FinWise Bancorp

Greetings and welcome to the FinWISE Bancorp fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. At this time, I would now like to turn the floor over to the FinWISE Bancorp team. Thank you. You may begin.

Good afternoon, and thank you for joining us today for FinWise Bancorp's fourth quarter 2023 conference call. Earlier today, we filed our earnings release and posted it to our investor website at investors.finwisebancorp.com. Today's conference call is being recorded and webcast on the company's website, investors.finwisebancorp.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements that are subject to risk and uncertainties that could cause actual results to differ from those discussed today. Forward-looking statements represent management's current estimates, expectations, and beliefs, and FinWise Bancorp assumes no obligation to update any forward-looking statements in the future. We encourage listeners to review the more detailed discussions related to these forward-looking statements contained in the company's earnings press release and filings with the Securities and Exchange Commission. Hosting the call today are Kent Landvatter, CEO and President of Finwise Bancorp, Jim Noon, President of Finwise Bank, and Javis Jacobson, Chief Financial Officer. With that, I will turn the call over to Kent.

Good afternoon, everyone, and thank you for joining us on our fourth quarter 2023 earnings conference call. 2023 was another successful year as our differentiated business model, coupled with a disciplined approach and strong execution, continued to demonstrate resilience. We produced solid loan originations and delivered positive returns. Specifically, for the fourth quarter, we had approximately $1.2 billion in loan originations. Credit quality continued to perform as expected and generally in line with industry trends, notwithstanding an increase in non-performing loans in the fourth quarter. This increase was driven primarily by the continued impact of higher rates on our SBA loan portfolio. While our collateral and portfolio management processes continued to service well, the level of net charge-offs increased quarter over quarter, We continue to feel positive about the SBA portfolio, its growth and credit characteristics, and the level of net charge-offs at the bank, which have been generally in line with our expectations. Turning to capital, at the end of the fourth quarter, our bank leverage ratio remained significantly above well-capitalized regulatory guidelines, which we believe provides us with sufficient capital to continue to support growth. Tangible book value per common share also continued to increase this quarter. I would now like to provide a brief update on our key objectives for 2024 and beyond. Our previously communicated strategy of expanding into an integrated banking as a service bank, or BAS bank, continues to make meaningful progress. To that end, we are very excited about our payment sub and BIN sponsorship platforms, which are expected to be operational later in the year. This provides us with key pieces for an integrated BAS offering. We firmly believe that an integrated BAS infrastructure, coupled with the strength of our regulatory due diligence and oversight functions, are key differentiators in the market. Longer term, we also believe this expansion could create stickier relationships with our strategic platforms and offer multiple benefits to our business model. These could include additional recurring revenue, diversifying both revenue and deposit composition, more tools to manage our cost of funds through relationship banking and providing additional flexibility to manage our loan mix. This past quarter, we also completed an internal core system conversion as part of our overall business evolution. We believe this conversion should increase our operational efficiency and better position us to meet the needs of our growing organization. Our team worked diligently to complete this process by quarter end, and I want to thank them for their efforts. Turning to our SBA 7A loan program, we are pleased that the business continues to grow and perform as we expected, particularly amidst the higher rate environment that these credits have been managing through. While some market participants expect a potential economic soft landing, we believe uncertainties remain, at least through the first half of 2024, which could impact industry-wide loan originations across all the bank's lending products. The external environment notwithstanding, we will remain disciplined and continue to actively manage areas of the business we can control, including our strict underwriting and collateral management processes. As we move ahead, we believe we're at an inflection point in the evolution of our model with the potential to enhance the company's long-term earnings power. We plan to continue our efforts to expand the business towards an integrated BAS offering coupled with continued focus on our existing lending programs. In line with our culture, we will be patient and disciplined in our approach to rolling out the new businesses and expect the benefits to accrue over time. With that, let me turn the call over to Jim Noon, our bank president.