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First Internet Bancorp (INBK)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered steady improvement: diluted EPS rose to $0.83 (+3.8% q/q, +72.9% y/y) and net income reached $7.3M, with NIM up 5 bps to 1.67% as deposit costs fell faster than asset yields .
  • Total revenue (GAAP) increased to $39.5M (+16.9% q/q, +45.2% y/y), aided by $4.7M of gains from FHLB advance prepayments and swap terminations; adjusted revenue grew ~3% q/q excluding those gains .
  • Balance sheet trends remained favorable: loans +3.3% q/q to $4.17B, deposits +2.8% q/q to $4.93B, with loans/deposits at 84.5%; liquidity (cash + unused capacity) was $2.2B at period-end (173% of uninsured deposits) .
  • Asset quality mixed: NPLs rose to 0.68% and NCOs to 0.91% (driven by SBA clean-up), while ACL/loans declined to 1.07% as specific reserves fell; management emphasized idiosyncratic (“snowflake”) SBA issues, not systemic trends .
  • 2025 outlook constructive: loan growth 10–12%, deposit growth 5–7%, NII up mid-30% y/y, FTE NIM reaching 2.20–2.30% by Q4’25; provisions modeled +15–20% vs 2024, Opex +10–15%; CFO said 2025 EPS consensus is within their range .

What Went Well and What Went Wrong

What Went Well

  • NIM expansion and NII growth: NIM rose 5 bps to 1.67% (FTE 1.75%); NII increased 8.2% q/q as deposit costs declined 17 bps to 4.13% and loan yields rose 3 bps .
  • Strong SBA engine despite timing: $8.6M gain-on-sale (down q/q on timing as late-December closings slip to Jan), with net premiums +30 bps and December SBA closings of $63.1M slated for Q1 sale .
  • Funding, liquidity, and capital: deposits +$135.5M q/q (fintech partnerships +27% q/q to $643M), loans/deposits at 84.5%, and liquidity of $2.2B; CET1 9.30% and TCE/TA 6.62% (7.40% ex-AOCI/normalized cash) .

Management quote: “We remain confident that net interest income and net interest margin will continue to trend higher throughout 2025…” (CEO) .

What Went Wrong

  • Elevated credit costs: NCOs spiked to 0.91% (from 0.15%) and provision rose to $7.2M, driven by SBA portfolio resolutions; NPLs increased to 0.68% (franchise finance and SBA placements) .
  • Adjusted fee softness: Excluding $4.7M FHLB/swap gains, adjusted noninterest income fell 6.9% q/q, primarily on loan sale volume timing; core trend resumes in Q1 as deferred December SBA sales clear .
  • Small uptick in expense: Noninterest expense rose 5.1% q/q from hiring (SBA, risk, IT), seasonal items, and higher FDIC premiums on growth .

Financial Results

Headline P&L vs prior quarter and prior year

MetricQ4 2023Q3 2024Q4 2024
Total Revenue (GAAP, $M)$27.21 $33.79 $39.49
Net Interest Income ($M)$19.81 $21.77 $23.55
Noninterest Income ($M)$7.40 $12.03 $15.94
Provision for Credit Losses ($M)$3.59 $3.39 $7.20
Noninterest Expense ($M)$20.06 $22.79 $23.96
Net Income ($M)$4.14 $6.99 $7.33
Diluted EPS ($)$0.48 $0.80 $0.83

Margins, yields, and funding costs

MetricQ4 2023Q3 2024Q4 2024
NIM (GAAP)1.58% 1.62% 1.67%
NIM (FTE)1.68% 1.70% 1.75%
Yield on Loans (avg)5.50% 5.90% 5.93%
Cost of Interest-Bearing Deposits4.14% 4.30% 4.13%

Balance sheet and asset quality

MetricQ4 2023Q3 2024Q4 2024
Loans, period-end ($M)$3,840.22 $4,035.88 $4,170.65
Deposits, period-end ($M)$4,066.97 $4,797.71 $4,933.21
Loans / Depositsn/a84.1% 84.5%
NPLs / Loans0.26% 0.56% 0.68%
NPAs / Assets0.20% 0.39% 0.50%
ACL / Loans1.01% 1.13% 1.07%
Net Charge-offs / Avg Loans0.12% 0.15% 0.91%

Capital and book value

MetricQ4 2023Q3 2024Q4 2024
CET1 Ratio9.60% 9.37% 9.30%
TCE / TA6.94% 6.54% 6.62%
Tangible Book Value/Share$41.43 $43.89 $43.77

KPIs and segment highlights

KPIQ4 2024
SBA Gain on Sale Revenue ($M)$8.57 (timing deferred sales)
SBA Loan Sale Volume / PremiumsVolume −18.5% q/q; net premiums +30 bps
December SBA Closings to be Sold Q1’25$63.1M
FHLB Advance Paydown Gains$1.83M prepayment + $2.90M swap termination = $4.73M
Fintech Deposits (period-end)$643M (+27% q/q)
Fintech Payments Volume (Q4)~$16B (+38% q/q)
Dividend per Share (Q4)$0.06

Loan portfolio mix (period-end, Q4 2024)

CategoryAmount ($M)% of Loans
Construction413.529.9%
Investor CRE269.436.5%
Single Tenant Lease Financing949.7522.7%
Public Finance485.8711.6%
Healthcare Finance181.434.4%
Small Business Lending331.918.0%
Franchise Finance536.9112.9%
C&I + Owner-Occupied CRE173.774.2% (sum of 120.18 + 53.59)
Consumer (Residential/HE/Trailers/RV/Other)801.3819.2%
Net deferrals/premiums/other26.680.6%
Total Loans4,170.65100.0%

