First Internet Bancorp's Q1 2025: Key Contradictions in SBA Production, Deposits, and Loan Growth Strategies

SBA production and gain on sale margins, deposit growth and FinTech partnerships, SBA loan reserves and loss assumptions, SBA loan reserve adjustments, and loan growth expectations are the key contradictions discussed in First Internet Bancorp's latest 2025Q1 earnings call.



Revenue Growth and Operational Performance:
- First Internet Bancorp reported 2% total operating revenue growth over the prior quarter and a 22% year-over-year increase.
- This was driven by strong loan growth, which increased the yield on earning assets and was fueled by disciplined pricing and responsible expense management.

Net Interest Income and Margin Improvement:
- Net interest income increased by 6.6% and 6.3% fully taxable equivalent, with a 16 basis point improvement in net interest margin.
- The improvement was driven by a six basis point increase in loan yields and a 12 basis point decline in deposit costs.

Credit Challenges and Provision for Loan Losses:
- The provision for loan losses was elevated, with non-performing loans to total loans at 80 basis points, primarily in small business lending and franchise finance portfolios.
- This was due to certain problem credits being charged off and specific reserves being added on specific loans.

Deposit and Loan Growth:
- Average deposit balances increased by 2%, with non-maturity deposits up 15%, primarily due to growth in FinTech partnership deposits.
- Loan growth of 8% on an annualized basis was driven by strong performance in commercial lending and construction activities.