third quarter 2026
Filed Oct 28, 2026FinWise Bancorp reports third quarter 2026 net income of $10.0 million and diluted EPS of $0.73, with loan originations of $2.1 billion.
Loan originations, net interest income, credit-enhanced balances and net income increased versus both comparison periods, while nonperforming loans declined. Results included a $6.5 million bargain purchase gain, and the large credit-enhanced portfolio drove both provision expense and offsetting credit enhancement income.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Loan originations, three months ended September 30, 2026other | $2.07B | – | – |
| Net interest income, three months ended September 30, 2026GAAP | $41.92M | – | – |
| Net interest margin, three months ended September 30, 2026GAAP | 19.58 % | – | – |
| Yield on loans, three months ended September 30, 2026other | 25.14 % | – | – |
| Cost of interest-bearing deposits, three months ended September 30, 2026other | 3.89 % | – | – |
| Provision for credit losses, three months ended September 30, 2026GAAP | $46.75M | – | – |
| Provision for credit losses, net of Strategic Program loans - with credit enhancement, three months ended September 30, 2026non-GAAP | $1.35M | – | – |
| Credit enhancement income, three months ended September 30, 2026GAAP | $45.39M | – | – |
| Bargain purchase gain, three months ended September 30, 2026GAAP | $6.46M | – | – |
| Total non-interest income, three months ended September 30, 2026GAAP | $60.83M | – | – |
| Total non-interest expense, three months ended September 30, 2026GAAP | $42.74M | – | – |
| Total non-interest expense less credit enhancement program expenses, three months ended September 30, 2026non-GAAP | $18.41M | – | – |
| Efficiency ratio from continuing operations, three months ended September 30, 2026non-GAAP | 41.6 % | – | – |
| Adjusted efficiency ratio from continuing operations, three months ended September 30, 2026non-GAAP | 55.8 % | – | – |
| Income from continuing operations before income taxes, three months ended September 30, 2026GAAP | $13.25M | – | – |
| Net income from continuing operations, three months ended September 30, 2026GAAP | $10.42M | – | – |
| Income (loss) from discontinued operations, net of tax, three months ended September 30, 2026GAAP | −$376K | – | – |
| Net income, three months ended September 30, 2026GAAP | $10.05M | – | – |
| Net income per common share, basic, three months ended September 30, 2026GAAP | $0.76 | – | – |
| Net income per common share, diluted, three months ended September 30, 2026GAAP | $0.73 | – | – |
| Effective tax rate, three months ended September 30, 2026GAAP | 21.0% | – | – |
| Return on average assets, three months ended September 30, 2026other | 4.3 % | – | – |
| Return on average equity, three months ended September 30, 2026other | 19.9 % | – | – |
| Credit-enhanced Strategic Program loans held-for-investment, September 30, 2026GAAP | $146.2M | – | – |
| Total loans held-for-investment, September 30, 2026GAAP | $585.1M | – | – |
| Total period end deposits, September 30, 2026GAAP | $707.6M | – | – |
| Total assets, September 30, 2026GAAP | $958.3M | – | – |
| Total cash and cash equivalents, September 30, 2026GAAP | $92.57M | – | – |
| Total shareholders’ equity, September 30, 2026GAAP | $208.1M | – | – |
| Tangible book value per share, September 30, 2026non-GAAP | $15.14 | – | – |
| Leverage ratio, September 30, 2026other | 18.1% | – | – |
| Nonperforming loans, September 30, 2026GAAP | $37.13M | – | – |
| Nonperforming loans to total loans held-for-investment, September 30, 2026other | 6.3 % | – | – |
| Allowance for credit losses, September 30, 2026GAAP | $79.82M | – | – |
| Allowance for credit losses to total loans held-for-investment, September 30, 2026other | 13.6 % | – | – |
| Net charge-offs, three months ended September 30, 2026GAAP | $10.62M | – | – |
| Net charge-offs to average loans held-for-investment (annualized), three months ended September 30, 2026other | 6.9 % | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
by the second quarter of 2027 outlook
- NoteThe Company expects to complete the sale of its credit card business, including certain credit card assets acquired in the Tallied transaction, by the second quarter of 2027.
- NoteFinWise expects the efficiency ratio to continue to improve as it realizes increased revenues from interest earned on growing credit-enhanced loan balances.
Capital returns
- During the three months ended September 30, 2026, the Company repurchased 159,099 shares for $2.2 million under its share repurchase program.
- The share repurchase program announced in May 2026 provides for the purchase of up to 685,000 of the Company’s issued and outstanding shares.
- As of September 30, 2026, the Company had repurchased an aggregate amount of 188,835 shares under the plan since its inception.
What drove it
- Loan originations growth primarily reflected seasonality of originations by student loan lenders, rapid growth of a credit enhancement lending relationship, and increased volume from certain established strategic programs.
- Net interest income increased due to growth in the credit-enhanced loan portfolio and lower migration of performing loans to nonperforming loans, reducing reversals of interest on nonaccrual loans.
- Credit enhancement income increased with the provision for credit losses on credit-enhanced loans and is recognized as non-interest income.
- The $6.5 million bargain purchase gain resulted from the July 20, 2026 acquisition of certain Tallied Technologies Inc. assets and assumed liabilities.
