Emily Lee

Emily Lee asked for confirmation on REBL book refinancings, specifically if they involved entirely new partners, additional equity, and the comparison of new versus old interest rates. She then requested an update on the plan for The Aubrey property, following previous indications of seeking clarity within 30-60 days. Emily Lee also inquired about the implications of fintechs obtaining their own bank charters, asking if it poses a threat to The Bancorp's partnerships or presents new opportunities. Finally, she sought clarification on the specific economics of The Bancorp's off-balance sheet deposits and sweep program, including revenue generation and the expectation for future incremental deposit growth.

Answer

CFO Dominic Canuso confirmed some REBL refinancings were with new partners and some were recapitalizations, noting that properties were in stronger positions and experienced a slight yield step-down due to lower interest rates, with CEO Damian Kozlowski emphasizing stronger sponsorships. For The Aubrey, CFO Dominic Canuso highlighted benefits from stabilization investments, doubled available rooms, and consistent 80% occupancy, expecting cash flow break-even in Q2. Director of Investor Relations Andres Viroslav mentioned seeking broader exit opportunities for a stabilized property to maximize value, with CEO Damian Kozlowski noting a reappraisal over $50 million and a clear path to full occupancy. Regarding fintech charters, CEO Damian Kozlowski explained that many partners will not pursue licenses, and for others, valuation and oversight are deterrents, stressing The Bancorp's scalable, low-cost middle office platform and concluding no major impact is expected. On off-balance sheet deposits, CFO Dominic Canuso reiterated that the program currently optimizes funding and increases net interest margin, but is expected to become a revenue generator with larger volumes of lower-cost deposits, with CEO Damian Kozlowski adding that this strategy contributes to a very liquid position and downward pressure on deposit costs.

Emily Lee asked for details on the REBL book refinancings, including whether new partners were involved, if additional equity was put in, and how new interest rates compared to old ones. She also sought an update on The Audrey property, including occupancy, cash flow, and exit plans. Additionally, she questioned the potential threat and opportunities from fintechs obtaining their own bank charters, and the specific economics of the off-balance sheet deposit sweep program.

Answer

CFO Dominic Canuso confirmed that REBL refinancings involved both new partners and recapitalizations, with properties in stronger positions and some yield step-down due to lower rates. For The Audrey, management (Dominic Canuso, Andres Viroslav, Damian Kozlowski) reported doubled available rooms, 80% occupancy, nearing cash flow break-even in Q2, and plans for a prudent exit as a stabilized property to maximize value. CEO Damian Kozlowski and Andres Viroslav stated that many partners won't seek licenses due to valuation and oversight, emphasizing Bancorp's scalable middle office platform and not foreseeing a major impact from fintechs obtaining charters. Dominic Canuso and Damian Kozlowski reiterated that off-balance sheet deposits primarily optimize funding and NIM, with future revenue generation expected as lower-cost deposits grow, leading to NIM compression but a larger mix of fee revenue.

Emily Lee from KBW asked about the impact of First Internet Bancorp's fintech and BaaS pipeline on earnings so far, and the proportion of deposit growth driven by existing customers versus new onboarding from the fintech platform.

Answer

EVP and CFO Ken Lovik stated that the vast majority of deposit growth is from existing fintech partners like Ramp and Increase, which saw "explosive growth" in 2025 after starting as pilots. President and COO Nicole Lorch added that the bank has been selectively onboarding new programs, focusing on extending relationships with existing partners and noting a strong pipeline of new opportunities, including the upcoming Pool Money launch. Lovik also highlighted that gross revenue from fintech efforts, including lending with Jaris, was about $6.7 million, more than double the prior year.

Emily Lee inquired about the impact of the fintech and BaaS pipeline on earnings so far, and how much of the deposit growth is driven by existing customers versus new onboarding from the fintech platform.

Answer

Executive Vice President and CFO Ken Lovik stated that the vast majority of deposit growth is driven by existing fintech partners like Ramp and Increase, which experienced explosive growth in 2025, with varying amounts from other partners. President and COO Nicole Lorch added that the bank has been deliberately selective in onboarding new programs, achieving terrific growth from existing partners and extending relationships, though they maintain a strong pipeline of new opportunities and are excited about new programs like Pool. Ken Lovik further clarified that gross revenue from fintech efforts, including lending with Jaris, was $6.7 million, more than double the prior year, demonstrating significant revenue generation from both non-interest and interest income lines.

Emily Lee from Keefe, Bruyette & Woods, Inc. (KBW) inquired about the bank's deposit repricing strategy in a hypothetical scenario with no Fed rate cuts and asked for an outlook on credit quality amidst macroeconomic uncertainty.

Answer

CFO Ian Whinnem explained that without rate cuts, the bank expects to reprice $100-$140 million in retail CDs per quarter, picking up 10-15 bps on renewals. He noted their strategy of placing the highest rates on shorter-term CDs for protection. He also mentioned the upcoming digital account opening platform is expected to raise organic deposits, allowing them to pay down more expensive funding. Regarding credit, management expressed confidence, highlighting that delinquencies are down, the allowance is healthy at 1.30%, and the overall credit picture is stable.