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%, up 54 basis points year-over-year.
• Pre-Provision Net Revenue: $18.1 million, a 51% increase year-over-year.
• Total Loans: $3.8 billion, a slight increase of $29.1 million from the prior 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, including 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 management.
• Commercial Lending: Strong production in construction and single-tenant lease financing; robust pipelines across multiple verticals.
• Banking-as-a-Service: Significant growth in fintech deposits, with average fintech deposits up 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, with a new National Sales Manager appointed to strengthen the SBA segment.

3. Forward Guidance and Outlook

• 2026 Outlook: Maintaining prior guidance but acknowledging macroeconomic uncertainties. Loan growth targets may be ambitious due to higher-than-expected payoffs and evolving headwinds.
• Net Interest Income: Expected to reach $155 million to $160 million for the year, with a target of 10 to 15 basis points improvement in net interest margin per quarter.
• Fee Income: Anticipated to grow, with a focus on retaining more production in the SBA segment.

4. Bad News, Challenges, or Points of Concern

• Loan Growth: Total loans decreased 11% year-over-year, and the company faces challenges with high loan payoffs impacting growth.
• Credit Losses: Elevated nonperforming loans at 1.63% of total loans, with ongoing concerns about certain portfolios, particularly Franchise Finance.
• Macroeconomic Uncertainty: Heightened risks from volatile energy prices and geopolitical developments could impact overall performance and loan growth.

5. Notable Q&A Insights

• Charge-Offs: Management expects the second quarter to see elevated charge-offs, with a gradual improvement anticipated in the second half of the year.
• Net Interest Margin: The company is optimistic about margin improvement despite potential Fed rate cuts, largely due to the transition to lower-cost deposits.
• SBA Revenue: A ramp-up in SBA revenue is expected throughout the year, with a strong pipeline indicating potential for increased origination in the latter half of 2026.
• Fintech Partnerships: Continued momentum in fintech operations, with fee income from these partnerships showing significant year-over-year growth.

Overall, First Internet Bancorp reported solid financial results in Q1 2026, demonstrating resilience amid macroeconomic challenges, while also focusing on strategic growth areas and credit quality improvements. However, the company remains cautious about loan growth and credit losses moving forward.