First Internet Bancorp

Second-quarter net income was $2.4 million, or $0.27 per diluted share. Total revenue was $41.1 million, up 23% year over year, and pre-provision net revenue was $15 million, up 28% year over year. Provision for credit losses was $13.4 million, down from $16.3 million in Q1. Net charge-offs were $16.9 million, with small business lending net charge-offs at $4.8 million and franchise finance net charge-offs at $11.6 million. Net interest income was $32.4 million, or $33.6 million on an FTE basis, up 16% and 15% year over year, respectively; net interest margin improved to 2.39% or 2.47% FTE, both more than 40 basis points above a year ago. Non-performing loans were $60.1 million, or 1.58% of total loans, and delinquencies declined to 78 basis points of performing loans, with total delinquencies down 26% sequentially to $29.1 million. For 2026, management kept full-year EPS guidance at $2.35 to $2.45, raised non-interest income guidance to $40.5 million to $41 million, lowered non-interest expense guidance to $106 million to $107 million, expects full-year FTE NII of $141 million to $142 million, and kept provision for credit losses guidance at $47 million to $48 million. It now expects loan growth of approximately 4% to 6% and FTE NIM of 2.75% to 2.80% by Q4.

David Becker framed the quarter as an inflection point in credit, saying the company’s actions over the last 18 months are now producing measurable improvement. He highlighted lower delinquencies, lower non-accruals, and declining provision expense as evidence that the hardest part of the credit cycle may be behind the bank. He also emphasized portfolio reshaping toward higher-yielding, more efficient businesses like embedded finance, construction, investor CRE, single-tenant lease financing, and wealth advisory lending, while describing the tone as confident but still disciplined amid macro uncertainty.

Ken Lovik detailed the financial drivers behind the quarter and the updated outlook. He said provision fell to $13.4 million from $16.3 million, NII rose to $32.4 million ($33.6 million FTE), and margin improved to 2.39% (2.47% FTE), helped by a drop in the cost of interest-bearing deposits to 3.38% from 3.92% a year ago and by growth in lower-cost fintech deposits. He also noted that CD and brokered deposits declined more than $200 million sequentially, that more than $445 million of CDs mature in Q3 at a 4.04% weighted average cost, and that the company expects sustained expansion in NII and margin through year-end, while reducing non-interest expense guidance to $106 million to $107 million and raising non-interest income guidance to $40.5 million to $41 million.

Analysts focused on margin/NII sensitivity, credit reserves, payoff behavior, fintech partnership growth, and SBA volume. Management said CD repricing and higher-yielding asset mix should drive further NII and margin expansion, with Jaris and other embedded finance loans boosting yields; Ken estimated a static-balance-sheet rate hike would reduce annual NII by about $2.4 million and a 25 bp cut would add about $2.2 million. On credit, management said the worst of the 2021-2023 SBA vintages appears to be behind them, franchise finance inflows to non-accrual have slowed dramatically, and enhanced special assets/portfolio management is improving visibility and recoveries. They also said SBA growth is not being chased for volume alone; it will be rebuilt more selectively and quality-focused, with stronger pipelines and better second-half production expected.