First Internet Bancorp ((INBK)) has held its Q1 earnings call. Read on for the main highlights of the call.
First Internet Bancorp’s recent earnings call revealed a mixed sentiment, balancing between notable achievements and existing challenges. The company reported significant revenue growth, an expanded net interest margin, and successful strides in small business lending and fintech partnerships. However, these positive outcomes were tempered by concerns over credit quality and increased provisions for loan losses. Despite these challenges, management expressed a cautiously optimistic outlook, emphasizing future growth opportunities and strategic initiatives.
Revenue and Growth
First Internet Bancorp reported a pretax, pre-provision net income of $12 million, marking a 10.8% increase over the previous quarter’s adjusted amount and nearly a 50% rise from the first quarter of 2024. This revenue growth was fueled by a 7% increase in net interest income compared to Q4 2024 and a 20% increase compared to Q1 2024.
Net Interest Margin Expansion
The company achieved a 16 basis point improvement in its net interest margin as deposit costs declined and yields on earning assets increased. This marks the sixth consecutive quarter of net interest income and core revenue growth for First Internet Bancorp.
Small Business Lending Success
The company experienced a significant increase in origination and loan sale volume, up 223% and 236% respectively, over the first quarter of 2024. First Internet Bancorp continues to hold its position as the eighth largest SBA seven program lender for SBA’s 2025 fiscal year to date.
Fintech Partnerships Growth
Fintech partnership deposits saw a 37% increase from Q4 2024, reaching $881 million by the end of the quarter. Total fintech partnership revenue exceeded $1.1 million in Q1, representing a 30% increase from Q4 2024.
Credit Issues in Loan Portfolios
The quarter’s net income was significantly affected by an elevated provision for loan losses, with $9.7 million in net charge-offs primarily related to franchise finance and small business lending portfolios.
Increase in Nonperforming Loans
Nonperforming loans to total loans were at 80 basis points, and nonperforming assets to total assets were at 61 basis points at the quarter’s end, with increases mainly in franchise finance and small business lending.
Provision for Credit Losses
The provision for credit losses in Q1 was $11.9 million, up from $7.2 million in Q4 2024. This increase was driven by elevated net charge-offs and specific reserves related to franchise finance and small business lending.
Forward-Looking Guidance
During the earnings call, First Internet Bancorp provided guidance indicating strong financial performance and future growth prospects. The company highlighted a 2% quarter-over-quarter and 22% year-over-year increase in total operating revenue. Despite challenges in small business lending and franchise finance portfolios, the company remains optimistic about declining deposit costs and continued net interest income growth throughout 2025, assuming no further Federal Reserve rate actions.
In summary, First Internet Bancorp’s earnings call presented a cautiously optimistic outlook. While the company faces challenges in credit quality and loan loss provisions, its strong revenue growth, net interest margin expansion, and successful fintech partnerships suggest promising future prospects. Management’s strategic initiatives and growth opportunities further bolster this positive sentiment.