activities, require more oversight or change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads and could expose us to additional costs, including increased compliance costs.
Business - “Supervision and Regulation.” Regulatory or legislative changes to laws applicable to the financial industry, if enacted or adopted, may impact the profitability of our business activities, require more oversight or change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads and could expose us to additional costs, including increased compliance costs.
Further, our contractual arrangements may not effectively 26 Table of Contents prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential or proprietary information.
Further, our contractual arrangements may not effectively prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential or proprietary information.
If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs and the development of our product candidates could be delayed. Our proprietary technologies and analytic models have not yet been extensively tested during down-cycle economic conditions.
If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs and the development of our product candidates could be delayed. Our proprietary technologies and analytic models have not yet been exposed to longer term down-cycle economic conditions.
This allocation of resources, as well as any failure to comply with applicable requirements, may negatively impact our results of operations and financial condition. Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, governance structure, financial condition or results of operations.
The allocation of our resources to address regulatory compliance, as well as any failure to comply with applicable requirements, may negatively impact our results of operations and financial condition. Legislative and regulatory actions taken now or in the future, including deregulation, may increase our competition and costs and impact our business, governance structure, financial condition or results of operations.
Furthermore, mergers and acquisitions involve a number of risks and challenges, including our ability to achieve planned synergies and to integrate the branches and operations we acquire, and the internal controls and regulatory functions into our current operations, as well as the diversion of management’s attention from existing operations, which may adversely affect our ability to successfully conduct our business and negatively impact our financial results.
Furthermore, executing on successful mergers and acquisitions involves a number of risks and challenges, including, but not limited to, our ability to achieve planned synergies and to integrate the branches and operations we acquire, and the internal controls and regulatory functions into our current operations, as well as the diversion of management’s attention from existing operations, which may adversely affect our ability to successfully conduct our business and operations and negatively impact our financial results.
Any such reputational harm could further affect the behavior of consumers, including their willingness to obtain loans facilitated through us or to make payments on their loans. As a result, our business, results of operations, financial condition, and prospects would be materially and adversely affected. We may be susceptible to deposit run-off risks.
Any such reputational harm could further affect the behavior of consumers, including their willingness to obtain loans facilitated through us or to make payments on their loans. As a result, our business, results of operations, financial condition, and prospects would be materially and adversely affected.
Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event. We could also experience a breach by intentional or negligent conduct on the part of employees or other internal sources.
Our computer systems and network infrastructure could be vulnerable to hardware and cybersecurity issues. Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event. We could also experience a breach by intentional or negligent conduct on the part of employees or other internal sources.
We face strong competition from financial services companies and other companies that offer banking services. We operate in the highly competitive financial services industry and face significant competition for customers from financial institutions located both within and beyond our principal markets and product lines.
We operate in the highly competitive financial services industry and face significant competition for customers from financial institutions located both within and beyond our principal markets and product lines.
Also, the Federal Trade Commission recently issued a staff report on digital “dark patterns,” sophisticated design practices that can trick or manipulate consumers into buying products or services or giving up their private information, that, among other things, highlighted marketing and disclosure practices by some financial technology companies that the Federal Trade Commission claimed were deceptive because of their use of dark patterns.
Also, the Federal Trade Commission has issued a staff report on digital “dark patterns,” sophisticated design practices that can trick or manipulate consumers into buying products or services or giving up their private information, that, among other things, highlighted marketing and disclosure practices by some financial technology companies that the Federal Trade Commission claimed were deceptive because of their use of dark patterns, and this has led to numerous enforcement actions, staff reports, and statements by Federal Trade Commission officials scrutinizing marketing and disclosure practices of financial technology companies.
A successful regulatory challenge to an institution’s performance under the CRA, fair lending or consumer lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines.
A successful regulatory challenge to an institution’s performance under the CRA, fair lending or consumer lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. 41 Table of Contents Private parties may also challenge an institution’s performance under fair lending laws in private class action litigation.
Furthermore, if a borrower or regulator were to successfully bring claims against a Strategic Program service provider and/or the Bank for violations of state consumer lending laws the Strategic Program service provider and/or the Bank could be subjected to damages, revocation of required licenses, individual and class action lawsuits, enforcement actions, penalties, injunctions which require the cessation or curtailment of a Strategic Program or operation by the Bank, rescission rights held by investors in securities offerings and civil and criminal liability.
Furthermore, if the Bank were not deemed to be the “true lender,” then the Bank and our Strategic Program service provider could be subject to claims by borrowers, as well as enforcement actions by regulators. 34 Table of Contents Furthermore, if a borrower or regulator were to successfully bring claims against a Strategic Program service provider and/or the Bank for violations of state consumer lending laws the Strategic Program service provider and/or the Bank could be subjected to damages, revocation of required licenses, individual and class action lawsuits, enforcement actions, penalties, injunctions which require the cessation or curtailment of a Strategic Program or operation by the Bank, rescission rights held by investors in securities offerings and civil and criminal liability.
If new state or federal laws or regulations are ultimately enacted that significantly raise the cost of foreclosure or raise outright barriers, such laws could have a material adverse effect on our business, financial condition and results of operation.
If new state or federal laws or regulations are ultimately enacted that significantly raise the cost of foreclosure or raise outright barriers, such laws could have a material adverse effect on our business, financial condition and results of operation. Our origination of construction loans exposes us to increased lending risks.
In 2024 the Federal Reserve lowered the target range in three increments to 4.25%-4.5% Further changes to prevailing interest rates could influence not only the interest we receive on loans and investments and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans at competitive rates and obtain deposits; (ii) the fair value of our financial assets and liabilities; (iii) the average duration of our loan portfolios and other interest-earning assets; and (iv) the mix of lending products we originate.
Changes to prevailing interest rates could influence not only the interest we receive on loans and investments and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans at competitive rates and obtain deposits; (ii) the fair value of our financial assets and liabilities; (iii) the average duration of our loan portfolios and other interest-earning assets; and (iv) the mix of lending products we originate.
These factors can individually or in the aggregate be detrimental to our business, and the interplay between these factors can be complex and unpredictable. Adverse economic conditions could have a material adverse effect on our business, financial condition and results of operations. Acts of terrorism, geopolitical and other external events could impact our ability to conduct business.
These factors can individually or in the aggregate be detrimental to our business, and the interplay between these factors can be complex and unpredictable. Adverse economic conditions could have a material adverse effect on our business, financial condition and results of operations.
This could also increase our costs of compliance and business operations and could reduce income from certain business initiatives. This includes increased privacy-related enforcement activity at the federal level by the Federal Trade Commission, as well as at the state level. For example, in March 2022, Utah enacted the Utah Consumer Privacy Act.
This could also increase our costs of compliance and business operations and could reduce income from certain business initiatives. This includes increased privacy-related enforcement activity at the federal level by the Federal Trade Commission, as well as at the state level.
If we are unable to maintain our relationships with our Strategic Program service providers, our business will suffer. A significant portion of our loan origination is conducted through our Strategic Programs. Approximately $54.1 , or 55.9% of our total revenues for the year ended December 31, 2024, were generated through our Strategic Programs.
If we are unable to maintain our relationships with our Strategic Program service providers, our business will suffer. A significant portion of our loan origination is conducted through our Str ategic Programs. Approximately $76.1 million, or 50.4% of our total revenues for the year ended December 31, 2025, were generated through our Strategic Programs.
Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies and especially our organization, changes in the laws, regulations and procedures applicable to SBA loans could adversely affect our ability to operate profitably.
Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies and especially our organization, changes in the laws, regulations and procedures applicable to SBA loans could adversely affect our ability to operate profitably. We are subject to interest rate risk as fluctuations in interest rates may adversely affect our earnings.
If our borrowers are unable to repay their loans, our business, financial condition and results of operations could be adversely affected. Our concentration of large loans to a limited number of borrowers may increase our credit risk. As of December 31, 2024, our 10 largest borrowing relationships accounted for approximatel y 10.5% of our total gross loans held-for-investment.
If our borrowers are unable to repay their loans, our business, financial condition and results of operations could be adversely affected. Our concentration of large loans to a limited number of borrowers may increase our credit risk. A s of December 31, 2025 our 10 largest borrowing relationships accounted for approximately 8.3% of our tota l gross loans held-for-investment.
This competition may increase our costs, reduce our revenues or revenue growth or, because we are a relatively small banking operation without the name recognition of other, more established banking operations, make it difficult for us to compete effectively in obtaining these relationships. Our agreements with Fintech Banking and Payment Solutions customers may expose us to credit risk.
This competition may increase our costs, reduce our revenues or revenue growth or, because we are a relatively small banking operation without the name 23 Table of Contents recognition of other, more established banking operations, make it difficult for us to compete effectively in obtaining these relationships.
A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations, as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs and reputational damage, any of which could have a material adverse effect on our business, financial condition and results of operations.
A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations, as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs and reputational damage, any of which could have a material adverse effect on our business, financial condition and results of operations. 36 Table of Contents We have implemented remote working and workplace protocols for our employees in accordance with government requirements.
