Why First Internet Bancorp (INBK) Is Plunging in 2025?

Ladies and gentlemen, buckle up! We're diving into the wild world of First Internet Bancorp (INBK), and let me tell you, it's been a rollercoaster ride. The stock has been on a downward spiral, and we need to figure out why. So, let's get down to business and dissect the factors that have led to this plunge.

First and foremost, let's talk about earnings. INBK reported an EPS of $0.41 for Q4 2024, which was a massive miss compared to analysts' estimates of $0.91. That's a 54.95% miss, folks! This kind of underperformance is a red flag for any investor, and it's no surprise that the stock took a hit. The market hates uncertainty, and a miss like this creates a lot of it.

But it's not just about earnings. INBK's net charge-offs spiked to 0.91% of average loans in Q4, primarily due to a strategic cleanup of the small business lending portfolio. While this proactive approach to problem loan resolution is commendable, it's still a concerning signal for investors. The spike in net charge-offs, combined with the earnings miss, has raised serious questions about the company's credit quality and risk profile.

Now, let's compare these factors to industry trends and broader market conditions. The industry as a whole has seen a 20.2% increase in stock prices over the past three months, while INBK has experienced a decline of 1.87% over the same period. This discrepancy suggests that the issues faced by First Internet Bancorp are more specific to the company rather than being part of a broader industry downturn. Furthermore, the broader market conditions, as indicated by the S&P 500 index, have shown positive trends, with the index increasing by 82.6% over the past year. This contrast highlights that the decline in INBK's stock price is more likely due to company-specific factors rather than broader market conditions.



But here's the thing, folks: despite these challenges, First Internet Bancorp's financial performance has shown significant growth. In 2024, the company's revenue reached $117.65 million, marking a 39.44% increase from the previous year's $84.38 million. This substantial revenue growth was driven by various factors, including strong commercial loan growth, particularly in construction, investor commercial real estate, and small business lending. These segments enhanced the bank's interest rate risk profile and drove loan yields higher, contributing to the overall revenue increase.

Net income for the full year 2024 was $25.28 million, a remarkable 200.30% increase from the previous year. This surge in net income was primarily due to growth in net interest income and greater gain on sale revenue from the small business lending business. The company's strategic focus on higher-yielding variable rate and shorter-duration products, combined with strong deposit growth, positioned the bank well for continued financial success.

So, what's the bottom line? First Internet Bancorp's stock price decline in 2025 can be attributed to the company's underperformance in earnings, increased net charge-offs, and concerns about credit quality. These factors are specific to the company and do not reflect broader industry trends or market conditions. However, the bank's strong financial performance, strategic initiatives, and proactive credit management position it well for future growth. It's a tough market out there, but INBK is fighting back, and that's something to keep an eye on.

Stay tuned, folks, because the story of First Internet Bancorp is far from over. The market is a wild beast, and INBK is in the thick of it. But with the right moves and a bit of luck, this bank could just surprise us all. So, keep your eyes on the prize and your ears to the ground, because in this game, anything can happen. BOO-YAH!