First Internet Bancorp (INBK) Q2 Earnings call transcript Jul 25, 2024
In a recent earnings call, First Internet Bancorp revealed its financial performance for the second quarter of 2024, showcasing significant improvements and optimism for the remainder of the year. The call, led by Chairman and CEO David Becker and Executive Vice President and CFO Ken Lovik, highlighted key themes and trends that demonstrate the company's strategic positioning and financial health.
Improved Financial Performance
First Internet Bancorp reported an 11.5% increase in net income for the second quarter, with diluted earnings per share up 11.7% from the previous quarter. This positive trend is attributed to a combination of loan growth, net interest income growth, net interest margin expansion, and non-interest income powered by record gains on sale revenue. The bank's emphasis on improving the loan portfolio composition and stabilizing deposit pricing has contributed to these impressive results.
SBA Business Performance
The company's SBA business has been a key driver of these improvements. SBA originations were up 15% year-to-date, and the team delivered another record quarter of gain on sale. The SBA team's strong performance has enabled First Internet Bancorp to diversify its revenue base, with non-interest income comprising nearly one-third of total revenues for the first half of 2024. This diversification not only enhances the company's financial stability but also positions it well for future growth opportunities.
Deposit Growth and Stability
The call also highlighted the company's deposit growth, with total deposits up 4.7% during the second quarter. Despite the average balance of deposits increasing, period end deposits were essentially flat. This stability in deposit balances, combined with the reduction in higher cost brokered deposit balances, has helped the bank maintain a strong liquidity position. The focus on optimizing the balance sheet mix has been instrumental in the bank's ability to fund loan growth and securities purchases while keeping deposit costs in check.
Future Outlook
Looking ahead, First Internet Bancorp remains optimistic about its outlook for the remainder of 2024. The company anticipates annual earnings per share to be in the range of $3 per share, with net interest income projected to be up 20%. The bank's confidence is driven by its solid loan growth, diversification efforts, and continued improvement in operating performance. Furthermore, the potential for a reduction in short-term interest rates could further boost net interest income and net interest margin.
Conclusion
The earnings call provided a comprehensive overview of First Internet Bancorp's financial performance and outlook. The company's strategic focus on improving the loan portfolio, stabilizing deposit pricing, and diversifying revenue streams has yielded significant results. With a strong pipeline of opportunities and a solid liquidity position, First Internet Bancorp is well-positioned for continued growth and profitability in the second half of 2024 and beyond.