If we fail to successfully maintain, protect and enforce our intellectual property rights, our competitive position could suffer. Similarly, if we were to infringe on the intellectual property rights of others, our competitive position could suffer.
Similarly, if we were to infringe on the intellectual property rights of others, our competitive position could suffer.
For these reasons, any national, regional or local economic downturn that affects our service regions, or existing or prospective borrowers in such regions, could have a material adverse effect on our real estate and SBA 7(a) lending and the business, financial condition and results of operations.
Any national, regional or local economic downturn that affects our service regions, or existing or prospective borrowers in such regions, could have a material adverse effect on our real estate and SBA 7(a) lending and the business, financial condition and results of operations. We face strong competition from financial services companies and other companies that offer banking services.
Furt her, the JOBS Act allows us to present only two years of audited financial statements and only two years of related management’s discussion and analysis of financial condition and results of operations. 41 Table of Contents We may take advantage of some or all of these provisions for up to five years or such earlier time as we cease to qualify as an emerging growth company, which will occur if we have more than $1.235 billion in total annual gross revenue, if we issue more than $1.0 billion of non-convertible debt in a three-year period, or if we become a “large accelerated filer,” in which case we would no longer be an emerging growth company as of the following December 31.
We may take advantage of some or all of these provisions for up to five years or such earlier time as we cease to qualify as an emerging growth company, which will occur if we have more than $1.235 billion in total annual gross revenue, if we issue more than $1.0 billion of non-convertible debt in a three-year period, or if we become a “large accelerated filer,” in which case we would no longer be an emerging growth company as of the following December 31.
Private parties may also challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our reputation, business, financial condition and results of operations. We may be subject to liability for potential violations of predatory lending laws, which could adversely impact our results of operations, financial condition and business.
Such actions could have a material adverse effect on our reputation, business, financial condition and results of operations. We may be subject to liability for potential violations of predatory lending laws, which could adversely impact our results of operations, financial condition and business.
These changes also may require us to invest significant management attention and resources to make any necessary changes to operations to comply and could have a material adverse effect on our business, financial condition and results of operations.
These legislative and regulatory changes, both the adoption and repeal of laws, may require us to invest significant management attention and resources to make any necessary changes to operate appropriately and efficiently and could have a material adverse effect on our business, financial condition and results of operations.
We are subject to interest rate risk as fluctuations in interest rates may adversely affect our earnings. Most of our banking assets and liabilities are monetary in nature and subject to risk from changes in interest rates.
Most of our banking assets and liabilities are monetary in nature and subject to risk from changes in interest rates.
We also have approximately $254.3 million, or 54.7% , of our total gross loans held-for-investment in SBA loans that are secured with real estate as a component of collateral as of December 31, 2024. The market value of real estate can fluctuate significantly in a short period of time.
We also have approximately $199.0 million, or 34.0%, of our total gros s loans held-for-investment in SBA loans that are secured, at least in part, with real estate collateral as of December 31, 2025 . The market value of real estate can fluctuate significantly in a short period of time.
We invest a portion of our total assets ( 5.7% as of December 31, 2024) in investment securities with the primary objectives of providing a source of liquidity, providing an appropriate return on funds invested, managing interest rate risk and meeting pledging requirements. Factors beyond our control can significantly and adversely influence the fair value of securities in our portfolio.
We invest a portion of our total assets ( 3.9% as of December 31, 2025 ) in investment securities with the primary objectives of providing a source of liquidity, providing an appropriate return on funds invested, managing interest rate risk and meeting pledging requirements.
The level of the allowance reflects management’s continuing evaluation of general economic conditions, diversification and seasoning of the loan portfolio, historic loss experience, identified credit problems, delinquency levels and adequacy of collateral.
We maintain an ACL that represents management’s judgment of probable losses and risks inherent in our loan portfolio. The level of the allowance reflects management’s continuing evaluation of general economic conditions, diversification and seasoning of the loan portfolio, historic loss experience, identified credit problems, delinquency levels and adequacy of collateral.
Our origination of construction loans exposes us to increased lending risks. We originate commercial construction loans primarily to professional builders for the construction of one-to-four family residences, apartment buildings, and commercial real estate properties. As of December 31, 2024, we had app roximately $42.3 million of construction loans, which represents approximately 9.1% o f our total gross loan portfolio held-for-investment.
We originate commercial construction loans primarily to professional builders for the construction of one-to-four family residences, apartment buildings, and commercial real estate properties . As of December 31, 2025, we had approximately $49.1 million of construction loans, which represents approximately 8.4% of o ur total gross loan portfolio held-for-investment.
We may also be required to sell securities or other assets to meet funding needs which would reduce revenues or potentially generate losses. Our strategy of pursuing business with our Fintech Banking and Payment Solutions customers has been adopted by other institutions with which we compete.
We may also be required to sell securities or other assets to meet funding needs which would reduce revenues or potentially generate losses. Our agreements with Fintech Banking and Payment Solutions customers may expose us to credit risk.
We have implemented remote working and workplace protocols for our employees in accordance with government requirements. Working outside of our network protection may increase our risk exposure to cybersecurity breaches. An increase in the number of employees working offsite may correspond to an increase in the size of our risk exposure to cyber disruptions.
Working outside of our network protection may increase our risk exposure to cybersecurity breaches. An increase in the number of employees working offsite may correspond to an increase in the size of our risk exposure to cyber disruptions.
We rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to ensure that we have adequate liquidity to fund our operations. Our most important source of funds is deposits. As of December 31, 2024, approximately $126.8 million, or 23.3%, of our total deposits were noninterest-bearing demand accounts.
We rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to ensure that we have adequate liquidity to fund our operations. Our most important source of funds is deposits.
Financial institutions have been, and continue to be, targets of terrorist threats aimed at compromising operating and communication systems and remain central targets for potential acts of terrorism.
Acts of war, global conflict, terrorism, geopolitical and other external events could impact our ability to conduct business. Financial institutions have been, and continue to be, targets of terrorist threats aimed at compromising operating and communication systems and remain central targets for potential acts of terrorism.
Moreover, our reliance on any such information could result in suboptimally and inefficiently priced loans or incorrect approvals or denials of loans, which in turn could adversely affect our reputation and ability to attract new borrowers, counterparties or Strategic Program service providers. 39 Table of Contents Risks Related to Potential Strategic Transactions We may pursue strategic acquisitions in the future, and we may not be able to overcome risks associated with such transactions.
Moreover, our reliance on any such information could result in suboptimally and inefficiently priced loans or incorrect approvals or denials of loans, which in turn could adversely affect our reputation and ability to attract new borrowers, counterparties or Strategic Program service providers.
Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations. 34 Table of Contents We are subject to numerous laws and regulations, designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws or regulations could lead to a wide variety of sanctions.
Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations.
More moderate levels of run-off can adversely affect banks but are less dramatic and have been significantly less reported. The rapid rise in interest rates during 2022 and 2023 and the resulting industry-wide reduction in the fair value of securities portfolios, among other events, have increased volatility and uncertainty with respect to the health of the U.S. banking system.
The rapid rise in interest rates during 2022 and 2023 and the resulting industry-wide reduction in the fair value of securities portfolios, among other events, increased volatility and uncertainty with respect to the health of the U.S. banking system for a period of time.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe department is managed by the Bank’s Director of Information Systems and Security, who reports to the Bank’s Chief Technology Officer The current Director of Information Systems and Security has more than 24 years of technology and cybersecurity experience. Our Chief Technology Officer periodically reports information about the Company’s cybersecurity risks and operational developments to our Board of Directors.
Biggest changeThe department is managed by the Bank’s IT Security Manager, who reports to the Bank’s Chief Technology Officer. The current IT Security Manager has more than 14 years of technology and cybersecurity experience. Our Chief Technology Officer periodically reports information about the Company’s cybersecurity risks and operational developments to our Board of Directors.
We may nevertheless be unsuccessful in the future in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. For additional information regarding cybersecurity risks, see “Risk Factors - Risks Related to Cybersecurity and Technology”.
We may nevertheless be unsuccessful in the future in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. For additional information regarding cybersecurity risks, see “Risk Factors - Risks Related to Technology”.
We have escalation procedures to notify members of our executive management, Board of Directors and regulators in a timely manner based on the criticality and materiality of any cybersecurity incident. While we have experienced, and expect to continue to experience, cybersecurity threats, we did not experience any material cybersecurity incident in the year ended December 31, 2024.
We have escalation procedures to notify members of our executive management, Board of Directors and regulators in a timely manner based on the criticality and materiality of any cybersecurity incident. While we have experienced, and expect to continue to experience, cybersecurity threats, we did not experience any material cybersecurity incident in the year ended December 31, 2025.
Minutes of the meetings of the IT Steering Committee are regularly reviewed by our Board of Directors. We perform periodic risk assessments of the Company’s information systems based on regulatory guidance issued by the Federal Financial Institutions Examination Council (“FFIEC”) and state and federal regulators, including the FDIC and the UDFI.
Minutes of the meetings of the IT Steering Committee are regularly reviewed by our Board of Directors. 45 Table of Contents We perform periodic risk assessments of the Company’s information systems based on regulatory guidance issued by the Federal Financial Institutions Examination Council (“FFIEC”) and state and federal regulators, including the FDIC and the UDFI.
