First Internet Bancorp(INBK) - 2025 Q3 - Quarterly Results

Executive Summary & Business Overview This section summarizes First Internet Bancorp's Q3 2025 performance, strategic actions, and financial reporting principles Third Quarter 2025 Highlights First Internet Bancorp reported strong Q3 2025 operational momentum and NIM expansion, offset by a GAAP net loss from a loan sale Third Quarter 2025 Key Metrics | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :----------------------------------- | :-------- | :-------- | :-------- | | Adjusted Total Revenue (QoQ Change, in millions) | $43.5 (+30%) | $33.5 | $33.8 | | FTE NIM (YoY Change) | 2.12% (+42 bps) | 2.04% | 1.70% | | Net Interest Income (QoQ Change, in millions) | $30.4 (+8%) | $28.0 | $21.8 | | FTE Net Interest Income (QoQ Change, in millions) | $31.5 (+8%) | $29.1 | $22.9 | | Adjusted Pre-Tax, Pre-Provision Income (QoQ Change, in millions) | $18.1 (+54%) | $11.7 | $11.0 | | Net Loss (GAAP, in millions) | ($41.6) | $0.2 | $7.0 | | Diluted Loss Per Share (GAAP) | ($4.76) | $0.02 | $0.80 | | Adjusted Net Loss (Excl. Loan Sale, in millions) | ($12.5) | N/A | N/A | | Adjusted Diluted Loss Per Share (Excl. Loan Sale) | ($1.43) | N/A | N/A | | Common Equity Tier 1 (CET1) Ratio | 9.24% | 8.90% | 9.37% | | Total Risk-Based Capital Ratio | 13.11% | 12.16% | 12.79% | | Tangible Common Equity to Tangible Assets | 6.17% | 6.35% | 6.54% | | Loan Balances (QoQ Change, in millions) | -$732.2 (-17%) | N/A | N/A | | Loan Balances (Excl. Loan Sale, QoQ Change, in millions) | +$104.7 (+2.4%) | N/A | N/A | | Deposits (QoQ Change, in millions) | -$383.4 (-7%) | N/A | N/A | | Loans to Deposits Ratio | 73.9% | N/A | N/A | | Nonperforming Loans to Total Loans | 1.47% | 1.00% | 0.56% | | Net Charge-Offs to Average Loans | 1.89% | 1.31% | 0.15% | | Allowance for Credit Losses to Total Loans | 1.65% | 1.07% | 1.13% | | Tangible Book Value Per Share | $39.88 | $44.25 | $43.89 | - The company completed the sale of $836.9 million single tenant lease financing loans, which enhanced regulatory capital ratios and provided balance sheet flexibility[5] - A provision for credit losses of $34.8 million was recognized, primarily related to small business lending and franchise finance, as part of proactive credit risk management[5] CEO Commentary CEO David Becker highlighted consistent net interest income growth, strong fintech deposit inflows, and improved asset quality, positioning for future earnings - Achieved eight consecutive quarters of increasing net interest income due to higher yields on earning assets and reduced funding costs[2] - Attained significant growth in fintech deposits, contributing to strong balance sheet liquidity and a favorable loans-to-deposits ratio[2] - Decisive actions were taken to address credit issues in small business lending and franchise finance portfolios, resulting in improved asset quality and delinquencies at their lowest level in a year[2] - The company is now well-positioned to grow earnings and accelerate its ability to achieve a Return on Average Assets (ROAA) of 1%[2] Company Profile First Internet Bancorp is a $5.6 billion asset bank holding company, pioneering branchless banking since 1999, listed on Nasdaq 'INBK' - First Internet Bancorp is a bank holding company with assets of $5.6 billion as of September 30, 2025[8] - First Internet Bank, founded in 1999, is an industry pioneer in branchless banking, offering consumer and small business deposit, SBA financing, franchise finance, consumer loans, specialty finance services nationally, and commercial real estate, construction, commercial & industrial loans, and treasury management services regionally[8] - The company's common stock trades on the Nasdaq Global Select Market under the symbol 'INBK' and is a component of the Russell 2000® Index[8] Non-GAAP Financial Measures