First Internet Bancorp's Q4 2024 Earnings Call: A Tale of Tripled Net Income and Credit Quality Challenges

Wow, what a quarter for First Internet Bancorp (INBK)! The company just reported a whopping 200% increase in net income and earnings per share for 2024, navigating some credit quality challenges in its SBA portfolio. Let's dive into the key takeaways from their Q4 2024 earnings call and explore what this means for the future of this digital banking powerhouse.

First off, the numbers are impressive. Net interest margin (NIM) for Q4 2024 came in at 1.67%, up five basis points from the previous quarter. This, coupled with an 8% rise in net interest income (NII) in the fourth quarter, paints a clear picture of a company that's firing on all cylinders. But it's not just about the numbers; it's about the story behind them.



The company's strong loan growth, particularly in construction investor, commercial real estate, and small business lending, contributed to a 9% increase in balances over 2023. This diversification in loan portfolio is a testament to the company's ability to adapt and grow in various economic conditions. Moreover, the SBA lending business had an outstanding year, driving noninterest income substantially higher and contributing to greater revenue diversification.

However, it's not all sunshine and roses. The company recognized $9.4 million of net charge-offs in the fourth quarter, primarily related to the SBA portfolio. This indicates some challenges in credit quality, which the company acknowledges and is taking a conservative approach to provisioning for credit losses in 2025. Nonperforming loans increased, particularly in franchise finance and small business lending, but the company maintains that overall credit quality remains sound.