- Nonperforming loans declined primarily because of paydowns from the sale of real property collateralizing nonperforming SBA 7(a) and commercial real estate loans.
Concerns
- Third-quarter net income included a non-recurring, pre-tax bargain purchase gain of $6.5 million.
- The Company recorded $46.7 million of provision for credit losses, primarily associated with growth in credit-enhanced Strategic Program loans.
- Credit-enhanced program expenses were $24,333, while credit enhancement income was $45,392, for the three months ended September 30, 2026.
- Net charge-offs were $10.6 million for the third quarter of 2026, including $8,055 of net charge-offs on Strategic Program loans with credit enhancement.
- The Company is exiting the credit card portfolio business and reported a loss from discontinued operations of $0.4 million for the third quarter.
What to watch
- Completion of the planned sale of the credit card business, including certain credit card assets acquired in the Tallied transaction, by the second quarter of 2027.
- Growth in credit-enhanced Strategic Program loan balances, which were $146,241 as of September 30, 2026.
- Credit enhancement counterparty performance, because FinWise states that inability of a strategic program service provider to fulfill its obligations could expose the Bank to loss of reimbursement and credit enhancement income.
- Trends in nonperforming loans, net charge-offs, allowance for credit losses, and migration of performing loans to nonaccrual status.
- Whether efficiency ratio improvement continues as revenues from credit-enhanced loan balances grow.
Balance sheet and cash flow
- Total assets were $958.3 million as of September 30, 2026, compared to $925.3 million as of June 30, 2026 and $899.9 million as of September 30, 2025.
- Total period end deposits were $707,601 as of September 30, 2026, compared to $693,799 as of June 30, 2026 and $682,310 as of September 30, 2025.
- Total cash and cash equivalents were $92,572 as of September 30, 2026, compared to $93,638 as of June 30, 2026 and $105,627 as of September 30, 2025.
- Total shareholders’ equity was $208,050 as of September 30, 2026, compared to $199,191 as of June 30, 2026 and $187,765 as of September 30, 2025.
- No debt or cash flow statement was reported in the filing.
Analysis
FinWise reported materially higher activity and earnings in the third quarter. Loan originations were $2,065,300, net interest income was $41,918, and net income was $10,046, each above both the preceding quarter and the prior-year period. Net interest margin reached 19.58 %, compared with 13.83 % in the prior quarter and 9.09 % a year earlier. Management attributed the improvement in net interest income and margin to credit-enhanced portfolio growth and lower migration of performing loans to nonaccrual status.
Credit-enhanced lending was the central source of balance-sheet and income-statement movement. Credit-enhanced Strategic Program loans held for investment rose to $146,241, from $74,229 at June 30, 2026 and $41,369 at September 30, 2025. The related provision for credit losses was $45,392 and credit enhancement income was also $45,392. Total provision for credit losses was $46,747, while the non-GAAP provision excluding credit-enhanced Strategic Program loans was $1,355. The program also carried $24,333 of credit enhancement program expenses in the quarter.
Reported profitability benefited from the $6,456 bargain purchase gain tied to the Tallied transaction. Net income from continuing operations was $10,422, while discontinued operations generated a loss, net of tax, of $(376). The Company has classified the credit card portfolio business as discontinued operations and expects to complete its sale, including certain acquired credit card assets, by the second quarter of 2027. Non-interest expense increased to $42,744, with credit enhancement guarantee expense of $20,049 and credit enhancement servicing expense of $4,284. The efficiency ratio from continuing operations improved to 41.6 %; the adjusted efficiency ratio from continuing operations was 55.8 %.
Funding and capital expanded alongside the credit-enhanced portfolio. Total deposits were $707,601 and total shareholders’ equity was $208,050 at September 30, 2026. The Bank leverage ratio was 18.1%, compared with the 8.0% well-capitalized requirement. The Company repurchased 159,099 shares for $2.2 million during the quarter. Asset quality showed lower nonperforming loans of $37,133, but total net charge-offs remained $10,620 and the allowance for credit losses increased to $79,821 as credit-enhanced balances grew.
The principal forward items are the planned credit card business sale, execution on prospective partner opportunities, and the trajectory of credit-enhanced loan balances, program expenses, provisions and counterparty reimbursement. FinWise expects the efficiency ratio to continue to improve as it realizes increased revenues from interest earned on growing credit-enhanced loan balances. The filing did not provide quantitative financial guidance.
Management, verbatim
This quarter demonstrates the tangible progress we have made in broadening our platform and building a more capital-efficient sponsor bank.
Jim Noone, CEO of FinWise Bancorp
Credit performance improved during the quarter. Net charge-offs on loans without credit enhancement were $2.6 million in the quarter, well below the range of the last few quarters. Non-performing asset balances also decreased quarter-over-quarter.
Jim Noone, CEO of FinWise Bancorp
Not in the filing
stated, not guessed- Total revenue
- Revenue by operating segment
- Gross margin
- Operating income
- GAAP operating margin
- Non-GAAP adjusted EPS
- Operating cash flow
- Free cash flow
- Debt balances
- Dividend declaration or payment
- Quantitative forward revenue guidance
- Quantitative forward expense guidance
- Prior outlook for comparison
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.