Explanation This section explains First Internet Bancorp's use of non-GAAP financial measures for assessing capital and profitability, supplementary to GAAP - Non-GAAP financial measures are used by management to measure capital strength and analyze profitability, including the ability to generate earnings on tangible capital[11] - Specific non-GAAP measures include tangible common equity, tangible assets, tangible book value per common share, FTE interest income/net interest income/net interest margin, pre-tax, pre-provision income (adjusted), adjusted total revenue, adjusted net (loss) income, and adjusted return ratios[10][11] - These non-GAAP measures should not be considered a substitute for GAAP financial measures and may not be comparable to those presented by other companies[11] Financial Performance Overview This section details First Internet Bancorp's Q3 2025 financial performance, covering key ratios, balance sheets, income statements, and loan and deposit trends Summary Financial Information Q3 2025 summary financials show a $41.6 million net loss and ($4.76) diluted loss per share, driven by a loan sale, with improved FTE NIM and solid capital Summary Financial Data | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----------------------------------- | :----------- | :----------- | :----------- | | Net (Loss) Income (in thousands) | $(41,593) | $193 | $6,990 | | (Loss) Earnings Per Share - Diluted | $(4.76) | $0.02 | $0.80 | | Dividends Declared Per Share | $0.06 | $0.06 | $0.06 | | Book Value Per Common Share | $40.42 | $44.79 | $44.43 | | Tangible Book Value Per Common Share | $39.88 | $44.25 | $43.89 | | Common Shares Outstanding | 8,713,094 | 8,713,094 | 8,667,894 | | Average Common Shares Outstanding (Diluted) | 8,742,052 | 8,760,374 | 8,768,731 | Key Performance Ratios Q3 2025 performance ratios reflect a net loss, with ROAA at (2.71%) and ROAE at (42.11%), while FTE NIM improved to 2.12% | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----------------------------------- | :----------- | :----------- | :----------- | | Return on Average Assets | (2.71%) | 0.01% | 0.50% | | Return on Average Shareholders' Equity | (42.11%) | 0.20% | 7.32% | | Return on Average Tangible Common Equity | (42.62%) | 0.20% | 7.41% | | Net Interest Margin | 2.04% | 1.96% | 1.62% | | Net Interest Margin - FTE | 2.12% | 2.04% | 1.70% | Capital Ratios Q3 2025 regulatory capital ratios improved, with CET1 increasing to 9.24% and Total Risk-Based Capital rising to 13.11% | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----------------------------------- | :----------- | :----------- | :----------- | | Total Shareholders' Equity to Assets | 6.25% | 6.43% | 6.61% | | Tangible Common Equity to Tangible Assets | 6.17% | 6.35% | 6.54% | | Tier 1 Leverage Ratio | 5.69% | 6.69% | 7.13% | | Common Equity Tier 1 Capital Ratio | 9.24% | 8.90% | 9.37% | | Tier 1 Capital Ratio | 9.24% | 8.90% | 9.37% | | Total Risk-Based Capital Ratio | 13.11% | 12.16% | 12.79% | Asset Quality Q3 2025 asset quality metrics deteriorated, with nonperforming loans to total loans rising to 1.47% and net charge-offs to average loans increasing to 1.89% | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----------------------------------- | :----------- | :----------- | :----------- | | Nonperforming Loans (in thousands) | $53,250 | $43,541 | $22,478 | | Nonperforming Assets (in thousands) | $55,237 | $45,539 | $22,944 | | Nonperforming Loans to Loans | 1.47% | 1.00% | 0.56% | | Nonperforming Assets to Total Assets | 0.98% | 0.75% | 0.39% | | Allowance for Credit Losses - Loans to Loans | 1.65% | 1.07% | 1.13% | | Allowance for Credit Losses - Loans to Nonperforming Loans | 112.5% | 106.8% | 203.4% | | Net Charge-Offs to Average Loans | 1.89% | 1.31% | 0.15% | Condensed Consolidated Balance Sheets As of