Cybersecurity risk is assessed and managed primarily through our operations, risk management, and audit teams and is overseen by our Board of Directors.
Cybersecurity risk is assessed and managed primarily through our technology, risk management, and audit teams and is overseen by our Board of Directors.
Additionally, 43 Table of Contents we participate in various cybersecurity industry forums and have access to law enforcement analyses regarding current threats.
Additionally, we participate in various cybersecurity industry forums and have access to law enforcement analyses regarding current threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeNone of the leases involve any of our directors, officers or beneficial owners of more than 5% of our voting securities or any affiliates of the foregoing. We believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.
Biggest changeNone of the leases involve any of our directors, officers or beneficial owners of more than 5% of our voting securities or any affiliates of the foregoing. We believe that our facilities, which are used by each of our reportable segments, are in good condition and are adequate to meet our operating needs for the foreseeable future.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
Item 3. LEGAL PROCEEDINGS We are not currently subject to any material legal proceedings. We are from time to time subject to claims and litigation arising in the ordinary course of business.
Added
Item 3. LEGAL PROCEEDINGS Between July and August 2025, several lawsuits were filed against the Company in the United States District Court for the District of Utah.
Removed
These claims and litigation may include, among other things, allegations of violation of banking and other applicable regulations, competition law, labor laws and consumer protection laws, as well as claims or litigation relating to intellectual property, securities, breach of contract and tort.
Added
The complaints generally assert claims of negligence, breach of implied contract and unjust enrichment, on behalf of various classes of putative individuals who claimed to have been harmed in connection with an alleged data breach involving the Company.
Removed
We intend to defend ourselves vigorously against any pending or future claims and litigation in any case where we disagree with the claims made.
Added
The plaintiffs are seeking equitable and injunctive relief as well as an unspecified amount of monetary damages in connection with their claims, which include an award of attorneys’ fees and costs.
Removed
In the current opinion of management, the likelihood is remote that the impact of such ordinary course proceedings, either individually or in the aggregate, would have a material adverse effect on our results of operations, financial condition or cash flows.
Added
On October 3, 2025, the Court entered an Order consolidating the pending cases and all subsequently filed putative class actions involving the same or substantially the same obligations into the pending matter into Minter et. al v. FinWise Bank et. al, Case No. 46 Table of Contents 2:25-cv-00569-JNP-CMR. The Company has disputed the claims and is vigorously defending the lawsuit.
Removed
However, one or more unfavorable outcomes in any claim or litigation against us could have a material adverse effect for the period in which they are resolved.
Added
The parties engaged in voluntary mediation on March 17, 2026, but were unable to reach an agreement on that date. The outcome of the pending litigation described above is uncertain. We intend to defend vigorously against the foregoing pending lawsuit and any other lawsuits as they may arise in the ordinary course of business.
Removed
In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect our reputation, even if resolved in our favor. 44 Table of Contents Item 4. MINE SAFETY DISCLOSURES Not applicable. 45 Table of Contents PART II
Added
However, litigation is inherently uncertain, and we are unable to predict the outcome of these lawsuits. We also cannot provide any assurance that the ultimate resolution of any lawsuits will not have a material adverse effect on our reputation, business, prospects, results of operations or financial condition.
Added
For additional information concerning contingencies and uncertainties, see Note 9 - Commitments and Contingencies, of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Report. Item 4. MINE SAFETY DISCLOSURES Not applicable. 47 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock has been publicly traded since November 19, 2021 and is currently traded on the Nasdaq Global Market under the Symbol “FINW.” Holders of Record There were approximately 94 shareholders of record of the Company’s common stock as of March 20, 2025.
Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock has been publicly traded since November 19, 2021 and is currently traded on the Nasdaq Global Market under the Symbol “FINW.” Holders of Record There were approximat ely 88 shareholders of record of the Company’s common stock as of March 16, 2026.
This number does not reflect the number of persons or entities holding stock in nominee name through banks, brokerage firms or other nominees. Dividends Holders of our common stock are only entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for dividends.
This nu mber does not reflect the number of persons or entities holding stock in nominee name through banks, brokerage firms or other nominees. Dividends Holders of our common stock are only entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for dividends.
The repurchase program does not obligate us to purchase any particular number of shares. There were no repurchases of our common stock during the three months ended December 31, 2024 . At December 31, 2024 , 597,224 shares remain available for repurchase.
The repurchase program does not obligate us to purchase any particular number of shares. There were no repurchases of our common stock during the three months ended December 31, 2025 . At December 31, 2025 , 597,224 shares remain available for repurchase.
Equity Compensation Plan Information For information regarding securities authorized for issuance under the Company’s equity compensation plans, see Part III, Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Item 6. [RESERVED] 46 Table of Contents
Equity Compensation Plan Information For information regarding securities authorized for issuance under the Company’s equity compensation plans, see Part III, Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Item 6. [RESERVED] 48 Table of Contents
Recent Sales of Unregistered Securities and Issuer Repurchases of Equity Securities There were no unregistered sales of the Company’s common stock during the fourth quarter of 2024 .
Recent Sales of Unregistered Securities and Issuer Repurchases of Equity Securities There were no unregistered sales of the Company’s common stock during the fourth quarter of 2025 .
Removed
The repurchase program authorized the repurchase by us of our common stock in open market transactions, including pursuant to a trading plan in accordance with Rule 10b-18 promulgated under the Exchange Act of 1934, as amended (the “Exchange Act”), or privately negotiated transactions.
Removed
Repurchases may also be made pursuant to a trading plan under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased when we might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions.
Removed
The Share Repurchase Committee, designated by the Board of Directors, will determine the actual timing, number and value of any shares repurchased in its discretion depending 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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe percentage of ACL related to Strategic Program loans retained reflects the increased credit risks associated with certain retained Strategic Program loans. 63 Table of Contents December 31, 2024 ($ in thousands) Amount % of Total Allowance Construction and land development $ 374 2.8 % Residential real estate 788 6.0 % Residential real estate multifamily 38 0.3 % Commercial real estate Owner occupied 2,834 21.5 % Non-owner occupied 113 0.9 % Commercial and industrial 700 5.3 % Consumer 638 4.8 % Commercial leases 1,387 10.5 % Strategic Program loans 6,304 47.8 % Total $ 13,176 100.0 % December 31, 2023 ($ in thousands) Amount % of Total Allowance Construction and land development $ 316 2.5 % Residential real estate 956 7.4 % Residential real estate multifamily 6 — % Commercial real estate Owner occupied 3,336 25.9 % Non-owner occupied 282 2.2 % Commercial and industrial 361 2.8 % Consumer 211 1.6 % Commercial leases 355 2.8 % Strategic Program loans 7,065 54.8 % Total $ 12,888 100.0 % The following table reflects the ratios of the ACL to total LHFI, nonaccrual loans to total loans held-for-investment, and the ACL to nonaccrual loans by CECL loan category as of December 31, 2024.
Biggest changeThe percentage of ACL related to Strategic Program loans retained reflects the increased credit risks associated with certain retained Strategic Program loans. 65 Table of Contents December 31, 2025 December 31, 2024 ($ in thousands) Amount Percent of Loans in Category to Total Loans Amount Percent of Loans in Category to Total Loans Construction and land development $ 970 8.4 % $ 374 9.1 % Residential real estate 777 9.6 % 788 13.2 % Residential real estate multifamily 62 0.5 % 38 0.4 % Commercial real estate Owner occupied 3,267 36.0 % 2,834 40.9 % Non-owner occupied 104 1.6 % 113 2.8 % Commercial and industrial 773 4.5 % 700 9.5 % Consumer 679 3.7 % 638 4.8 % Commercial leases 1,838 13.5 % 1,387 15.0 % Strategic Program loans: Strategic Program loans - with credit enhancement 22,396 18.5 % 111 0.2 % Strategic Program loans - without credit enhancement 5,930 3.7 % 6,193 4.1 % Total $ 36,796 100.0 % $ 13,176 100.0 % The following table reflects the ratios of the ACL to total LHFI, nonaccrual loans to total LHFI, and the ACL to nonaccrual loans by CECL loan category as of December 31, 2025: ACL to Total LHFI Nonaccrual loans to Total LHFI ACL to Nonaccrual loans Construction and land development 2.0 % 4.7 % 42.4 % Residential real estate 1.4 % 19.9 % 6.9 % Residential real estate multifamily 2.0 % — % — % Commercial real estate Owner occupied 1.6 % 11.3 % 13.7 % Non-owner occupied 1.1 % 28.8 % 3.8 % Commercial and industrial 2.9 % 8.6 % 34.4 % Consumer 3.1 % 0.2 % 1,297.1 % Commercial leases 2.3 % 1.1 % 214.0 % Strategic Program loans 21.8 % — % — % Total 6.3 % 7.4 % 85.1 % 66 Table of Contents The following table reflects the ratios of the ACL to total LHFI, nonaccrual loans to total LHFI, and the ACL to nonaccrual loans by CECL loan category as of December 31, 2024: ($ in thousands) ACL to Total LHFI Nonaccrual to Total LHFI ACL to Nonaccrual loans Construction and land development 0.9 % — % — % Residential real estate 1.3 % 11.8 % 10.9 % Residential real estate multifamily 2.3 % — % — % Commercial real estate Owner occupied 1.5 % 12.4 % 12.0 % Non-owner occupied 0.9 % 21.8 % 4.1 % Commercial and industrial 1.6 % 4.0 % 39.2 % Consumer 2.9 % — % — % Commercial leases 2.0 % 0.5 % 385.4 % Strategic Program loans 31.3 % — % — % Total 2.8 % 7.7 % 36.9 % When comparing December 31, 2025 to December 31, 2024, the increase in ACL to total LHFI was primarily due to the growth in the credit enhanced loans included in the Strategic Program loans held-for-investment.
