• Net Income: $25.3 million for the year, tripled compared to 2023.
• Diluted Earnings Per Share: $2.88 for the year, tripled compared to 2023.
• Annual Net Income: $87.4 million, up 17% year-over-year.
• Gain on Sale Revenue: Increased by over 60% year-over-year.
• Noninterest Income Growth: Up 81% from 2023.
• Total Adjusted Revenue Growth: Almost 30% year-over-year.
• Loan Growth: Balances increased by $330 million, a 9% rise over 2023.
• Net Interest Income (Q4 2024): Up 17% compared to Q4 2023.
• Net Income (Q4 2024): $7.3 million, up 5% from the previous quarter.
• Diluted Earnings Per Share (Q4 2024): $0.83, up 4% from the previous quarter.
• Net Charge-offs: $9.4 million, primarily related to the SBA portfolio.
• Nonperforming Loans to Total Loans: 68 basis points.
• Nonperforming Assets to Total Assets: 50 basis points.
• Average Balance of Deposits (Q4 2024): Increased by $344 million or 8%.
• Net Interest Margin (Q4 2024): 1.67%, up five basis points from the previous quarter.
• Noninterest Income (Q4 2024): $16 million, up 32.5% from the previous quarter.
• Allowance for Credit Losses: 1.07% of total loans at the end of Q4 2024.
• Tangible Common Equity Ratio: 6.62%, up eight basis points from the previous quarter.

• Warning! GuruFocus has detected 2 Warning Sign with INBK.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• First Internet Bancorp (NASDAQ:INBK) reported a significant improvement in financial results for 2024, with net income and diluted earnings per share tripling compared to 2023.
• The company achieved strong loan growth, particularly in construction investor, commercial real estate, and small business lending, contributing to a 9% increase in balances over 2023.
• Net interest income increased for the fifth consecutive quarter, with an 8% rise in the fourth quarter of 2024 compared to the previous quarter.
• The SBA lending business had an outstanding year, driving noninterest income substantially higher and contributing to greater revenue diversification.
• First Internet Bancorp (NASDAQ:INBK) maintained a solid liquidity position, allowing for significant paydown of federal home loan bank borrowings while continuing to optimize the balance sheet.

Negative Points

• The company recognized $9.4 million of net charge-offs in the fourth quarter, primarily related to the SBA portfolio, indicating some challenges in credit quality.
• Nonperforming loans increased, particularly in franchise finance and small business lending, although the company maintains that overall credit quality remains sound.
• The decline in gain on sale revenue was attributed to timing issues, as a large portion of SBA loan originations closed late in the quarter, delaying revenue recognition.
• Provision for credit losses increased significantly in the fourth quarter, reflecting elevated net charge-off activity and adjustments to the small business lending allowance for credit losses.
• The company anticipates continued charge-offs in the SBA portfolio, with a conservative approach to provisioning for credit losses in 2025.

Q & A Highlights

Q: Can you provide more details on the SBA charge-offs and your expectations for provisioning in 2025? A: Kenneth Lovik, CFO, explained that the increase in provisioning is due to the growth in the SBA portfolio, which inherently has higher charge-offs. The company is taking a conservative approach to provisioning, anticipating continued growth in the portfolio and maintaining higher reserves.

Q: Are there specific industries within the SBA portfolio experiencing more pressure? A: David Becker, CEO, stated that there is no specific industry or geographic trend causing concern. The issues are borrower-specific, with some impact from hurricanes and COVID-related delays. The company is confident in the portfolio's overall health.

Q: What is the outlook for SBA loan production and gain on sale margins in 2025? A: Kenneth Lovik, CFO, mentioned that the company expects $600 million in SBA loan originations for 2025, with gain on sale premiums assumed to be around 108 basis points. The company may choose to hold loans if gain on sale premiums decrease significantly.

Q: How do you see the current rate environment impacting your SBA borrowers and overall credit portfolio? A: Kenneth Lovik, CFO, noted that most SBA loans were originated in a high-rate environment, and the company conducts stress testing to ensure borrowers can handle rate increases. The current rate environment is not expected to significantly impact borrowers.

Q: Can you provide an update on fintech deposit growth and future expectations? A: David Becker, CEO, highlighted strong growth from existing fintech partners, with significant earnings improvement in 2024. The company is cautious about onboarding new partners due to industry challenges but sees potential for exponential growth with current clients.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.