Key Highlights

  • Diluted EPS of USD 0.73 beat the USD 0.19 consensus estimate and compared with USD 0.34 in the prior-year quarter.
  • Net income reached USD 10.0 million, including a USD 6.5 million bargain purchase gain from the Tallied Technologies acquisition.
  • Originations hit USD 2.1 billion while credit enhanced loan balances nearly doubled from the prior quarter to USD 146.2 million.
  • Net interest margin widened to 19.58% and the efficiency ratio improved to 41.6% from 54.9% in the second quarter.

FinWise Bancorp (NASDAQ:FINW) reported third-quarter 2026 diluted earnings per share of USD 0.73, well above a consensus estimate of USD 0.19 and up from USD 0.15 in the second quarter and USD 0.34 a year earlier. Net income was USD 10.0 million versus USD 2.1 million in the prior quarter and USD 4.9 million a year ago. The result includes a pre-tax bargain purchase gain of USD 6.5 million tied to the July 20 acquisition of assets of Tallied Technologies, and a USD 0.4 million loss from discontinued operations.

On the revenue line, adjusted operating revenue, a non-GAAP measure that strips out credit enhancement items, was USD 33.0 million, below a consensus estimate of USD 41.62 million, though up from USD 23.8 million in the second quarter. Reported GAAP net interest income was USD 41.9 million and non-interest income was USD 60.8 million.

Credit Enhancement Growth and Margin Detail

Originations rose to USD 2.1 billion from USD 1.6 billion in the second quarter, reflecting student lending seasonality, a fast-growing credit enhanced consumer program and higher volume from established programs. Net interest income climbed from USD 28.4 million in the second quarter and USD 18.6 million a year earlier, and net interest margin reached 19.58% against 13.83% and 9.09%. Loan yield was 25.14%.

Non-interest expense rose to USD 42.7 million from USD 28.3 million, mostly from credit enhancement guarantee and servicing costs of USD 24.3 million that track the growth in credit enhanced balances. Provision for credit losses was USD 46.7 million, but excluding credit enhanced loans it was USD 1.4 million versus USD 5.9 million in the second quarter. Chief executive Jim Noone said net charge-offs on loans without credit enhancement were USD 2.6 million, below recent quarters. Nonperforming loans were USD 37.1 million versus USD 37.7 million at June 30.

Outlook, Card Exit and Capital

Management said fourth-quarter originations are tracking at about USD 1.5 billion to USD 1.6 billion based on the first four weeks of October, and it views that range as a run rate for 2027, with roughly 5% growth above it as the year progresses and no contribution from new partners. It targets non-credit-enhanced net charge-offs of about USD 4 million for the fourth quarter, migration to nonperforming loans of USD 5 million to USD 7 million, and a modeling tax rate of 26%.

The board approved a plan to exit the credit card portfolio, which is shown as discontinued operations, while retaining the Tallied technology platform. The company anticipates completing the sale by the second quarter of 2027. The leverage ratio was 18.1% and tangible book value per share was USD 15.14. It repurchased 159,099 shares for USD 2.2 million in the quarter, about 28% of the 685,000 shares authorized, and a Rule 10b5-1 plan begins in mid-December.

Factors to Watch

Four data points frame the next report. Originations are first, with the USD 1.5 billion to USD 1.6 billion fourth-quarter tracking range against USD 2.1 billion in the third quarter. Credit enhanced balances are second: USD 146.2 million, versus USD 74.2 million at June 30 and USD 41.4 million a year ago. Credit quality is third, with USD 5 million to USD 7 million of projected nonperforming migration against USD 37.1 million of nonperforming loans. The fourth is the credit card sale timetable, which targets the second quarter of 2027.