These relationships were developed to support our ability to generate significant loan volume across diverse consumer and commercial markets and have been the primary source of our significant growth and our consistent ability to operate profitability since developing the third-party loan origination business.
These relationships were developed to support our ability to generate significant loan volume across diverse consumer and commercial markets and have been the primary source of our growth and our consistent ability to operate profitability since developing our third-party loan origination business.
Aside from minimal balances held with our correspondent banks, the majority of our interest-bearing deposits are at the Federal Reserve. Securities We use our securities portfolio to provide a source of liquidity, provide an appropriate return on funds invested, manage interest rate risk, meet collateral requirements and meet regulatory capital requirements.
Aside from minimal balances held with our correspondent banks, the majority of our interest-bearing deposits are held at the Federal Reserve. Securities We use our securities portfolio to provide a source of liquidity, provide an appropriate return on funds invested, manage interest rate risk, meet collateral requirements and meet regulatory capital requirements.
We manage our loan portfolio based on factors that include concentrations per loan program and aggregated portfolio, industry of operation and geographies. We also monitor the impact of identified and estimated losses on capital as well as the pricing characteristics of each product. The following provides a general description and the risk characteristics relevant to each of the products.
We manage our loan portfolio based on factors that include concentrations per loan program and aggregated portfolio, industry of operation and geographies. We also monitor the impact of identified and estimated losses on capital as well as the pricing characteristics of each product. The following provides a general description and the risk characteristics relevant to each of our loan products.
While our commercial and residential real estate lending and other products and services offered from our branch continue to be concentrated in and around the Salt Lake City, Utah MSA, our third-party loan origination relationships have allowed us to expand into new markets across the United States.
While our commercial and residential real estate lending and other products and services offered from our branch continue to be concentrated in and around the Salt Lake City, Utah MSA, our third-party loan origination relationships have allowed us to expand into markets across the United States.
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 considerations. These leases are generally secured by liens on business assets leased or purchased with our funds.
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 our funds.
These deposits add an element of flexibility in that they tend to increase or decrease in relation to the size of or Strategic Program loan portfolio. In addition to the reserve account, some Strategic Program loan originators maintain operating deposit accounts with us.
These deposits add an element of flexibility in that they tend to increase or decrease in relation to the size of our Strategic Program loan portfolio. In addition to the reserve account, some Strategic Program loan originators maintain operating deposit accounts with us.
Under these capital requirements the Bank must maintain a leverage ratio greater than 9.0% to be considered well-capitalized. As of December 31, 2024, the most recent notification from the FDIC categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action (there are no conditions or events since that notification we believe have changed the Bank’s category).
Under these capital requirements the Bank must maintain a leverage ratio greater than 9.0% to be considered well-capitalized. As of December 31, 2025 , the most recent notification from the FDIC categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action (there are no conditions or events since that notification we believe have changed the Bank’s category).
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. The repurchase program expires on March 31, 2026. During the three months ended December 31, 2024, there were no open-market share repurchases.
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. The repurchase program expires on March 31, 2026. During the three months ended December 31, 2025, there were no open-market share repurchases.
While certain product lines generate higher net charge-offs, our exposure is carefully monitored and mitigated by our concentration policies and reserved for by the loan loss allowance we maintain. Specifically, retention of certain Strategic Program loans with higher default rates accounts for a disproportionate amount of our charge-offs.
While certain product lines generate higher net charge-offs, our exposure is carefully monitored and mitigated by our concentration policies and reserved for by the credit loss allowance we maintain. Specifically, retention of certain Strategic Program loans with higher default rates accounts for a disproportionate amount of our charge-offs.
Since the repurchase program’s inception, we have repurchased and subsequently retired a total of 44,608 shares for $0.5 million at an average price of $10.30 per share. See Note 1 - Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8 for more information.
Since the repurchase program’s inception, we have repurchased and subsequently retired a tota l of 44,608 shares for $0.5 million at an average price of $10.30 per share. See Note 1 - Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8 for more information.
The estimate of credit loss incorporates assumptions for both the likelihood and amount of funding over the estimated life of the commitments, including adjustments for current conditions and reasonable and supportable forecasts. Management periodically reviews and updates its assumptions for estimated funding rates.
Allowance for Credit Losses The estimate of credit loss incorporates assumptions for both the likelihood and amount of funding over the estimated life of the commitments, including adjustments for current conditions and reasonable and supportable forecasts. Management periodically reviews and updates its assumptions for estimated funding rates.
For details of our commitments to extend credit please see Note 9 - Commitments and Contingencies to the consolidated financial statements included in Part II, Item 8.. Reconciliations of Non-GAAP Financial Measures We believe that both management and investors benefit from certain non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods.
For details of our commitments to extend credit please see Note 9 - Commitments and Contingencies to the consolidated financial statements included in Part II, Item 8. 71 Table of Contents Reconciliations of Non-GAAP Financial Measures We believe that both management and investors benefit from certain non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods.
SBA loans We originate and service loans partially guaranteed by the SBA under its Section 7(a) loan program for small businesses and professionals throughout the USA. Through our diversification efforts, we have built an SBA 7(a) portfolio that we believe positions us to better withstand economic shifts.
SBA We originate and service loans partially guaranteed by the SBA under its Section 7(a) loan program for small businesses and professionals throughout the United States. Through our diversification efforts, we have built an SBA 7(a) portfolio that we believe positions us to better withstand economic shifts.
We require all loans to conform to policy (or otherwise be identified as exceptions to policy and monitored and reported on, at minimum, quarterly) and be granted on a sound basis. Loans are made with a primary emphasis on loan profitability, credit risk and concentration exposures.
We require all loans to conform to our underwriting policies (or otherwise be identified as exceptions to policy and monitored and reported on, at minimum, quarterly) and be granted on a sound basis. Loans are made with a primary emphasis on loan profitability, credit risk and concentration exposures.
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.
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.
As of December 31, 2024 and December 31, 2023, we had total residential real estate loans of $51.6 million and $38.1 million, respectively, representing 11.1% 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.
As of December 31, 2025 and December 31, 2024, we had total residential real estate loans of $59.6 million and $51.6 million, respectively, representing 10.2% and 11.1% 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.
All other securities are designated as AFS and carried at estimated fair value with unrealized gains and losses included in shareholders’ equity on an after-tax basis. 55 Table of Contents The following table summarizes the weighted-average yields of our investment securities at December 31, 2024 .
All other securities are designated as AFS and carried at estimated fair value with unrealized gains and losses included in shareholders’ equity on an after-tax basis. 57 Table of Contents The following table summarizes the weighted-average yields of our investment securities at December 31, 2025 .
The stock repurchase program became effective as of March 6, 2024 and authorizes us to repurchase up to 641,832 shares of our common stock in the aggregate in open market transactions, privately negotiated transactions, or any manner that complies with the provisions of Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as pursuant to a trading plan under Rule 10b5-1 under the Exchange Act.
The stock repurchase program became effective as of March 6, 2024 and authorizes us to repurchase up to 641,832 shares of our common stock in the aggregate 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.
Financial Condition The following table summarizes selected components of our consolidated balance sheets as of December 31, 2024 and 2023 .
Financial Condition The following table summarizes selected components of our consolidated balance sheets as of December 31, 2025 and 2024 .
Consumer Consumer lending provides financing for personal, family, or household purposes on a nationwide basis. Most of these loans are originated through our POS platform and come from a variety of sources, including other approved merchant or dealer relationships and lending platforms.
Consumer 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.
We had a total of $36.5 million in nonperforming assets, which included $0.8 million in material loan modifications at December 31, 2024. The amount of nonperforming assets as of December 31, 2024 includes $19.2 million of SBA 7(a) loan balances that are guaranteed by the SBA.
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. We had $36.5 million in nonperforming assets, which included $0.8 million in material loan modifications, at December 31, 2024.
Strategic Program Loans Held-for-Sale We, through our Strategic Program service providers, issue, on a nationwide basis, unsecured and secured consumer and business loans to borrowers within certain approved credit profiles. Loans originated through these programs are limited to predetermined Bank underwriting criteria, which has been approved by our board of directors.
Strategic Program Loans Held-for-Sale We, through our Strategic Program service providers, offer unsecured and secured consumer and business loans to borrowers within certain approved credit profiles nationwide. Loans originated through these programs are limited to predetermined Bank underwriting criteria, which has been approved by our board of directors.
