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First Internet Bancorp (INBK)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was a mixed quarter: core revenue and NIM expanded (NIM 1.82%, FTE NIM 1.91%), but elevated credit costs (provision $11.9M; NCOs 0.92%) drove diluted EPS to $0.11 and net income to $0.9M .
  • Results missed Wall Street: EPS $0.11 vs consensus $0.74* and revenue $23.59M vs $26.73M*, primarily on higher provision and charge-offs in franchise finance and SBA portfolios; noninterest income also normalized vs 4Q one-time gains .
  • Management reiterated a constructive 2025 outlook: loan growth 10–12%, deposit growth 5–7%, full-year NII up ~40%+ YoY, and FTE NIM reaching 2.35–2.45% by 4Q25; Q2 noninterest income expected to dip to $5–6M as SBA loan sales are held longer before normalizing in 2H25 .
  • Balance sheet trends were favorable: loans +2.0% QoQ, deposits +0.3% QoQ, L/D 86.0%, TCE/TA 6.55% (7.17% ex-AOCI/normalized cash), CET1 9.16%; fintech deposit growth enabled payoff of $200M high-cost brokered deposits late in the quarter, aiding future deposit costs .

Footnote: *Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • NIM expansion and core revenue momentum: NIM rose to 1.82% (FTE 1.91%), with NII up 6.6% QoQ as loan yields increased and deposit costs fell 12 bps; management: “We remain confident that net interest income and net interest margin will continue to trend higher throughout 2025” .
  • Fintech deposits scaling: non-maturity and fintech deposits grew strongly, enabling lower-cost funding and paying down higher-cost brokered CDs; fintech revenue exceeded $1.1M in Q1 (+30% QoQ) .
  • Commercial loan growth and mix shift: loans +$83.8M QoQ (+2.0%) led by construction, investor CRE, SBA, and C&I; new funded yield 7.78% (up 50 bps QoQ) supports further NII/NIM improvement .

What Went Wrong

  • Credit costs remained elevated: net charge-offs of $9.7M (0.92% of avg loans) and provision of $11.9M, driven by franchise finance and SBA credits placed on nonaccrual; NPLs rose to 0.80% .
  • Noninterest income fell sequentially to $10.4M from $15.9M in 4Q (which had $4.7M one-time gains) and saw a negative servicing asset revaluation; management also flagged a temporary Q2 GOS dip from longer SBA hold periods .
  • EPS and revenue missed consensus, reflecting the credit and fee headwinds (EPS $0.11 vs $0.74*; revenue $23.59M vs $26.73M*) .

Footnote: *Values retrieved from S&P Global.

Financial Results

Core financials (dollars in millions, except per-share and %). Periods ordered oldest → newest

MetricQ3 2024Q4 2024Q1 2025
Total Revenue (GAAP, $MM)$33.794 $39.487 $35.523
Net Interest Income ($MM)$21.765 $23.551 $25.096
Noninterest Income ($MM)$12.029 $15.936 $10.427
Diluted EPS ($)$0.80 $0.83 $0.11
Net Interest Margin (GAAP, %)1.62% 1.67% 1.82%
Net Interest Margin (FTE, %)1.70% 1.75% 1.91%

Consensus vs. Actual – Q1 2025

MetricConsensusActualComment
EPS ($)$0.7425*$0.11 Significant miss (credit costs)
Revenue ($MM)$26.733*$23.590 Miss (lower fees; servicing FV)

Footnote: *Values retrieved from S&P Global.

Operating KPIs and Capital (period-end unless noted)

KPIQ3 2024Q4 2024Q1 2025
Loans ($B)$4.036 $4.171 $4.254
Deposits ($B)$4.798 $4.933 $4.946
Loan-to-Deposit Ratio (%)84.1% 84.5% 86.0%
NPLs / Loans (%)0.56% 0.68% 0.80%
Net Charge-offs / Avg Loans (%)0.15% 0.91% 0.92%
ACL / Loans (%)1.13% 1.07% 1.11%
CET1 (%)9.37% 9.30% 9.16%
TCE / TA (%)6.54% 6.62% 6.55%
TBVPS ($)$43.89 $43.77 $44.04

Noninterest income mix (illustrative)

Component ($MM)Q4 2024Q1 2025
Gain on sale of loans$8.568 $8.647
Loan servicing revenue$1.825 $1.983
Servicing asset revaluation$(0.428) $(1.181)
Other + fees$6.0 (sum of other + service charges) ~$1.0 (sum of other + fees)
Total Noninterest Income$15.936 $10.427

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FTE NIM4Q 2025—2.35%–2.45%New quantitative outlook
Net Interest Income growthFY 2025—~40%+ YoYNew
Loan growthFY 2025—10%–12%New
Deposit growthFY 2025—5%–7%New
Noninterest income (SBA GOS timing)2Q 2025—~$5–6M (temporary dip; normalize 2H25)Lower near-term; timing-driven
Noninterest expense growthFY 2025+10%–15% YoY+10%–15% YoYMaintained
Dividend per shareOngoing—$0.06 quarterly maintainedMaintained