Estimates vs Actuals (S&P Global)

  • S&P Global consensus for Q4 2024 EPS and revenue was not retrievable at this time due to temporary data access limits; therefore, estimate comparisons are unavailable. Management stated 2025 EPS consensus is within their forecast range .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan GrowthFY 2025n/a10–12% y/yNew
Deposit GrowthFY 2025n/a5–7% y/yNew
Net Interest IncomeFY 2025n/aMid-30% increase vs 2024New
FTE NIMQ4 2025n/a2.20%–2.30%New
Core Noninterest IncomeFY 2025n/a+9%–12% vs 2024 (ex-$4.7M gains)New
Provision for Credit LossesFY 2025n/a+15%–20% vs 2024New
Noninterest ExpenseFY 2025n/a+10%–15%New
Tax RateFY 2025n/a~13%–14% (9% Q1 → 16–17% Q4)New
DividendsOngoingn/a$0.06 per quarter (Q4 actual)Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
NIM/Deposit CostsNIM up 1 bp q/q; CDs inflecting lower vs maturities NIM +5 bps; deposit costs −17 bps; CD repricing tailwind into 1H’25 Improving
SBA BusinessGains +26.9% q/q in Q2; record Q3 gains $8.6M gains; volume timing late-Dec; $63.1M to sell Q1 Strong, timing shift
Asset Quality (SBA/Franchise)NPLs rose in Q3; reserves added to SBA/franchise NCOs 0.91% on SBA clean-up; NPLs 0.68%; idiosyncratic drivers; hurricanes impact some borrowers Mixed/managed
Fintech/BaaS DepositsBaaS-brokered rising; reclassification path emerging Fintech deposits +27% q/q to $643M; reclassified to IBDD under primary purpose exemption; $16B volume Positive growth, lower cost
Funding & LiquidityBrokered reductions; strong liquidity Liquidity $2.2B; L/D 84.5%; paydown $200M FHLB with $4.7M gains Stronger
Capital/Book ValueTBVPS up q/q in Q2/Q3 TBVPS $43.77 (−0.3% q/q on AOCI), TCE/TA 6.62% (7.40% adj) Stable to improving ex-AOCI
2025 Outlookn/aLoans +10–12%, NII +mid-30%, FTE NIM 2.20–2.30% by Q4’25; Opex +10–15% Constructive

Management Commentary

  • CEO Becker: “We remain confident that net interest income and net interest margin will continue to trend higher throughout 2025…” .
  • CEO Becker on SBA credit: “There is absolutely nothing going on that causes me to lose any sleep at night... every loan is a snowflake… about half … tied to the hurricanes…” .
  • CFO Lovik on margin drivers: “Deposit costs are beginning to trend down… $765M of CDs maturing over the next two quarters… expected to drive further NII growth and provide a strong catalyst for NIM expansion” .
  • CFO Lovik on 2025: “Assuming loan growth 10%–12%… deposit growth 5%–7%… annual NII will increase in a mid-30% range… FTE NIM… 2.20%–2.30% by Q4 2025” .
  • Fintech/BaaS update: “Total fintech partnership revenue was $880,000 in the fourth quarter… payments volume… almost $16 billion, up 38% q/q” .

Q&A Highlights

  • SBA charge-offs and provisioning: Elevated Q4 NCOs reflect proactive clean-up; modeling 2025 provisions +15–20% vs 2024 given SBA growth and coverage; long-run SBA charge-offs expected ~30–40 bps of SBA portfolio per quarter .
  • SBA gain-on-sale outlook: Assuming ~1.08% net premiums; may hold select loans if premiums soften vs ~10% portfolio yields .
  • Margin cadence: Expect improvement, with a “nice pop” in Q2 as CD/brokered repricing and paydowns flow through; Q1 improvement but less visibility .
  • Franchise finance: Growth throttled back; working earlier with borrowers and new third-party servicer; seeing stabilization signs .
  • Taxes: 2025 quarterly ETR ramp 9% (Q1) to ~16–17% (Q4); ~13–14% for the year .

Estimates Context

  • S&P Global consensus for Q4 2024 EPS and revenue could not be retrieved due to temporary data access limits; comparisons to consensus are unavailable at this time. Management noted full-year 2025 EPS consensus is within the company’s forecast range .

Key Takeaways for Investors

  • NIM inflecting: Deposit costs are falling faster than asset yields, with large CD maturities and brokered paydowns set to accelerate NIM/NII in 1H–2H’25; management targets 2.20–2.30% FTE NIM by Q4’25 .
  • SBA is a structural growth driver: Despite Q4 credit clean-up, originations remain robust and gains resilient, with timing setting up Q1; watch for gain-on-sale pricing and occasional retention decisions .
  • Credit watchlist: Expect normalized SBA loss content (30–40 bps quarterly on SBA book) and higher 2025 provisions; NPL increases are concentrated in SBA/franchise and idiosyncratic in nature .
  • Funding/fintech optionality: Fintech deposits (reclassified under primary purpose exemption) are scaling with payments growth, supporting a lower-cost, diversified funding mix .
  • Capital/liquidity cushion: CET1 9.30%, TCE/TA 6.62% (7.40% adj), liquidity $2.2B; loans/deposits at 84.5% affords room to optimize both sides of the balance sheet .
  • 2025 model setup: Plan for double-digit loan growth, mid-30% NII growth, rising NIM through the year, and operating expense growth tied to SBA scale and risk/IT investments; earnings skewed to back half .
  • Catalyst map: Quarterly NIM progression (CD roll), SBA gain-on-sale volumes/pricing, stabilization in franchise/SBA credit metrics, and fintech deposit growth should be the main stock drivers near term .