September 30, 2025, total assets decreased to $5.64 billion and total deposits to $4.92 billion, primarily due to a significant loan sale Balance Sheet Summary | Balance Sheet Item | Sep 30, 2025 (in thousands) | Jun 30, 2025 (in thousands) | Sep 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Assets | $5,639,174 | $6,072,573 | $5,823,259 | | Net Loans | $3,570,462 | $4,316,045 | $3,990,159 | | Total Deposits | $4,915,434 | $5,298,789 | $4,797,710 | | Noninterest-Bearing Deposits | $243,539 | $145,166 | $111,591 | | Interest-Bearing Deposits | $4,671,895 | $5,153,623 | $4,686,119 | | Total Liabilities | $5,287,006 | $5,682,334 | $5,438,130 | | Total Shareholders' Equity | $352,168 | $390,239 | $385,129 | - Loans decreased by $732.2 million, or 17%, from the second quarter of 2025, largely due to the loan sale[5] - Deposits decreased by $383.4 million, or 7%, reflecting over $700 million moved off-balance sheet[5] Condensed Consolidated Statements of Income Q3 2025 saw a $41.6 million net loss, driven by a $34.8 million provision for credit losses and a $27.1 million loss on loan sales, despite increased net interest income Income Statement Summary | Income Statement Item | Sep 30, 2025 (in thousands) | Jun 30, 2025 (in thousands) | Sep 30, 2024 (in thousands) | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Interest Income | $84,388 | $80,886 | $74,990 | | Total Interest Expense | $54,036 | $52,896 | $53,225 | | Net Interest Income | $30,352 | $27,990 | $21,765 | | Provision for Credit Losses | $34,789 | $13,608 | $3,390 | | Net Interest (Loss) Income After Provision | $(4,437) | $14,382 | $18,375 | | Total Noninterest (Loss) Income | $(24,647) | $5,557 | $12,029 | | Total Noninterest Expense | $25,459 | $21,800 | $22,794 | | (Loss) Income Before Income Taxes | $(54,543) | $(1,861) | $7,610 | | Income Tax (Benefit) Provision | $(12,950) | $(2,054) | $620 | | Net (Loss) Income | $(41,593) | $193 | $6,990 | | (Loss) Earnings Per Share - Diluted | $(4.76) | $0.02 | $0.80 | - Net interest income increased by 8% from the second quarter of 2025[5] - The quarterly results included a pre-tax loss of $37.8 million on the sale of single tenant lease financing loans[5] Average Balances and Rates Q3 2025 saw average interest-earning assets rise to $5.90 billion with a 5.68% yield, improving NIM to 2.04% (2.12% FTE) due to lower funding costs Average Balances and Yields/Costs | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----------------------------------- | :----------- | :----------- | :----------- | | Average Interest-Earning Assets (in thousands) | $5,895,554 | $5,739,019 | $5,348,153 | | Yield on Interest-Earning Assets | 5.68% | 5.65% | 5.58% | | Average Loans (in thousands) | $4,427,200 | $4,407,196 | $4,029,360 | | Yield on Loans | 6.18% | 6.07% | 5.90% | | Average Interest-Bearing Liabilities (in thousands) | $5,498,129 | $5,360,514 | $5,004,110 | | Cost of Interest-Bearing Liabilities | 3.90% | 3.96% | 4.23% | | Average Total Deposits (in thousands) | $5,307,504 | $4,945,955 | $4,497,087 | | Cost of Interest-Bearing Deposits | 3.87% | 3.92% | 4.30% | | Interest Rate Spread | 1.78% | 1.69% | 1.35% | | Net Interest Margin | 2.04% | 1.96% | 1.62% | | Net Interest Margin - FTE | 2.12% | 2.04% | 1.70% | - The cost of interest-bearing deposits decreased to 3.87% in Q3 2025 from 3.92% in Q2 2025 and 4.30% in Q3 2024[16] - Average interest-bearing demand deposits increased significantly to $1.40 billion in Q3 2025 from $1.23 billion in Q2 2025, with a yield of 3.33%[16] Loans and Deposits Breakdown As of September 30, 2025, total loans decreased to $3.63 billion due to a loan sale, while total deposits fell to $4.92 billion, with shifts in deposit categories Loan Portfolio Composition | Loan Category | Sep 30, 2025 (in thousands) | Percent | Jun 30, 2025 (in thousands) | Percent | Sep 