Earnings Call Themes & Trends

TopicQ3 2024Q4 2024Q1 2025Trend
Deposit strategy/fintechStrong deposit growth; fintech scaling Reclassified fintech brokered to IBDDs; deposit growth Fintech deposits up; $200M high-cost brokered paid down late-Q Improving
NIM/Deposit costsNIM dipped on excess liquidity; loan yields up NIM +5 bps QoQ; CD repricing tailwind NIM +15 bps QoQ; deposit costs –12 bps; more to come Improving
SBA gain-on-saleRecord GOS $9.9M GOS $8.6M; timing late Dec GOS ~$8.6M; Q2 dip on longer holds; normalizing 2H Near-term dip, 2H normalize
Credit qualityNPLs up on SBA/franchise; ACL + NCOs 0.91%; provision $7.2M NCOs 0.92%; provision $11.9M; NPLs 0.80% Deteriorated, being addressed
CapitalTCE/TA ~6.5% TCE/TA 6.62% TCE/TA 6.55%; CET1 9.16% Stable
Rate/macro—Fed cuts benefiting deposits/pricing 25 bp cut adds ~$3.6M annual NII on static balances Supportive
Shareholder returns——Potential buybacks if stock <50% of book (Q&A) Potential

Management Commentary

  • “We remain confident that net interest income and net interest margin will continue to trend higher throughout 2025” (Nicole Lorch) .
  • “Total fintech partnership revenue was over $1.1 million in the first quarter, up 30% from the fourth quarter” (Ken Lovik) .
  • “We are making some changes to our loan sale process… [that] will result in a longer hold period… This… will cause a temporary 1 quarter decline in gain on sale revenue… we anticipate we will return to a normalized… run rate as we approach the second half of the year” (Ken Lovik) .
  • “Assuming loan growth remains 10% to 12%… and deposit growth 5% to 7%, we expect that full year net interest income will increase… ~40% or more… and FTE NIM… 2.35% to 2.45% by the fourth quarter of 2025” (Ken Lovik) .

Q&A Highlights

  • Q2 noninterest income expected at ~$5–6M due to longer SBA holds; offset partially by higher loan interest during hold; normalization expected in 2H25 .
  • Rate sensitivity: a 25 bp Fed cut adds about $3.6M annualized NII on a static balance sheet, ramping in over subsequent quarters (not linear by quarter) .
  • SBA program/SOP changes: average SBA loan size just over $1M; fee reinstatement on sub-$1M loans minimally impactful; pipelines remain strong .
  • Credit trajectory: early 2Q showed lower delinquencies and reduced charge-off/specific reserve activity vs 1Q, though monitoring continues .
  • Capital allocation: management open to share repurchases if shares trade below 50% of book value, subject to conditions (David Becker) .

Estimates Context

  • Q1 2025 EPS $0.11 vs consensus $0.74*; revenue $23.59M vs consensus $26.73M*, driven by higher provision ($11.9M), elevated NCOs (0.92%), and lower noninterest income vs 4Q (no one-time gains; negative servicing FV) .
  • Consensus target price stands at $26.1* (5 estimates) as of Q1 2025; estimate breadth: 4 EPS estimates, 3 revenue estimates*.

Footnote: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter’s large miss vs estimates stems from credit costs, not core spread income; NII/NIM momentum is intact and accelerating into Q2 on deposit cost declines, CD repricing, and higher new loan yields .
  • Near-term headwind: Q2 fee income from SBA sales will dip on process changes; partial offset via higher accrued interest; normalization expected by 2H25—watch execution and timeline .
  • Credit cleanup continues in SBA and franchise finance; management is reserving and charging off where appropriate; watch NPL/NCO trajectory in Q2–Q3 for confirmation of moderation .
  • Balance sheet flexibility improving: fintech deposits scaling and $200M of high-cost brokered paid down late Q1 should lower funding costs and aid NIM sequentially .
  • Capital remains sound (CET1 9.16%; TCE/TA 6.55%); TBVPS grew to $44.04; potential buybacks add an optionality catalyst if valuation deeply discounts TBV .
  • 2025 framework is constructive: loan growth 10–12%, deposit growth 5–7%, NII up ~40%+ YoY, FTE NIM 2.35–2.45% by 4Q25—delivery on this trajectory would be a key re-rating driver .
  • Trading setup: near-term sentiment may hinge on Q2 fee dip and credit normalization, while medium-term thesis centers on sustained NIM expansion, fintech deposit momentum, and disciplined credit/workouts .
All document-based figures are cited. Consensus figures marked with * are values retrieved from S&P Global.