First Internet Bancorp(US:INBK)2026-01-29 23:02Financial Data and Key Metrics Changes - The company reported a quarterly revenue increase of 21% year-over-year, with net interest income growing by 30% year-over-year [4][20] - Adjusted net income for the fourth quarter was $5.6 million, translating to adjusted earnings per share of $0.64, reflecting strong operational execution [20] - Net interest margin improved to 2.22%, up 55 basis points year-over-year, driven by higher loan yields and declining deposit costs [21][22] Business Line Data and Key Metrics Changes - The banking-as-a-service (BaaS) initiatives generated over $1.3 billion in new deposits for 2025, more than tripling from the previous year [6] - The SBA business maintained its position as a top 10 SBA 7(a) lender with nearly $580 million in funded originations during 2025 [7] - Payments volume processed exceeded $165 billion, an increase of over 225% from 2024 [6] Market Data and Key Metrics Changes - Total loans as of December 31, 2025, were $3.7 billion, a 4% increase from the linked quarter but a 10% decrease from the previous year [24] - Total deposits were $4.8 billion, reflecting a 2% decrease compared to both the linked quarter and the previous year [25] Company Strategy and Development Direction - The company is focusing on a digital-first banking model, emphasizing operational efficiency and disciplined expense management [4][10] - Strategic initiatives include enhancing underwriting standards and improving servicing capabilities in the SBA business to drive long-term growth [7][13] - The company aims to achieve a 1% return on average assets and is actively managing its balance sheet to optimize asset mix [6][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver strong financial performance while building long-term shareholder value through disciplined execution of strategic priorities [10][29] - The company anticipates continued net interest margin expansion and robust fintech partnership growth, with credit stabilization expected in the second half of 2026 [10][28] Other Important Information - The company executed a share buyback program, purchasing 27,998 shares at an average price of $18.64 per share [8] - A higher provision for credit losses is expected in 2026 to address problem loans, with an estimated provision of $50 million to $53 million for the full year [28] Q&A Session Summary Question: What is the expected impact of SBA loans on the balance sheet and their yield? - Management indicated that they expect to retain a greater percentage of guaranteed originations on the balance sheet, priced at prime plus 1.5, which will positively impact loan yields [31][41] Question: What are the repricing opportunities on the funding side? - Management expects continued decreases in deposit costs, particularly in the first quarter, due to recent Federal Reserve rate cuts [37][39] Question: What is the outlook for criticized loans, particularly in the SBA and franchise finance buckets? - Criticized loans increased by approximately $16 million, predominantly in the SBA portfolio, with ongoing monitoring and proactive engagement with borrowers [42][44] Question: How does the company model interest reversals in relation to net interest income? - Management confirmed that interest reversals are factored into net interest income forecasts, with an estimated impact of $300,000 to $400,000 in the fourth quarter [54][56] Question: What is the expected tax rate for the EPS guidance? - The tax rate is expected to be around 7% to 8.5% in the first half of the year, ramping up to 10% to 12% in the second half as earnings improve [65][66]