8-K: First Internet Bancorp Posts Strong Q4 2025 Results

First Internet Bancorp reported robust fourth-quarter and full-year 2025 financial results, driven by significant net interest income growth and strategic advancements in digital banking.

Summary

• Net income for the fourth quarter of 2025 was $5.3 million, with diluted earnings per share (EPS) of $0.60.
• Adjusted net income, excluding the impact of an additional loan sale, was $5.6 million, and adjusted diluted EPS was $0.64.
• Adjusted quarterly revenue increased 21% year-over-year to $42.1 million.
• Adjusted pre-provision net revenue grew 66% year-over-year.
• Net interest income increased 29% to $30.3 million (27% on a fully-taxable equivalent (FTE) basis to $31.5 million) over the prior year period.
• FTE net interest margin increased 55 basis points (bps) from the prior year period to 2.30%.
• Total loan balances reached $3.7 billion, up 4% from the third quarter of 2025, driven by strong production in single tenant lease financing, construction, and small business lending.
• The provision for credit losses for the fourth quarter of 2025 declined significantly by $22.8 million, or 66%, from the third quarter of 2025.
• Net charge-offs to average loans improved to 1.68% from 1.89% in the third quarter of 2025.
• Tangible book value per share increased 3% from the third quarter of 2025 to $40.87.
• The company repurchased 27,998 shares during the quarter at an average price of $18.64 per share.
• For the full year 2025, the company reported a GAAP net loss of $35.168 million and diluted EPS of -$4.03.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, demonstrating strong operational recovery in Q4 2025 and a clear strategic path for 2026, despite the full-year GAAP loss driven by prior credit provisions.

Positives

• Strong growth in net interest income, up 29% year-over-year, and FTE net interest income, up 27% year-over-year.
• Significant expansion in FTE net interest margin, increasing 55 bps from the prior year period to 2.30%.
• Adjusted quarterly revenue increased 21% year-over-year to $42.1 million, demonstrating strong revenue momentum.
• Adjusted pre-provision net revenue grew substantially by 66% year-over-year.
• Robust commercial loan production, particularly in single tenant lease financing and construction, with solid loan pipelines setting the stage for continued net interest income growth in 2026.
• Provision for credit losses declined significantly by $22.8 million (66%) from the third quarter of 2025, indicating improving credit trends.
• Net charge-offs to average loans improved to 1.68% from 1.89% in the third quarter of 2025.
• Continued growth in fintech deposits, providing flexibility to manage the balance sheet and allowing higher-cost CDs and brokered deposits to mature.
• The cost of interest-bearing deposits declined 19 bps from the prior quarter to 3.68%.
• Tangible book value per share increased 3% from the third quarter of 2025 to $40.87.
• Successful completion of the $850 million single tenant lease financing loan sale to Blackstone in 2025.
• Exceptional growth in Banking-as-a-Service (BaaS) initiatives and strategic investments in technology to improve credit underwriting and efficiency.
• Positive full year 2026 outlook with projected loan growth of 15% to 17%, FTE net interest margin expansion to 2.75% to 2.80% by Q4 2026, and diluted earnings per share of $2.35 to $2.45.

Negatives

• The company reported a GAAP net loss of $35.168 million and diluted EPS of -$4.03 for the full year 2025, a significant decline from net income of $25.276 million and diluted EPS of $2.88 in 2024.
• Nonperforming loans to total loans increased to 1.56% as of December 31, 2025, compared to 0.68% as of December 31, 2024.
• Allowance for credit losses (ACL) to nonperforming loans decreased to 95.1% as of December 31, 2025, from 157.5% as of December 31, 2024.
• Net charge-offs to average loans for the full year 2025 increased significantly to 1.45% from 0.32% in 2024.
• Total deposits declined to $4.8 billion as of December 31, 2025, compared to $4.9 billion in the third quarter of 2025.
• Quarterly results included a pre-tax loss of $0.4 million on the sale of an additional $14.3 million of single tenant lease financing loans.

Risks

• General economic conditions, whether national or regional, and conditions in the lending markets may have an adverse effect on the demand for loans and other products.
• Credit quality and related levels of nonperforming assets and loan losses, and the value and salability of the real estate that is the collateral for loans.
• Failures or breaches of or interruptions in the communications and information systems relied upon to conduct business.
• Failure of plans to grow commercial and industrial, construction, and SBA loan portfolios.
• Competition with national, regional, and community financial institutions.
• The loss of key members of senior management.
• The anticipated impacts of inflation and rising interest rates on the general economy.
• Risks relating to the regulation of financial institutions.

