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Image source: The Motley Fool. Thursday, July 30, 2026, at 5 p.m. ET Chairman and Chief Executive Officer - David Becker President and Chief Operating Officer - Nicole Lorch Executive Vice President and Chief Financial Officer - Ken Lovik Operator: My name is Trevor and I will be your conference operator today. At this time, I would like to welcome everyone to the First Internet Bancorp earnings conference call for the second quarter 2026. Please note that this event is being recorded. It is now my pleasure to turn the call over to Julia Ferrara from ICR. You may begin your conference. Julia Ferrara Thank you, operator. Hello, everyone, and thank you for joining us to discuss First Internet Bancorp's second quarter 2026 financial results. The company issued its earnings press release earlier this afternoon, and it is available on the company's website at www.firstinternetbancorp.com. In addition, the company has included a slide presentation that you can refer to during the call. You can also access these slides on the website. Joining us from the management team today are Chairman and CEO, David Becker; President and COO, Nicole Lorch; and Executive Vice President and CFO, Ken Lovik. David and Nicole will provide an overview and Ken will discuss the financial results, and then we'll open the call up for your questions. Before we begin, I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial condition of First Internet Bancorp that involves risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. The company disclaims any obligation to update any forward-looking statements during the call. Additionally, management may refer to non-GAAP measures which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures. At this time, I'd like to turn the call over to David. David Becker: Thank you, Julia. Good afternoon, and thank you for joining us. We're excited to report solid second quarter results with total revenue growing 23% year over year, pre-provision net revenue up 28%, and earnings per share of $0.27, up significantly from the prior year period. More importantly, this quarter marks a meaningful inflection point in our credit trajectory. For the past several quarters, credit has been the primary overhang on our results and on our stock. This quarter, that story began to turn. Over the past 18 months, we took a hard look at the credit outcomes we experienced and made meaningful changes to our underwriting, servicing, portfolio management, and resolution processes. Our disciplined actions are now translating into clear, measurable improvement, and we believe the credit trends we are seeing today mark a clear turning point in this cycle. Let me walk through why we feel confident in that conclusion. First, provision for credit losses, while still elevated on a historical basis, declined significantly from the prior quarter. Net charge-offs in our SBA portfolio were down almost 50% from the first quarter, reflecting the enhanced underwriting, servicing, and early warning capabilities we built over the past year. Second, non-performing loans declined from the first quarter, and total non-accrual loans declined for the second consecutive quarter, down 19% from year-end. Furthermore, non-performing loans, excluding government guaranteed balances, declined to 1.07% of total loans, down from 1.22% in the prior quarter. And third, perhaps most encouraging of all, delinquencies fell significantly during the quarter. We experienced a sharp drop in early-stage delinquencies, and total small business lending delinquencies declined to $1.5 million from $13.3 million in the prior quarter. The reduction in provision expense demonstrates that our credit performance is improving today. The decline in non-performing loan formation and delinquency gives us conviction that credit costs will continue to moderate as we move through the second half of the year. At the same time, we continue to optimize the loan portfolio. Continued runoff in existing portfolios, such as healthcare finance and residential mortgage, combined with elevated payoffs in franchise finance is creating capacity that we are redeploying into construction, investor commercial real estate, single-tenant lease financing, small business lending, and emerging verticals such as wealth advisory lending and embedded finance, where we see better risk-adjusted returns and more efficient use of our balance sheet. A good example is the evolution of our relationship with Jaris, an embedded finance technology partner that helps payment processors and ISOs modernize their platforms through capabilities such as digital onboarding, instant payouts, and business financing solutions. Historically, we funded loans originated on Jaris's platform and retained a small portion of that production, selling the majority to a fund managed by Jaris. Beginning in June, we took that relationship a meaningful step further and are now retaining all originations going forward. The short duration, high-yielding assets should be accretive to net interest income, and the expanded arrangement reflects the trust and depth of collaboration we have built with Jaris over time. Looking ahead, we are navigating the current macro and geopolitical environment with prudent strategy and appropriate discipline. Our credit trends and earnings are moving in the right direction while we continue to deepen high-value fintech partnerships and invest in the technology and talent that differentiate our platform. We believe this combination of improving credit, disciplined capital deployment, and expanding non-interest income positions us well to maximize growth and profitability in future periods. While the financial results speak for themselves, what gives us confidence in the future is the operational progress occurring throughout the company. I will now turn the call over to Nicole for additional perspective on the