Due to elevated interest rates, the slowdown of consumer spending and the variable rate nature of our SBA portfolio, the risk of default is elevated and may result in additional delinquencies in future periods. Our Strategic Program service providers also provide for loan modifications to 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. Our Strategic Program service providers also provide for loan modifications to borrowers.
Among other things, we use loan risk grading information for loan pricing, risk and collection management and determining credit loss reserve adequacy. Further, on a quarterly basis, the Loan Committee holds a Loan Risk Grade meeting, wherein all loans in our portfolio are reviewed for accurate risk grading.
Among other things, we use loan risk grading information for loan pricing, risk and collection management and determining credit loss reserve adequacy. Further, on a quarterly basis, the Loan Committee holds a Loan Risk Grade meeting, to review all loans in our portfolio for accurate risk grading.
As of December 31, 2024 and December 31, 2023, we had total commercial non-real estate loans of $3.7 million and $2.5 million, respectively, representing 0.8% and 0.7% of our total loans held-for-investment, respectively.
As of December 31, 2025 and December 31, 2024, we had total commercial non-real estate loans of $4.2 million and $3.7 million, respectively, representing 0.7% and 0.8% of our total loans held-for-investment, respectively.
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 $183.2 million and $136.9 million as of December 31, 2024 and December 31, 2023, respectively.
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 $204.1 million and $183.2 million as of December 31, 2025 and December 31, 2024, respectively.
As of December 31, 2024 and December 31, 2023, we had total consumer loans of $22.2 million and $11.4 million, respectively, representing 4.8% and 3.1% of our total loans held-for-investment, respectively. We use a debt-to-income (“DTI”) ratio to determine whether an applicant will be able to service the debt.
As of December 31, 2025 and December 31, 2024, we had total consumer loans of $21.9 million and $22.2 million, respectively, representing 3.8% and 4.8% 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.
Net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as “volume changes.” It is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds, referred to as “rate changes.” Net interest income increased $4.4 million for the year ended December 31, 2024, compared to the year ended December 31, 2023 primarily due to volume increases in the loans held for investment and loans held-for-sale portfolios and was partially offset by increased volume and rate in the certificates of deposit portfolio which also contributed to the increase in our cost of funds.
Net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as “volume changes.” It is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds, referred to as “rate changes.” Net interest income increased $13.3 million for the year ended December 31, 2025, compared to the year ended December 31, 2024 primarily due to volume increases in the loans held-for-investment and loans held-for-sale portfolios and was partially offset by increased volume in the certificates of deposit portfolio.
Provision for Income Taxes The provision for income taxes totaled $4.2 million at an effective tax rate of 25.0% for the year ended December 31, 2024, compared to $6.4 million at an effective tax rate of 26.7% for the year ended December 31, 2023.
Provision for Income Taxes The provision for income taxes totaled $5.7 million at an effective tax rate of 26.1% for the year ended December 31, 2025, compared to $4.2 million at an effective tax rate of 25.0% for the year ended December 31, 2024.
Total non-interest income less credit enhancement income is a non-GAAP measure to illustrate the impact of credit enhancement income resulting from credit enhanced loans on non-interest income: ($ in thousands; unaudited) Year Ended December 31, 2024 Total non-interest income $ 22,485 Less: credit enhancement income (111) Total non-interest income less credit enhancement income $ 22,374 Total non-interest income less indemnification income is a non-GAAP measure that illustrates the impact of credit enhancement income on non-interest income.
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: ($ in thousands; unaudited) Year Ended December 31, 2025 Year Ended December 31, 2024 Total non-interest income $ 58,483 $ 22,485 Less: credit enhancement income (23,924) (111) Total non-interest income less credit enhancement income $ 34,559 $ 22,374 Total non-interest income less indemnification income is a non-GAAP measure that illustrates the impact of credit enhancement income on non-interest income.
For example, we focus on industries such as non-store retailers (e-commerce), ambulatory healthcare services, professional, scientific and technical services (including law firms), and merchant wholesalers. As of December 31, 2024 and December 31, 2023, we had total SBA 7(a) loans of $255.1 million and $239.9 million, respectively, representing 54.8% and 64.5% of our total loans held-for-investment, respectively.
For example, we focus on industries such as non-store retailers (e-commerce), ambulatory healthcare services, professional, scientific and technical services (including law firms), and merchant wholesalers. As of December 31, 2025 and December 31, 2024, we had total SBA 7(a) loans of $205.6 million and $255.1 million, respectively, representing 35.1% and 54.8% of our total loans held-for-investment, respectively.
For example, commercial vehicle term loans and commercial working capital term loans. 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.
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.
While the loans are generally for the purchase of goods which may afford us a purchase money security interest, they are underwritten as if they were unsecured. On larger loans, we may file a Uniform Commercial Code financing form. Historically, we have retained these loans on our balance sheet for investment.
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 financing form.
The Company generally retains the loans and/or receivables for a number of business days after origination before selling the loans and/or receivables to the Strategic Program provider or another investor. Interest income is earned by the Company while holding the loans. These loans are classified as held-for-sale on the balance sheet and measured at the lower of cost or market.
We generally retain the loans and/or receivables for one to four business days after origination before selling the loans and/or receivables to the Strategic Program provider or another investor. Interest income is earned by us while holding the loans. These loans are classified as held-for-sale on the balance sheet and measured at the lower of cost or market.
Estimated uninsured deposits at the Bank as of December 31, 2024 include $54.0 million of total deposits contractually required to be maintained at the Bank pursuant to our Strategic Program agreements and an additional $42.1 million of total deposits associated with accounts owned by the parent holding company or the Bank.
Estimated uninsured deposits at the Bank as of December 31, 2025 include $62.1 million of total deposits contractually required to be maintained at the Bank pursuant to our Strategic Program agreements and an additional $58.2 million of total deposits associated with accounts owned by the parent holding company or the Bank.
The same credit policies and procedures are used in making these commitments as for on-balance sheet instruments.
The same credit policies and 70 Table of Contents procedures are used in making these commitments as for on-balance sheet instruments.
The most commonly used measure is total equity to total assets, which was 23.3% and 26.5% as of December 31, 2024 and December 31, 2023, respectively. Our return on average equity was 7.7% and 11.9% for the years ended December 31, 2024 and 2023, respectively.
The most commonly used measure is total equity to total assets, which was 19.8% and 23.3% as of December 31, 2025 and December 31, 2024, respectively. Our return on average equity was 8.9% and 7.7% for the years ended December 31, 2025 and 2024, respectively.
Loans are sourced primarily through our referral relationship with BFG. Although BFG actively markets throughout the USA, because of its physical location in the New York area we have developed a lending presence in the New York and New Jersey geographies. The maximum SBA 7(a) loan amount is $5 million.
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.
We classify investment securities as either HTM or AFS based on our intentions and our ability to hold such securities until maturity. In determining such classifications, securities that we have the positive intent and the ability to hold until maturity are classified as HTM and carried at amortized cost.
We classify investment securities as either held-to-maturity (“HTM”) or available-for-sale (“AFS”) based on our intentions and our ability to hold such securities until maturity. In determining such classifications, securities that we have the intent and the ability to hold until maturity are classified as HTM and carried at amortized cost.
At December 31, 2024, there were 22 securities, consisting of eight collateralized mortgage obligations, four U.S. Treasuries and ten mortgage-backed securities, in an unrealized loss position as of December 31, 2024 and 19 securities, consisting of nine collateralized mortgage obligations and ten mortgage-backed securities, in an unrealized loss position as of December 31, 2023.
At December 31, 2025, there were seventeen securities, consisting of eight collateralized mortgage obligations and nine mortgage-backed securities, in an unrealized loss position as of December 31, 2025 and twenty-two securities, consisting of four U.S. Treasuries, eight collateralized mortgage obligations and ten mortgage-backed securities, in an unrealized loss position as of December 31, 2024.
As of December 31, 2024 and December 31, 2023, we had total commercial real estate loans of $42.4 million and $22.8 million, respectively, representing 9.1% and 6.1% of our total loans held-for-investment, respectively. Of these amounts, $41.0 million and $20.8 million represented owner occupied properties as of December 31, 2024 and December 31, 2023, respectively.
As of December 31, 2025 and December 31, 2024, we had total commercial real estate loans of $85.7 million and $42.4 million, respectively, representing 14.6% and 9.1% of our total loans held-for-investment, respectively. Of these amounts, $84.0 million and $41.0 million represented owner occupied properties as of December 31, 2025 and December 31, 2024, respectively.
Executive Summary This executive summary provides certain 2024 and 2023 financial highlights from the discussion and analysis that follows: • Originations of total loans increased by $0.7 billion to $5.0 billion for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Executive Summary This executive summary provides certain 2025 and 2024 consolidated financial highlights from the discussion and analysis that follows: • Originations of total loans increased by $1.1 billion to $6.1 billion for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Underwriting of construction and development loans typically includes analysis of not only the borrower’s financial condition and ability to meet the required debt obligations, but also the general market conditions associated with the area and type of project being funded.
Underwriting of construction and development loans typically includes analysis of the general market conditions associated with the area and type of project being funded in addition to the borrower’s financial condition and ability to meet the required debt obligation.