Future Outlook

First Internet Bancorp projects continued loan growth of 15% to 17% in 2026, driven by strong commercial lending pipelines. FTE net interest margin is expected to expand, reaching 2.75% to 2.80% by the fourth quarter of 2026, with FTE net interest income between $155 million and $160 million. Noninterest income is forecast at $33 million to $35 million, reflecting continued strong BaaS growth and modest SBA originations. Operating expenses are projected to be $111 million to $112 million. Provision for credit losses is anticipated to remain elevated in the first half of 2026 (expected to be $17 million to $19 million in Q1 and $14 million to $16 million in Q2) before gradually improving in the second half. Diluted earnings per share are projected to be $2.35 to $2.45 for the full year 2026.

Management Comments

• "We are pleased to close 2025 with strong fourth quarter results that demonstrate the resilience of our differentiated digital banking model." David Becker, Chairman and CEO of First Internet Bancorp.
• "In 2025, we produced solid core financial performance as net interest income grew 30% year-over-year and delivered meaningful strategic accomplishments including the successful $850 million single tenant lease financing loan sale to Blackstone, exceptional growth in our Banking-as-a-Service initiatives and strategic investments in technology to further improve our credit underwriting and efficiency." David Becker.
• "Additionally, we took decisive and proactive measures to address credit challenges in our SBA and franchise finance portfolios through enhanced underwriting standards, and improved collection and risk management through strategic investments in AI and automation. As a result, we expect gradual credit improvement in the second half of this year." David Becker.
• "Looking ahead, our digital-first model, strong loan pipelines, and diversified revenue streams position us well for continued growth. We remain confident in our ability to deliver strong financial performance while building long-term shareholder value through disciplined execution of our strategic priorities." David Becker.

Industry Context

StockSavvy.ai notes that First Internet Bancorp's continued focus on its digital-first model and Banking-as-a-Service (BaaS) initiatives positions it well within the evolving financial landscape, where digital transformation and fintech partnerships are key drivers of growth and efficiency. The emphasis on AI and automation for credit risk management aligns with broader industry trends to leverage technology for operational improvements and enhanced credit quality, especially in specialty lending segments like SBA and franchise finance.

Comparison to Industry Standards

• First Internet Bank, founded in 1999, is noted as an industry pioneer in branchless banking, establishing a digital-first model over 25 years ago, predating many digital-only banks and fintechs that have emerged more recently.
• The company was the 7th largest Small Business Administration 7(a) lender for the SBA's 2025 fiscal year, demonstrating strong performance and market position in this specialized lending segment compared to other financial institutions.
• Its BaaS initiatives, including the co-recipient award for Payments Innovation of the Year from American Banker for its work with Increase to deliver High-fidelity ACH, highlight innovation in payment processing capabilities, a competitive area where many traditional banks are still developing.
• The company's focus on high-quality borrowers is evidenced by an average credit score at origination of 779 for specialty consumer loans and 742 for residential mortgages, suggesting a potentially lower-risk portfolio compared to lenders with broader credit risk appetites.

Stakeholder Impact

• Shareholders: Potential for increased shareholder value through projected EPS growth, share repurchases, and expanding net interest margin. The strong Q4 recovery and positive 2026 outlook aim to mitigate concerns from the full-year 2025 GAAP loss.
• Customers: Expected enhancements to consumer and small business product offerings through continued investment in technology and AI, along with diversified lending solutions.
• Employees: Strategic investments in technology and risk management may lead to evolving roles and skill requirements within the organization.
• Fintech Partners: Continued growth in Banking-as-a-Service (BaaS) initiatives strengthens existing partnerships and creates opportunities for new collaborations, expanding the company's platform capabilities.

Next Steps

• Continued loan growth in the range of 15% to 17% in 2026, driven by strong pipelines across commercial lending verticals.
• FTE net interest margin expansion, reaching 2.75% to 2.80% by the fourth quarter of 2026.
• Provision for credit losses is expected to remain elevated in the first half of 2026, then gradually improve in the second half of 2026.
• Continued investment in technology and AI to further enhance consumer and small business product offerings, as well as SBA and risk management.
• The company will host a conference call and webcast on January 29, 2026, at 5:00 p.m. Eastern Time to discuss its financial results.

Key Dates

Recommendation

The company's strong Q4 2025 performance, marked by significant revenue and net interest income growth, coupled with an optimistic 2026 outlook for loan growth, NIM expansion, and EPS, suggests a robust recovery trajectory. Despite the full-year 2025 GAAP loss, the proactive measures taken to address credit challenges and strategic investments in digital banking and AI position the company for sustained profitability and long-term shareholder value. The current valuation at a discount to tangible book value, as noted in the filing, presents an attractive entry point for investors.

Keywords

First Internet Bancorp, INBK, Financial Results, Q4 2025, Full Year 2025, Net Interest Income, Net Interest Margin, Loan Growth, Credit Quality, Banking-as-a-Service, BaaS, Fintech, SBA Lending, Commercial Real Estate, Deposits, Earnings Per Share, Tangible Book Value, Digital Banking, Bank Holding Company