INBKZ — First Internet Bancorp - Fixed-

Summary of First Internet Bancorp (INBKZ) Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Income: $2.5 million, or $0.29 per diluted share.
• Total Revenue: $43.1 million, a 21% increase year-over-year.
• Net Interest Income: $31.6 million, up 26% year-over-year; fully taxable equivalent net interest margin improved to 2.45%, a 54 basis point increase year-over-year.
• Pre-Provision Net Revenue: $18.1 million, up 51% year-over-year.
• Total Loans: $3.8 billion, a slight increase of 1% from the previous quarter but down 11% year-over-year.
• Total Deposits: $5 billion, up 3% from the previous quarter and 1% year-over-year.
• Provision for Credit Losses: $16.3 million, slightly better than expectations; included net charge-offs of $15.8 million.

2. Strategic Updates and Business Highlights

• Credit Quality: Improvement in delinquencies and nonperforming loans, particularly in the SBA portfolio, attributed to enhanced underwriting standards and proactive monitoring.
• Commercial Lending: Strong production in construction and single-tenant lease financing; robust pipelines across various verticals.
• Banking-as-a-Service (BaaS): Significant growth in fintech deposits, which increased by 186% year-over-year, providing funding advantages and flexibility.
• Technology Investments: Continued focus on AI and digital capabilities to enhance customer experience and operational efficiency.
• SBA Business: Shift towards prioritizing credit quality over volume; lower loan production expected in the short term but optimistic about long-term growth.

3. Forward Guidance and Outlook

• 2026 Guidance: Maintaining previous revenue guidance of $155 million to $160 million; loan growth targets may be ambitious due to macroeconomic uncertainties.
• Net Interest Margin: Expected to improve by 10 to 15 basis points per quarter through the end of the year, contingent on the Federal Reserve's interest rate decisions.
• Credit Loss Provisions: Anticipated to remain elevated in Q2 but expected to improve in the latter half of the year.

4. Bad News, Challenges, or Points of Concern

• Loan Growth: Total loans decreased significantly year-over-year, and early payoffs in certain portfolios impacted growth.
• Nonperforming Loans: Increased to $61.6 million (1.63% of total loans), though some are fully guaranteed by the SBA, mitigating loss exposure.
• Macroeconomic Uncertainty: Heightened risks from volatile energy prices and geopolitical developments could affect loan growth and credit quality.
• Expense Management: While expenses were managed well, there is potential for increased costs related to problem loans and technology investments.

5. Notable Q&A Insights

• Charge-Offs: Expected to peak in Q1, with a gradual decline anticipated in the second half of the year.
• Loan-to-Deposit Ratio: Currently low but expected to increase as cash is deployed into higher interest-earning assets.
• SBA Revenue: Anticipated to ramp up throughout the year, with a stronger focus on retaining loans for better net interest income rather than immediate sales.
• Fintech Partnerships: Positive momentum in fee income from fintech operations, with expectations for continued growth as new programs are onboarded.

Overall, First Internet Bancorp reported strong Q1 results with solid revenue growth and improved credit quality, although challenges remain related to loan growth and macroeconomic uncertainties. The company is focused on strategic investments in technology and maintaining a disciplined approach to underwriting.