30, 2024 (in thousands) | Percent | | :--------------------------- | :-------------------------- | :------ | :-------------------------- | :------ | :-------------------------- | :------ | | Commercial and Industrial | $206,301 | 5.7% | $174,475 | 4.0% | $111,199 | 2.8% | | Investor Commercial Real Estate | $644,184 | 17.7% | $513,411 | 11.8% | $260,614 | 6.5% | | Single Tenant Lease Financing | $135,025 | 3.8% | $970,042 | 22.3% | $932,148 | 23.1% | | Small Business Lending | $401,628 | 11.1% | $383,455 | 8.8% | $298,645 | 7.4% | | Franchise Finance | $450,340 | 12.4% | $479,757 | 11.0% | $550,442 | 13.6% | | Total Commercial Loans | $2,818,456 | 77.7% | $3,540,306 | 81.2% | $3,203,480 | 79.4% | | Total Consumer Loans | $788,085 | 21.6% | $797,171 | 18.2% | $803,353 | 19.9% | | Total Loans | $3,630,385 | 100.0% | $4,362,562 | 100.0% | $4,035,880 | 100.0% | Deposit Composition | Deposit Category | Sep 30, 2025 (in thousands) | Percent | Jun 30, 2025 (in thousands) | Percent | Sep 30, 2024 (in thousands) | Percent | | :------------------------------ | :-------------------------- | :------ | :-------------------------- | :------ | :-------------------------- | :------ | | Noninterest-Bearing Deposits | $243,539 | 5.0% | $145,166 | 2.7% | $111,591 | 2.3% | | Interest-Bearing Demand Deposits | $1,003,950 | 20.4% | $1,458,123 | 27.5% | $538,484 | 11.2% | | Money Market Accounts | $1,250,202 | 25.4% | $1,210,960 | 22.9% | $1,230,707 | 25.7% | | Fintech - Brokered Deposits | — | —% | — | —% | $211,814 | 4.4% | | Certificates of Deposits | $2,115,613 | 43.0% | $2,146,356 | 40.5% | $2,110,618 | 44.0% | | Brokered Deposits | $283,436 | 5.8% | $317,282 | 6.0% | $572,784 | 11.9% | | Total Deposits | $4,915,434 | 100.0% | $5,298,789 | 100.0% | $4,797,710 | 100.0% | - The significant decrease in single tenant lease financing loans from $970.0 million in Q2 2025 to $135.0 million in Q3 2025 reflects the impact of the major loan sale[18] Non-GAAP Financial Measures Reconciliations This section provides detailed reconciliations of First Internet Bancorp's non-GAAP financial measures to GAAP, including tangible common equity, FTE net interest income, and adjusted earnings Tangible Common Equity and Assets Reconciliation This section reconciles GAAP total equity and assets to tangible common equity and tangible assets, showing $347.48 million tangible common equity and $5.63 billion tangible assets Tangible Common Equity and Assets | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :-------------------------------------- | :----------- | :----------- | :----------- | | Total Equity - GAAP (in thousands) | $352,168 | $390,239 | $385,129 | | Goodwill Adjustment (in thousands) | $(4,687) | $(4,687) | $(4,687) | | Tangible Common Equity (in thousands) | $347,481 | $385,552 | $380,442 | | Total Assets - GAAP (in thousands) | $5,639,174 | $6,072,573 | $5,823,259 | | Goodwill Adjustment (in thousands) | $(4,687) | $(4,687) | $(4,687) | | Tangible Assets (in thousands) | $5,634,487 | $6,067,886 | $5,818,572 | | Tangible Book Value Per Common Share | $39.88 | $44.25 | $43.89 | | Tangible Common Equity to Tangible Assets | 6.17% | 6.35% | 6.54% | Net Interest Income - FTE Reconciliation This section reconciles GAAP interest income to FTE, showing Q3 2025 total interest income - FTE at $85.55 million and net interest income - FTE at $31.51 million, with an FTE NIM of 2.12% Net Interest Income - FTE | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :-------------------- | :----------- | :----------- | :----------- | | Total Interest Income - GAAP (in thousands) | $84,388 | $80,886 | $74,990 | | FTE Adjustments (in thousands) | $1,158 | $1,157 | $1,133 | | Total Interest Income - FTE (in thousands) | $85,546 | $82,043 | $76,123 | | Net Interest Income - GAAP (in thousands) | $30,352 | $27,990 | $21,765 | | FTE