Non-interest expenses less credit enhancement expenses is a non-GAAP measure presented to illustrate the impact of credit enhancement expense on non-interest expense: ($ in thousands; unaudited) Year Ended December 31, 2024 Total non-interest expense $ 52,835 Less: credit enhancement expense (8) Total non-interest expense less credit enhancement expenses $ 52,827 Total non-interest expense less credit enhancement expense is a non-GAAP measure that illustrates the impact of credit enhancement expenses on non-interest expense, the most directly comparable GAAP measure.
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: ($ in thousands; unaudited) Year Ended December 31, 2025 Year Ended December 31, 2024 Total non-interest expense $ 70,333 $ 52,835 Less: credit enhancement program expenses (9,755) (9) Total non-interest expense less credit enhancement program expenses $ 60,578 $ 52,826 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.
In light of suppressed gain-on-sale premiums and increasing variable loan rates during 2023, we retained on our balance sheet a greater percentage of the guaranteed portion of certain SBA loans that we originated than we have historically, which we believe will benefit us through stronger government guaranteed held-for-investment loan growth and an increased recurring stream of interest income and partially offset the decline in gain-on-sale revenue. 57 Table of Contents Commercial leases As of December 31, 2024 and December 31, 2023, we had total commercial leases of $70.2 million and $38.1 million, respectively, representing 15.1% and 10.2% of our total loans held-for-investment, respectively.
In light of suppressed gain-on-sale premiums and increasing variable loan rates during 2023, we retained on our balance sheet a greater percentage of the guaranteed portion of certain SBA loans that we originated than we have historically, which we believe will benefit us through stronger government guaranteed held-for-investment 59 Table of Contents loan growth and an increased recurring stream of interest income and partially offset the decline in gain-on-sale revenue.
We primarily utilize short-term and long-term borrowings to supplement deposits to fund our lending and investment activities. At December 31, 2024, we had the ability to access $239.2 million from the FRB’s Discount Window on a collateralized basis. The Bank had an available unsecured line of credit with two correspondent banks to borrow up to $6.1 million in overnight funds.
We primarily utilize short-term and long-term borrowings to supplement deposits to fund our lending and investment activities. At December 31, 2025, we had the ability to access $193.8 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.
Our return on average assets was 2.0% and 3.5% for the years ended December 31, 2024 and 2023, respectively. The Bank is subject to various regulatory capital requirements administered by the federal banking agencies.
Our return on average assets was 1.9% and 2.0% for the years ended December 31, 2025 and 2024, respectively. 69 Table of Contents The Bank is subject to various regulatory capital requirements administered by the federal banking agencies.
FinWise has entered into agreements with certain of its Strategic Program service providers pursuant to which the service providers 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 U.S.
FinWise has entered into agreements with certain of its Strategic Program service providers pursuant to which the service providers provide credit enhancement on loans which protects the Bank by indemnifying or reimbursing the Bank for incurred credit and fraud losses.
Non-core deposits generally include brokered deposits and deposits acquired through the utilization of a listing service. We intend to have various term offerings to match our funding needs. With no current plans to expand our brick-and-mortar branch network, online and mobile banking offers a means to meet customer needs and aggregate deposits more efficiently compared to a traditional branch network.
We intend to have various term offerings to match our funding needs. With no current plans to expand our brick-and-mortar branch network, online and mobile banking offers a means to meet customer needs and aggregate deposits more efficiently compared to a traditional branch network.
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 potential future recovery of those losses is also recorded on the balance sheet in the form of non-interest income (credit enhancement income).
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).
Our Strategic Program loans held-for-sale increased $44.1 million as of December 31, 2024 compared to December 31, 2023, primarily as a result of greater hold periods for new originations for certain programs and a higher level of originations in the fourth quarter of 2024 compared to the same period in 2023.
Our Strategic Program loans held-for-sale increased $54.9 million as of December 31, 2025 compared to December 31, 2024, primarily as a result of greater hold periods for new originations for certain programs and a higher level of originations in 2025 compared to 2024.
Average interest-bearing liabilities increased by $101.4 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, while the related cost of funds increased 35 basis points to 4.57%.
Average interest-bearing liabilities increased by $166.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024, while the related cost of funds decreased 55 basis points to 4.02%.
The total outstanding balance of loans held-for-investment with credit enhancement as of December 31, 2024 was approximately $0.9 million. 70 Table of Contents
The total outstanding balance of loans held-for-investment with credit enhancement as of December 31, 2025 and 2024 was approximately $108.1 million and $0.9 million, respectively.
The following non-GAAP measure is presented to illustrate the effect of the credit enhancement program that creates the credit enhancement on the allowance for credit losses: ($ in thousands; unaudited) As of December 31, 2024 Allowance for credit losses $ (13,176) Less: allowance for credit losses related to credit enhanced loans (111) Allowance for credit losses excluding the effect of the allowance for credit losses related to credit enhanced loans $ (13,065) 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 most directly comparable GAAP measure is non-interest income. 73 Table of Contents 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: ($ in thousands; unaudited) As of December 31, 2025 As of December 31, 2024 Allowance for credit losses $ 36,796 $ 13,176 Less: allowance for credit losses related to credit enhanced loans (22,411) (111) Allowance for credit losses excluding the effect of the allowance for credit losses related to credit enhanced loans $ 14,385 $ 13,065 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 following tables show the allocation of the ACL as of December 31, 2024, and 2023. The ACL related to Strategic Programs constitutes 47.8% and 54.8% of the total ACL while comprising 4.3% and 5.2%, respectively, of total loans held-for-investment as of December 31, 2024 and 2023, respectively.
The ACL related to Strategic Programs constitutes 77.0% and 47.8% of the total ACL while comprising 22.2% and 4.3%, respectively, of total loans held-for-investment as of December 31, 2025 and 2024, respectively.
Strategic Program Service Providers During the year ended December 31, 2024, we entered into the following new strategic program relationships: • We enhanced our portfolio of private student loan products through our new strategic lending program with Earnest, to help students and their families with education financing. • We announced our first strategic payments program with Hank Payments Corp. to offer modernized payments and cash management solutions to our customers. • We announced our new strategic lending program with Plannery to offer a debt consolidation platform exclusively for healthcare professionals.
During the year ended December 31, 2024, we entered into the following new strategic program relationships: • FinWise Bank and Albert entered into a strategic partnership to jointly launch lending products. • We enhanced our portfolio of private student loan products through our new strategic lending program with Earnest, to help students and their families with education financing. • We announced our strategic payments program with FUTR Payments (formerly Hank Payments Corp.) to support automated payment processing and remittance capabilities. • We announced our new strategic lending program with Plannery to offer a debt consolidation platform exclusively for healthcare professionals.
For example, we focus on industries and loan types that have historically lower loss rates such as professional, scientific and technical services (including law firms), non-store retailers (e-commerce), and ambulatory healthcare services. 56 Table of Contents The following table summarizes our gross loan portfolio held-for-investment by loan program as of the periods indicated: As of December 31, 2024 2023 ($ in thousands) Amount % of total loans Amount % of total loans SBA (1) $ 255,056 54.8 % $ 239,922 64.5 % Commercial leases 70,153 15.1 % 38,110 10.2 % Commercial, non real estate 3,691 0.8 % 2,457 0.7 % Residential real estate 51,574 11.1 % 38,123 10.2 % Strategic Program loans 20,122 4.3 % 19,408 5.2 % Commercial real estate: Owner occupied 41,046 8.8 % 20,798 5.6 % Non-owner occupied 1,379 0.3 % 2,025 0.5 % Consumer 22,212 4.8 % 11,372 3.1 % Total loans held-for-investment, gross $ 465,233 100.0 % $ 372,215 100.0 % (1) SBA loans as of December 31, 2024 and December 31, 2023 include $158.7 million and $131.7 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA.
For example, we focus on industries and loan types that have historically lower loss rates such as professional, scientific and technical services (including law firms), non-store retailers (e-commerce), and ambulatory healthcare services. 58 Table of Contents The following table summarizes our gross loan portfolio held-for-investment by loan program as of the periods indicated: As of December 31, 2025 2024 ($ in thousands) Amount % of total loans Amount % of total loans SBA (1) $ 205,615 35.1 % $ 255,056 54.8 % Commercial leases 78,743 13.4 % 70,153 15.1 % Commercial, non real estate 4,201 0.7 % 3,691 0.8 % Residential real estate 59,602 10.2 % 51,574 11.1 % Strategic Program loans: Strategic Program loans - with credit enhancement 108,131 18.5 % 891 0.2 % Strategic Program loans - without credit enhancement 21,637 3.7 % 19,231 4.1 % Commercial real estate: Owner occupied 84,016 14.3 % 41,046 8.8 % Non-owner occupied 1,638 0.3 % 1,379 0.3 % Consumer 21,926 3.8 % 22,212 4.8 % Total loans held-for-investment, gross $ 585,509 100.0 % $ 465,233 100.0 % (1) SBA loans as of December 31, 2025 and December 31, 2024 include $102.7 million and $158.7 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA.
