First Internet Bancorp - Fixed-

What they do

First Internet Bancorp operates through its wholly-owned subsidiary, First Internet Bank of Indiana, a state-chartered FDIC-insured internet bank. The company provides commercial and industrial lending, construction and investor commercial real estate lending, single tenant lease financing, public finance, specialty finance (healthcare, franchise, equipment), and small business lending, along with consumer deposits and treasury management. It operates without traditional branches, relying on digital channels and partnerships with fintechs to originate loans and gather deposits nationwide.

Revenue drivers

• Net interest income — Interest on loans and securities less interest on deposits and borrowings; $32.4 million in Q2 2026, up 16% year-over-year.
• Noninterest income — Fees from Banking-as-a-Service (BaaS) platform, deposit and treasury management services, and other banking fees; $8.7 million in Q2 2026, up 56% year-over-year, with BaaS fee revenue up 172%.
• Commercial lending — Includes C&I, construction, investor commercial real estate, single tenant lease financing, and public finance; largest asset class with total loans of $3.8 billion at Q2 2026.
• Small business lending — SBA 7(a) loans and small business checking; ranked 7th largest SBA 7(a) lender for fiscal 2025, closed $437.7 million in SBA 7(a) loans during the twelve months ended June 30, 2026.

Recent performance

For the second quarter of 2026, the company reported net income of $2.4 million and diluted EPS of $0.27, up from $0.2 million and $0.02 a year ago. For the first half of 2026, net income was $4.9 million ($0.55 per share), versus $1.1 million ($0.13) in the first half of 2025. In 2025, the company recorded a net loss of $35.2 million, largely due to a $38.2 million pre-tax loss on the sale of $851.2 million of single tenant lease financing loans. Revenue in Q2 2026 was $41.1 million, up 23% year-over-year, and pre-provision net revenue was $15.0 million. Provision for credit losses in Q2 2026 was $13.4 million, down from $16.3 million in Q1 2026.

Strategy

Management is focused on strengthening regulatory capital and improving interest rate risk, as evidenced by the 2025 loan sale. The company is expanding its Banking-as-a-Service platform by selectively adding fintech partners and growing existing relationships, which has boosted BaaS fee revenue 172% year-over-year. Commercial loan growth is targeted, led by construction investor commercial real estate and single tenant lease financing, with robust loan pipelines. The company also plans to increase retention of embedded finance small business loans originated for a fintech partner, citing attractive risk-return characteristics. Deposit strategy includes growing fintech deposits and using a deposit network to manage balance sheet size and reduce higher-cost funding.

Risks

• Credit risk — High provision for credit losses and elevated net charge-offs, particularly in franchise finance and small business lending, could persist.
• Interest rate risk — The company's net interest margin and earnings are sensitive to changes in interest rates; the 2025 loan sale was aimed at reducing this exposure to longer-duration assets.
• Reliance on technology — As a digital-only bank, any failure or security breach of its information systems could materially disrupt operations.
• Economic conditions — Recession, unemployment, tariffs, and monetary policy changes could adversely affect loan demand, deposit levels, and asset quality.

Outlook

Management expects continued commercial loan growth in the second half of 2026, supported by solid pipelines and increased retention of embedded finance loans. Credit quality is improving, with nonaccrual loans down for a second consecutive quarter and delinquencies falling to 0.78% of performing loans. The company anticipates the 2025 loan sale to benefit net interest margin and return on average assets in future periods.