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

1Key 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.

2Strategic 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).

3Forward 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.

4Bad 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.

5Notable 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.