Adjustments (in thousands) | $1,158 | $1,157 | $1,133 | | Net Interest Income - FTE (in thousands) | $31,510 | $29,147 | $22,898 | | Net Interest Margin - FTE | 2.12% | 2.04% | 1.70% | Adjusted Revenue and Income Reconciliation This section reconciles GAAP revenue and income to adjusted amounts, showing Q3 2025 adjusted total revenue of $43.53 million and an adjusted net loss of $12.47 million Adjusted Revenue and Income | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----------------------------------- | :----------- | :----------- | :----------- | | Total Revenue - GAAP (in thousands) | $5,705 | $33,547 | $33,794 | | Loss on Sale of Loans Adjustment (in thousands) | $37,823 | — | — | | Adjusted Total Revenue (in thousands) | $43,528 | $33,547 | $33,794 | | Net (Loss) Income - GAAP (in thousands) | $(41,593) | $193 | $6,990 | | Adjusted Net (Loss) Income (in thousands) | $(12,469) | $193 | $6,990 | | Pre-Tax, Pre-Provision (Loss) Income - GAAP (in thousands) | $(19,754) | $11,747 | $11,000 | | Loss on Sale of Loans Adjustment (in thousands) | $37,823 | — | — | | Adjusted Pre-Tax, Pre-Provision Income (in thousands) | $18,069 | $11,747 | $11,000 | Adjusted EPS and Return Ratios Reconciliation This section reconciles adjusted diluted EPS and return ratios, showing Q3 2025 adjusted diluted loss per share of ($1.43) and adjusted ROAA of (0.81%) Adjusted EPS and Return Ratios | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----------------------------------- | :----------- | :----------- | :----------- | | Diluted (Loss) Earnings Per Share - GAAP | $(4.76) | $0.02 | $0.80 | | Adjusted Diluted (Loss) Earnings Per Share | $(1.43) | $0.02 | $0.80 | | Return on Average Assets - GAAP | (2.71%) | 0.01% | 0.50% | | Adjusted Return on Average Assets | (0.81%) | 0.01% | 0.50% | | Return on Average Shareholders' Equity - GAAP | (42.11%) | 0.20% | 7.32% | | Adjusted Return on Average Shareholders' Equity | (12.63%) | 0.20% | 7.32% | | Return on Average Tangible Common Equity - GAAP | (42.62%) | 0.20% | 7.41% | | Adjusted Return on Average Tangible Common Equity | (12.78%) | 0.20% | 7.41% | Additional Information This section provides details on the conference call, forward-looking statements disclaimer, and contact information Conference Call and Webcast First Internet Bancorp will host a conference call and webcast on Thursday, October 23, 2025, at 2:00 p.m. ET to discuss quarterly results - Conference call and webcast to discuss quarterly financial results will be held on Thursday, October 23, 2025, at 2:00 p.m. Eastern Time[6] - Access the call via telephone at (800) 549-8228; access code: 74806. A recorded replay is available through October 30, 2025, by dialing (888) 660-6264; access code: **74806 **[6] - A live webcast and archived version will be available on the Company's website at **www.firstinternetbancorp.com**[7](index=7&type=chunk) Forward-Looking Statements This section provides a standard disclaimer for forward-looking statements, noting they are not guarantees of future performance and involve inherent risks and uncertainties - The press release contains forward-looking statements identifiable by words such as 'anticipate,' 'believe,' 'expect,' 'future,' 'growth,' 'improve,' 'will,' or similar expressions[9] - Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially[9] - Key risks include general economic conditions, credit quality, failures in information systems, competition, loss of key management, impacts of inflation and rising interest rates, and regulatory risks[9] Contact Information This section provides contact information for investor/analyst inquiries and media relations - Investors/Analysts contact: Paula Deemer, Director of Corporate Administration, (317) 428-4628, investors@firstib.com[12] - Media contact: Zach Weismiller, PANBlast, firstib@panblastpr.com[12]