Finwise Bancorp (FINW) risk factors, FY2025 10-K

Risks Related to Our Banking Business

1. 01Our business and operations in the financial services industry may be adversely affected in numerous and complex ways by weak economic conditions47% rewritten
2. 02expectations 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 competitorsNew
3. 03Our 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
4. 04We face strong competition from financial services companies and other companies that offer banking services64% rewritten
5. 05We may not be able to measure and limit our credit risk adequately, which could lead to unexpected losses48% rewritten
6. 06Our ACL may prove to be insufficient to absorb potential losses in our loan portfolio22% rewritten
7. 07Our SBA lending program is dependent upon the U.S. federal government, and we face specific risks associated with originating SBA loans34% rewritten
8. 08We are subject to interest rate risk as fluctuations in interest rates may adversely affect our earnings45% rewritten
9. 09We rely on BFG for loan referrals associated with our SBA 7(a) lending program, any disruption of that relationship may adversely impact our SBA lending business75% rewritten
10. 10Negative 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 lossesNew
11. 11Appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, other real estate owned and repossessed business and personal property may not accurately describe the net value of the asset
12. 12Our origination of construction loans exposes us to increased lending risks
13. 13The small- to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair our borrowers’ ability to repay loans
14. 14Our concentration of large loans to a limited number of borrowers may increase our credit risk
15. 15Liquidity is essential to our business. 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
16. 16We may be subject to certain risks in connection with growing through mergers and acquisitions26% rewritten
17. 17If we are unable to attract additional merchants and retain and grow our existing merchant relationships, our business, results of operations, financial condition, and future prospects could be materially and adversely affected
18. 18New lines of business or new products and services may subject us to additional risks43% rewritten
19. 19The accuracy of our financial statements and related disclosures could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate
20. 20We implemented segment reporting into our financial results during the three months ended September 30, 2025 and this change to our financial reporting could be confusing to investors and may not have the desired effectsNew
21. 21We could recognize losses on investment securities held in our securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate
22. 22We are subject to certain operational risks, including, but not limited to, customer, employee or third-party fraud
23. 23We rely heavily on our executive management team and other key employees, and we could be adversely affected by the unexpected loss of their services
24. 24Negative public opinion regarding the Company or failure to maintain our reputation within the industries we serve and across our product lines could adversely affect our business and prevent us from growing our business
25. 25We may be susceptible to deposit run-off risks, which could adversely affect our business and financial condition33% rewritten
26. 26We may not be able to raise the additional capital needed, in absolute terms or on terms acceptable to us, to fund our growth strategy in the future if we continue to grow at our current pace
27. 27Acts of war, global conflict, terrorism, geopolitical and other external events could impact our ability to conduct business77% rewritten
28. 28We expect to derive a percentage of our deposits, total assets and income from deposit accounts generated through our Fintech Banking and Payment Solutions relationships
29. 29Our agreements with Fintech Banking and Payment Solutions customers may expose us to credit risk
30. 30Our agreements with Fintech Banking and Payment Solutions customers may produce limited revenue and may expose us to liability for compliance violations by Fintech Banking and Payment Solutions customer

Risks Relating to Our Strategic Programs

1. 31The Bank and our Strategic Program service providers are subject to borrower protection laws and federal and state consumer protection laws and may be subject to public criticism by consumer advocacy groups
2. 32If we are unable to maintain our relationships with our Strategic Program service providers, our business will suffer
3. 33Inadequate oversight of our relationships with our Strategic Program service providers and POS merchants could result in regulatory actions against the Bank, which could adversely affect our business, financial condition and result of operations94% rewritten
4. 34form 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 operationsNew
5. 35Fraudulent activity associated with a Strategic Program service provider could negatively impact operating results, brand and reputation and cause the use of a Strategic Program’s loan products and services to decrease and its fraud losses to increase
6. 36We depend on the accuracy and completeness of information provided by our Fintech Banking and Payment Solutions service providers for our lending, payments and BIN programs67% rewritten
7. 37accounting 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 obligationsNew
8. 38Our credit enhancement arrangements with certain of our Strategic Program service providers exposes us to counterparty risk which may result in increased credit or fraud risk or losses to usNew

Risks Related to Technology

1. 39System failure or cybersecurity breaches of our network security could subject us to increased operating costs as well as litigation and other potential losses
2. 40We may not be able to protect our intellectual property rights, including our proprietary technologies and analytic models, and may become involved in lawsuits to protect or enforce our proprietary rights and information, which could be expensive, time consuming and unsuccessful
3. 41We may not have the resources to keep pace with rapid technological changes in the industry or implement new technology effectively43% rewritten
4. 42The development and use of artificial intelligence present risks and challenges that may adversely impact our businessNew
5. 43Our operations could be interrupted if our third-party service providers or Strategic Program service providers experience operational or other systems difficulties or terminate their services

Risks Related to Regulatory, Legal and Compliance

1. 44We are subject to substantial regulation, which increases the cost and expense of regulatory compliance and therefore reduces our net income and may negatively impact our opportunity to grow our business
2. 45Legislative 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 operations61% rewritten
3. 46ability to successfully compete with these other financial service providers and to maintain and increase market share and less regulation lowers the barrier for entry in the financial services and banking sectors, increasing our competitionNew
4. 47Due to Section 162(m) of the Internal Revenue Code (the “Code”), we may not be able to deduct all of the compensation of some executives, including executives of companies we may acquire in the future35% rewritten
5. 48Because of the Dodd-Frank Act and related rulemaking, the Company is subject to more stringent capital requirements
6. 49Federal 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
7. 50Financial institutions, such as the Bank, face risks of noncompliance and enforcement actions related to the Bank Secrecy Act and other anti-money laundering statutes and regulations59% rewritten
8. 51Administration and the IRS. There is also increased scrutiny of compliance with the sanctions programs and rules administered and enforced by the Treasury Department’s Office of Foreign Assets ControlNew
9. 52Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities
10. 53We 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
11. 54We may be subject to liability for potential violations of predatory lending laws, which could adversely impact our results of operations, financial condition and business
12. 55Regulatory agencies and consumer advocacy groups have asserted claims that the practices of lenders and loan servicers result in a disparate impact on protected classes
13. 56Increases in FDIC insurance premiums could adversely affect our earnings and results of operations
14. 57Climate change and related legislative and regulatory initiatives may materially affect our business and results of operationsNew
15. 58Evolving ESG expectations could increase our costs and risksNew

Risks Related to Ownership of Our Common Stock

1. 59The market price of our common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your shares at the volume, prices and times desired
2. 60The market price of our common stock may be highly volatile, which may make it difficult for you to resell your shares at the volume, prices and times desired. There are many factors that may affect the market price and trading volume of our common stock, most of which are outside of our control
3. 61Our executive management and board of directors have significant control over our business31% rewritten
4. 62We are an emerging growth company and smaller reporting company, and the reduced regulatory and reporting requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors
5. 63Provisions in our governing documents and Utah law may have an anti-takeover effect, and there are substantial regulatory limitations on changes of control of bank holding companies
6. 64Our Articles and Bylaws contain an exclusive forum provision that limits the judicial forums where our shareholders may initiate derivative actions and certain other legal proceedings against us and our directors and officers
7. 65Our common stock is not an insured deposit and is subject to risk of loss