INBKZ — First Internet Bancorp - Fixed-

Summary of First Internet Bancorp (INBKZ) Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Total Revenue: $41.1 million, up 23% year-over-year.
• Pre-Provision Net Revenue: $15 million, a 28% increase year-over-year.
• Net Income: $2.4 million, or $0.27 per diluted share, significantly higher than the prior year.
• Provision for Credit Losses: $13.4 million, down from $16.3 million in Q1 2026.
• Net Charge-Offs: $16.9 million, with a notable decrease in small business lending charge-offs to $4.8 million from $9.1 million in Q1.
• Non-Performing Loans: $60.1 million (1.58% of total loans), down from $61.6 million (1.63%) in the previous quarter.
• Net Interest Income: $32.4 million, up 16% year-over-year; net interest margin improved to 2.39%.
• Delinquencies: Declined to $29.1 million, a 26% drop from Q1.

2. Strategic Updates and Business Highlights

• The company has made significant improvements in credit management, resulting in reduced charge-offs and delinquencies.
• Enhanced underwriting, servicing, and portfolio management processes have been implemented over the past 18 months.
• The relationship with Jaris, an embedded finance partner, has been expanded to retain all loan originations, expected to enhance net interest income.
• Focus on optimizing the loan portfolio with a shift towards higher-yielding sectors such as construction and investor commercial real estate.
• Continued investment in technology and fintech partnerships, with fee revenue from fintech partners increasing significantly (up 256% in payments volume and 222% in fee revenue).

3. Forward Guidance and Outlook

• Full-year EPS forecast maintained at $2.35 to $2.45.
• Loan growth expected to be around 4% to 6%, with stronger pipelines anticipated in the second half of the year.
• Net interest margin projected to reach 2.75% to 2.80% by Q4.
• Full-year net interest income outlook revised to $141 million to $142 million, with non-interest income expected to rise to $40.5 million to $41 million.
• Provision for credit losses anticipated to improve sequentially throughout the remainder of 2026.

4. Bad News, Challenges, or Points of Concern

• Despite improvements, the provision for credit losses remains elevated compared to historical norms.
• The company is still managing legacy issues in the franchise finance portfolio, with some loans still under watch.
• Early payoffs in certain loan categories may continue to affect average loan balances.
• The overall SBA lending market is down approximately 18% year-to-date, which could impact growth.

5. Notable Q&A Insights

• Management expressed confidence that they have addressed most issues in the SBA portfolio, particularly from the 2021 to 2023 vintages.
• The company is cautious about growth in small business lending, emphasizing quality over quantity in underwriting.
• There is optimism about the potential for increased loan production in the second half of the year, supported by strong pipelines.
• Questions about the impact of potential interest rate changes revealed a liability-sensitive position, with expectations for NII to be negatively impacted by a rate hike but positively impacted by a cut.
• Management highlighted the importance of proactive communication with borrowers to mitigate risks and improve recovery rates.

This summary encapsulates the key points from the earnings call, providing a balanced view of First Internet Bancorp's performance and strategic direction.