These changes were consistent with our strategy to grow assets in lower risk revenue producing products. Deposits Deposits are the major source of funding for us. We offer a variety of deposit products including interest and noninterest bearing demand accounts, HSA demand deposits, money market and savings accounts and certificates of deposit, all of which we market at competitive pricing.
Deposits Deposits are the major source of funding for us. We offer a variety of deposit products including interest and noninterest bearing demand accounts, HSA demand deposits, money market and savings accounts and certificates of deposit, all of which we market at competitive pricing.
We have introduced our Payments (MoneyRails™) and Bank Identification Number (“BIN”) Sponsorship products which, together with our Strategic Programs, comprise the Bank’s Fintech Banking and Payment Solutions offerings. Payments (MoneyRails™) and BIN Sponsorship connect our customers to the Bank’s API-driven banking services ledger.
Our Payments (MoneyRails™) and Bank Identification Number (“BIN”) Sponsorship products which, together with our Strategic Programs, comprise the Bank’s Fintech Banking and Payment Solutions offerings.
Average interest-earning assets increased by $121.4 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, while the related yield on average interest earning assets decreased by 118 basis points to 12.60%.
Average interest-earning assets increased by $192.1 million for the year ended December 31, 2025 compared to the year ended December 31, 2024, while the related yield on average interest earning assets decreased by 77 basis points to 11.83%.
To attract core deposits from local and nationwide consumer and commercial markets, we have paid rates at the higher end of the market. We have been able to pay higher rates due to the higher rates earned on our loan portfolio. We utilize rate listing services and website advertising to attract deposits from consumer and commercial sources.
We have been able to pay higher rates due to the higher rates earned on our loan portfolio. We utilize rate listing services and website advertising to attract deposits from consumer and commercial sources. Non-core deposits generally include brokered deposits and deposits acquired through the utilization of a listing service.
In general, we place loans on nonaccrual status when they become 90 days past due. We also generally place loans on nonaccrual status if they are less than 90 days past due if the collection of principal or interest is in doubt. When interest accrual is discontinued, all unpaid accrued interest is reversed from income.
In general, we place loans on nonaccrual status when they become 90 days past due unless they are both well secured and in the process of collection. We also place loans on nonaccrual status if they are less than 90 days past due if the collection of principal or interest is in doubt.
We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, results of which form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily available from other sources. We evaluate our estimates on an ongoing basis.
These estimates are based on historical experience and other reasonable assumptions under current circumstances, the results of which form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily determinable from other sources. We review these estimates regularly. Actual results may differ from these estimates.
The following non-GAAP measures are presented to illustrate the impact of certain credit enhancement expenses on total interest income on loans HFI and average yield on loans HFI: As of and for the Year Ended 12/31/2024 ($ in thousands; unaudited) Total Average Loans HFI Total Interest Income on Loans HFI Average Yield on Loans HFI Before adjustment for credit enhancement $ 417,207 $ 51,194 12.27 % Less: credit enhancement expense (8) Net of adjustment for credit enhancement expenses $ 417,207 $ 51,186 12.27 % Total interest income on loans HFI net of credit enhancement expense and the average yield on loans HFI are non-GAAP measures that include the impact of credit enhancement expense on total interest income on loans HFI and the respective average yield on loans HFI, the most directly comparable GAAP measures. 69 Table of Contents The following non-GAAP measures are presented to illustrate the impact of certain credit enhancement expenses on net interest income and NIM: As of and for the Year Ended 12/31/2024 ($ in thousands; unaudited) Total Average Interest-Earning Assets Net Interest Income Net Interest Margin Before adjustment for credit enhancement $ 589,880 $ 58,912 9.99 % Less: credit enhancement expense (8) Net of adjustment for credit enhancement expenses $ 589,880 $ 58,904 9.99 % Net interest income and net interest margin net of credit enhancement expense are non-GAAP measures that include the impact of credit enhancement expenses on net interest income and net interest margin, 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 NIM: 72 Table of Contents As of and for the Year Ended As of and for the Year Ended December 31, 2025 December 31, 2024 ($ in thousands; unaudited) Total Average Interest-Earning Assets Net Interest Income Net Interest Margin Total Average Interest-Earning Assets Net Interest Income Net Interest Margin Before adjustment for credit enhancement $ 782,005 $ 72,183 9.23 % $ 589,880 $ 58,912 9.99 % Less: credit enhancement program expenses (9,755) (9) Net of adjustment for credit enhancement program expenses $ 782,005 $ 62,428 7.98 % $ 589,880 $ 58,903 9.99 % 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.
The PPPLF is secured by pledged PPP loans. Our most liquid assets are cash and cash equivalents. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At December 31, 2024, liquid assets (defined as cash and due from banks and interest-bearing deposits) totaled $109.2 million and constituted 14.6% of total assets.
The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At December 31, 2025, liquid assets (defined as cash and due from banks and interest-bearing deposits) totaled $163.4 million and constituted 16.7% of total assets.
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.
Strategic Program loans 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.
(2) Interest spread is the weighted average yield on interest-earning assets, less the weighted average rate incurred on interest-bearing liabilities. (3) Net interest margin is net interest income, expressed as a percentage of average earning assets. Rate/Volume Analysis. The following table sets forth the effects of changing rates and volumes on our net interest income based on average balances.
See “Nonperforming Assets” below. (2) Interest spread is the weighted average yield on interest-earning assets, less the weighted average rate incurred on interest-bearing liabilities. (3) Net interest margin is net interest income, expressed as a percentage of average earning assets. Rate/Volume Analysis.
See Note 1 - Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8 for information on our accounting policy related to this cri tical accounting estimate. Allowance for Credit Losses.
For further details on our accounting policy related to this estimate, refer to Note 1 – Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8. Allowance for Credit Losses (“ACL”). The ACL represents management’s estimate of expected credit losses on financial assets measured at amortized cost.
The maturity profile of our estimated uninsured time deposits, those amounts that exceed the FDIC insurance limit, at December 31, 2024 is as follows: December 31, 2024 ($ in thousands) Three months or less More than three months to six months More than six months to twelve months More than twelve months Total Time deposits, uninsured $ — $ 1,277 $ 1,746 $ 183 $ 3,206 66 Table of Contents Total Liabilities Total liabilities increased from $431.2 million at December 31, 2023 to $572.3 million at December 31, 2024 primarily due to an increase in total deposits as discussed above.
The maturity profile of our estimated uninsured time deposits, those amounts that exceed the FDIC insurance limit, at December 31, 2025 is as follows: December 31, 2025 ($ in thousands) Three months or less More than three months to six months More than six months to twelve months More than twelve months Total Time deposits, uninsured $ 277 $ 1,779 $ 605 $ 1,585 $ 4,246 Total Liabilities Total liabilities increased from $572.3 million at December 31, 2024 to $783.9 million at December 31, 2025 primarily due to an increase in deposits as discussed above. 68 Table of Contents Liquidity and Capital Resources Liquidity Management Liquidity management is the ability to meet current and future financial obligations of a short-term nature.
While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows, loan prepayments, loan sales and security sales are greatly influenced by general interest rates, economic conditions, and competition. Our primary source of funds to support new loan originations are deposits. Deposits are comprised of core and non-core deposits.
Our primary sources of funds consist of deposit inflows, the sale of loans, principal repayments and interest on loans and net profits. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows, loan prepayments, loan sales and security sales are greatly influenced by general interest rates, economic conditions, and competition.
The provision for credit losses on the Consolidated Statements of Income is a combination of the provision for credit losses and the provision for unfunded loan commitments. 62 Table of Contents The following tables present a summary of changes in the ACL for the periods indicated: Year Ended December 31, ($ in thousands) 2024 2023 ACL: Beginning balance $ 12,888 $ 11,985 Impact of ASU 2016-13 adoption(1) — 257 Adjusted beginning balance 12,888 12,242 Provision for loan losses 11,248 11,525 Charge-offs Construction and land development — — Residential real estate (297) (225) Residential real estate multifamily — — Commercial real estate Owner occupied (1,039) (714) Non-owner occupied (221) — Commercial and industrial (889) (472) Consumer (134) (68) Commercial leases (293) — Strategic Program loans (9,796) (10,946) Recoveries Construction and land development — — Residential real estate 65 90 Residential real estate multifamily — — Commercial real estate Owner occupied 334 1 Non-owner occupied — 378 Commercial and industrial 17 21 Consumer 6 2 Commercial leases 92 — Strategic Program loans 1,195 1,054 Ending balance $ 13,176 $ 12,888 (1) ASU 2016-13 (CECL) was adopted January 1, 2023.
The provision for credit losses on the Consolidated Statements of Income is a combination of the provision for credit losses and the provision for unfunded loan commitments. 64 Table of Contents The following tables present a summary of changes in the ACL for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 ACL: Beginning balance $ 13,176 $ 12,888 Provision for credit losses 38,479 11,248 Charge-offs Construction and land development — — Residential real estate (954) (297) Residential real estate multifamily — — Commercial real estate Owner occupied (1,832) (1,039) Non-owner occupied — (221) Commercial and industrial (933) (889) Consumer (559) (134) Commercial leases (294) (293) Strategic Program loans (11,841) (9,796) Recoveries Construction and land development — — Residential real estate 11 65 Residential real estate multifamily — — Commercial real estate Owner occupied 153 334 Non-owner occupied — — Commercial and industrial 15 17 Consumer 18 6 Commercial leases 29 92 Strategic Program loans 1,328 1,195 Ending balance $ 36,796 $ 13,176 The following table shows the allocation of the ACL and the percentage of loans in each category to total loans as of December 31, 2025, and 2024.
