FinWise Bancorp's Financial Health Compared to Peers

• FinWise Bancorp's ROIC is 6.27%, indicating it is not generating sufficient returns to cover its WACC of 10.70%.
• Despite a higher ROIC, Third Coast Bancshares faces challenges due to a significantly higher WACC, impacting its overall efficiency.
• Five Star Bancorp leads with the highest ROIC to WACC ratio of 1.32, demonstrating exceptional capital efficiency.

FinWise Bancorp (NASDAQ:FINW) is a financial institution that provides a range of banking services. The company operates in a competitive landscape alongside peers such as Third Coast Bancshares, Southern States Bancshares, USCB Financial Holdings, Five Star Bancorp, and Primis Financial Corp. These companies are evaluated based on their ability to generate returns relative to their cost of capital, a crucial metric for assessing financial health.

FinWise Bancorp's Return on Invested Capital (ROIC) is 6.27%, which is lower than its Weighted Average Cost of Capital (WACC) of 10.70%. This indicates that the company is not generating sufficient returns to cover its cost of capital. The ROIC to WACC ratio of 0.59 further highlights this inefficiency in capital utilization.

In comparison, Third Coast Bancshares has a higher ROIC of 7.82% but also a significantly higher WACC of 19.78%, resulting in a lower ROIC to WACC ratio of 0.40. This suggests that despite a better ROIC, the high cost of capital impacts its overall efficiency.

Southern States Bancshares, with a ROIC of 13.87% and a WACC of 11.49%, achieves a ROIC to WACC ratio of 1.21. This indicates that the company is generating returns above its cost of capital, showcasing better capital efficiency compared to FinWise Bancorp.

Five Star Bancorp leads the peer group with a ROIC of 14.82% and a WACC of 11.25%, resulting in the highest ROIC to WACC ratio of 1.32. This demonstrates exceptional capital efficiency, as the company generates returns significantly above its cost of capital, setting a benchmark for its peers.