First Internet Bancorp (INBK) Q3 2025 earnings summary

Executive summary

• Adjusted revenue rose 30% year-over-year to $43.5 million, marking the eighth consecutive quarter of net interest income growth and net interest margin expansion to 2.12%, driven by strong SBA and BaaS contributions.

• Completed sale of $836.9 million in single tenant lease financing loans, optimizing the balance sheet, enhancing capital ratios, and reducing interest rate risk, but resulting in a pre-tax loss of $37.8 million.

• Aggressive credit management actions in small business lending and franchise finance led to a $34.8 million provision for credit losses and $21 million in net charge-offs, with delinquencies dropping to the lowest level in a year.

• Significant fintech deposit growth and liquidity improvements, with over $700 million of deposits moved off-balance sheet.

• Reported a net loss of $41.6 million for Q3 2025, or $(4.76) per diluted share; adjusted net loss excluding the loan sale was $12.5 million, or $(1.43) per share.

Financial highlights

• Net interest income rose 39.5% year-over-year to $30.4 million, with net interest margin up 8 basis points sequentially to 2.12% (FTE).

• Adjusted pre-tax, pre-provision income increased over 50% sequentially and nearly 65% year-over-year to $18.1 million.

• Non-interest income from fintech initiatives up 14% sequentially and 130% year-over-year; noninterest income was a loss of $24.6 million in Q3 2025 due to the loan sale.

• Book value per share decreased 8.8% to $40.42; tangible book value per share decreased 8.9% to $39.88 as of September 30, 2025.

• Noninterest expense increased 11.7% year-over-year to $25.5 million, driven by higher salaries, premises, and deposit insurance costs.

Outlook and guidance

• Expect Q4 loan balances to rise 4%-6% (unannualized), with net interest margin projected at 2.4%-2.5% (tax-equivalent); 2026 guidance: non-interest income of $41.5-$44.5 million, non-interest expense of $106-$109 million, and NII of $149-$150 million (GAAP), $153.4-$154.4 million (FTE).

• Management expresses increased conviction in long-term profitable growth, citing a dedicated team, proactive approach, and strong liquidity.

• The loan sale is expected to improve future net interest margin and return on average assets by reducing risk-weighted assets and interest rate risk; no additional sales of single tenant lease financing loans are anticipated.

• The company expects to continue paying quarterly dividends, subject to board discretion and regulatory requirements.