For a description of the factors we considered in determining the ACL see Allowance for credit losses presented in Note 1 - Summary of Significant Accounting Policies included in Part II, Item 8. Our provision for credit losses was substantially flat at $11.6 million for the years ended December 31, 2024 and 2023.
We determine the provision for credit losses monthly in connection with our evaluation of the adequacy of our ACL. For a description of the factors we considered in determining the ACL see Allowance for credit losses presented in Note 1 - Summary of Significant Accounting Policies included in Part II, Item 8.
Doubtful - A doubtful asset has an existing weakness or weaknesses that make collection or liquidation in full, on the basis of currently existing facts and conditions, highly questionable and improbable.
Assets so classified have identified weaknesses and are characterized by the possibility that we may sustain some loss if deficiencies are not corrected. Doubtful - A doubtful asset has an existing weakness or weaknesses that make collection or liquidation in full, on the basis of currently existing facts and conditions, highly questionable and improbable.
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.
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.
Our track record has demonstrated that these factors help deliver such growth and profitability, and that the flexibility inherent in our model enhances our ability to manage credit risk.
Our track record has demonstrated that our products and delivery of the products help deliver sustainable asset growth and strong profitability, and that the characteristics of our business model enhances our ability to manage credit risk.
NIM decreased to 9.99% for the year ended December 31, 2024 from 11.65% for the year ended December 31, 2023 primarily as a result of our increased lending to lower risk borrowers with lower yields on loans as part 51 Table of Contents of our strategy to reduce average credit risk in the loan portfolio combined with the increased cost of funds as the Bank competed in the national deposit market for funds to support our asset growth.
NIM decreased to 9.23% for the year ended December 31, 2025 from 9.99% for the year ended December 31, 2024 primarily as a result of our increased lending to lower risk borrowers with lower yields on loans as part of our strategy to reduce average credit risk in the loan portfolio, which was offset in part by the growth in the higher yielding credit enhanced portfolio of $107.2 million.
Treasuries 4.68 % 4.19 % — % — % 4.23 % Securities held-to-maturity: Mortgage-backed securities — % 3.29 % 1.32 % 1.73 % 1.85 % Collateralized mortgage obligations — % 3.18 % — % 3.08 % 3.09 % Total 4.68 % 4.14 % 1.32 % 2.50 % 3.72 % There were no calls, sales or maturities of securities during the years ended December 31, 2024 and December 31, 2023.
Treasuries 4.32 % 4.18 % — % — % 4.19 % Securities held-to-maturity: Mortgage-backed securities — % 3.34 % 1.33 % 1.80 % 1.82 % Collateralized mortgage obligations — % 3.14 % — % 2.53 % 2.61 % Total 4.32 % 4.14 % 1.33 % 2.22 % 3.66 % There were no sales or transfers of investment securities between classifications during the years ended December 31, 2025 and December 31, 2024.
While our liquidity monitoring and management consider both present and future demands for and sources of liquidity, the following table of contractual commitments focuses only on future obligations and summarizes our significant contractual obligations as of December 31, 2024: ($ in thousands) Total Less than One Year One to Three Years Three to Five Years More Than Five Years Contractual Obligations Deposits without stated maturity $ 224,181 $ 224,181 $ — $ — $ — Time deposits 320,771 245,180 29,629 35,294 10,668 Operating lease obligations 5,595 1,122 2,270 2,203 — Total $ 550,547 $ 470,483 $ 31,899 $ 37,497 $ 10,668 68 Table of Contents Off-Balance Sheet Financing Arrangements In the normal course of business, we enter into certain off-balance sheet arrangements to meet the financing needs of our customers.
While our liquidity monitoring and management consider both present and future demands for and sources of liquidity, the following table of contractual commitments focuses only on future obligations and summarizes our significant contractual obligations as of December 31, 2025: ($ in thousands) Total Less than One Year One to Three Years Three to Five Years More Than Five Years Contractual Obligations Deposits without stated maturity $ 276,293 $ 276,293 $ — $ — $ — Time deposits 478,268 364,063 77,107 26,475 10,623 Operating lease obligations 4,575 1,212 2,346 1,017 — Total $ 759,136 $ 641,568 $ 79,453 $ 27,492 $ 10,623 Off-Balance Sheet Financing Arrangements In the normal course of business, we enter into certain off-balance sheet arrangements to meet the financing needs of our customers.
New Strategic Programs and organic growth through existing programs contributed to the increase in loan originations. • Net interest margin (“NIM”) was 9.99% for the year ended December 31, 2024, compared to 11.65% for the year ended December 31, 2023. NIM is impacted by income earned from interest-earning assets and interest costs incurred on interest-bearing liabilities.
New strategic programs and organic growth through certain established strategic programs contributed to the increase in loan originations. • Net interest margin (“NIM”) was 9.23% for the year ended December 31, 2025, compared to 9.99% for the year ended December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed10 unchanged
Biggest changeECONOMIC VALUE OF EQUITY ANALYSIS UNDER A STATIC BALANCE SHEET, PARALLEL INTEREST RATE SHOCK Economic value of equity -400 bps -300 bps -200 bps -100 bps Flat +100 bps +200 bps +300 bps +400 bps December 31, 2024 (20.6) % (13.1) % (7.6) % (3.4) % — % 3.2 % 6.3 % 9.1 % 11.6 % Interest Rate Sensitivity and Market Risk As a financial institution, our primary component of market risk is interest rate volatility.
Biggest changeThe following table illustrates the results of our EVE analysis as of December 31, 2025: ECONOMIC VALUE OF EQUITY ANALYSIS UNDER A STATIC BALANCE SHEET, PARALLEL INTEREST RATE SHOCK Economic value of equity -400 bps -300 bps -200 bps -100 bps Flat +100 bps +200 bps +300 bps +400 bps December 31, 2025 (23.6) % (15.9) % (8.9) % (3.8) % — % 3.2 % 6.1 % 8.8 % 11.1 % 74 Table of Contents Interest Rate Sensitivity and Market Risk As a financial institution, our primary component of market risk is interest rate volatility.
Additionally, the ALCO reviews liquidity, capital planning, cash flow flexibility, maturities of deposits and consumer and commercial deposit activity. Management employs methodologies to manage interest rate risk, which include an analysis of relationships between interest earning assets and interest-bearing liabilities and an interest rate shock simulation model. 72 Table of Contents
Additionally, the ALCO reviews liquidity, capital planning, cash flow flexibility, maturities of deposits and consumer and commercial deposit activity. Management employs methodologies to manage interest rate risk, which include an analysis of relationships between interest earning assets and interest-bearing liabilities and an interest rate shock simulation model. 75 Table of Contents
Based on the nature of our operations, we are not subject to foreign exchange or commodity price risk. We do not own any trading assets. 71 Table of Contents Our exposure to interest rate risk is managed by the Bank’s Asset/Liability Management Committee (“ALCO”) in accordance with policies approved by our board of directors.
Based on the nature of our operations, we are not subject to foreign exchange or commodity price risk. We do not own any trading assets. Our exposure to interest rate risk is managed by the Bank’s Asset/Liability Management Committee (“ALCO”) in accordance with policies approved by our board of directors.
The following table summarizes the results of our EAR analysis in simulating the change in net interest income and fair value of equity over a 12-month horizon as of December 31, 2024: IMPACT ON NET INTEREST INCOME UNDER A STATIC BALANCE SHEET, PARALLEL INTEREST RATE SHOCK Earnings at risk -400 bps -300 bps -200 bps -100 bps Flat +100 bps +200 bps +300 bps +400 bps December 31, 2024 (17.3) % (12.6) % (8.1) % (3.9) % — % 4.8 % 9.7 % 14.6 % 19.5 % Utilizing an economic value of equity (“EVE”) approach, we analyze the risk to capital from the effects of various interest rate scenarios through a long-term discounted cash flow model.
The following table summarizes the results of our EAR analysis in simulating the change in net interest income and fair value of equity over a 12-month horizon as of December 31, 2025: IMPACT ON NET INTEREST INCOME UNDER A STATIC BALANCE SHEET, PARALLEL INTEREST RATE SHOCK Earnings at risk -400 bps -300 bps -200 bps -100 bps Flat +100 bps +200 bps +300 bps +400 bps December 31, 2025 (10.4) % (8.0) % (5.0) % (2.3) % — % 2.2 % 4.8 % 7.4 % 9.9 % Utilizing an economic value of equity (“EVE”) approach, we analyze the risk to capital from the effects of various interest rate scenarios through a long-term discounted cash flow model.
Removed
The following table illustrates the results of our EVE analysis as of December 31, 2024.

Other FINW 10-K year-over-year comparisons