changes we've made and why we believe they position First Internet for continued improvement in the quarters ahead. Nicole Lorch: Thank you, David. One of the most encouraging takeaways from this quarter is that the improvement we're seeing across the business is the result of a sustained organizational effort over the last several quarters. We challenged longstanding processes, invested in new capabilities, and asked teams across the company to work differently. The numerical improvement in credit is evident in our results, and the strength of the underlying processes producing those results lays the groundwork for improved performance in the future. Over the past 18 months, we've strengthened underwriting standards, enhanced portfolio monitoring, expanded special assets capabilities, and invested in predictive analytics and early warning tools that allow us to identify borrower stress sooner and engage customers earlier. We also created greater separation and specialization between portfolio management and problem loan resolution, allowing both teams to operate more effectively. In small business lending, net charge-offs declined significantly from the first quarter, delinquency trends improved meaningfully, and new delinquency formations slowed during the quarter. That reinforces our view that the portfolios we're originating today are performing in line with expectations and that our actions are producing durable improvements in credit quality. In franchise finance, our focus remains on disciplined execution and timely resolution of legacy problem credits. During the quarter, our special assets team took action on several relationships that drove elevated charge-off activity. However, the pace of loans moving to non-accrual status slowed dramatically, and early-stage delinquencies have declined over 85% since year-end. I want to thank our credit administration and portfolio management teams for their tireless execution. While work remains, the evidence suggests the remaining issues are manageable and increasingly concentrated. We've also become more deliberate about how and where we deploy capital. Over the last year, we evaluated major business lines through the lens of risk-adjusted returns, capital efficiency, and long-term growth potential. That process led us to lean more heavily into businesses where we believe we possess durable competitive advantages, including banking as a service, embedded finance partnerships, and select commercial lending verticals. The expanded Jaris relationship is a good example of that approach in practice. We continue to see opportunities to deepen relationships with partners that value our compliance expertise, technical capabilities, and ability to operate at scale. In many cases, those opportunities allow us to generate attractive returns while using capital more efficiently than traditional balance sheet growth alone. Another area where we continue to invest is technology and automation. As pioneers in branchless banking, technology has been central to our business model from the beginning. But our technology strategy is grounded in business outcomes, not in chasing what is novel or interesting. Every investment is evaluated based on its ability to improve the customer experience, strengthen risk management, enhance efficiency, and generate an appropriate return on capital. Looking ahead, what excites me most is not any single business line or individual metric. It is that we are seeing progress across multiple dimensions of the company simultaneously. Credit trends are improving. Our funding profile continues to strengthen. Fintech and fee-based revenue streams are growing, and our teams are executing with discipline. There is no finish line when it comes to building a better bank, but the operational foundation we have built over the last several years positions us well for continued improvement in profitability and long-term shareholder value creation. And now I'll turn it over to Ken for additional insight into our second quarter performance and 2026 outlook. Kenneth Lovik: Thanks, Nicole. As David mentioned, we delivered solid second-quarter results with net income of $2.4 million, or $0.27 per diluted share, both up significantly from the prior year period. Before discussing operating trends, I want to provide additional color on credit. Provision for credit losses was $13.4 million in the second quarter, down from $16.3 million in the first quarter. Net charge-offs totaled $16.9 million, up modestly from the prior quarter, but with important positive trends beneath the headline number. Net charge-offs in small business lending totaled $4.8 million, down significantly from $9.1 million in the first quarter. Franchise finance net charge-offs totaled $11.6 million, $6.7 million of which were covered under specific reserves previously applied to these loans, and as Nicole noted, the pace of franchise finance loans moving to non-accrual status slowed dramatically. Non-performing loans were $60.1 million, or 1.58% of total loans, down from $61.6 million, or 1.63%, in the linked-quarter, the first sequential decline we have reported in several quarters. Total non-accrual loans declined for the second consecutive quarter, which was partially offset by an increase in franchise finance loans 90 days past due as certain loans worked through the resolution process. We expect our efforts to ultimately result in the full collection of principal and interest related to these loans. The most encouraging data point was delinquencies, which declined to 78 basis points of total performing loans as of June 30th, down from 106 basis points at the end of the first quarter and 101 basis points at year-end. In dollars, total delinquencies declined 26% from the first quarter to $29.1 million, and early-stage delinquencies declined significantly. Taken together, lower provision for credit losses, the continued decline in non-accrual loans, and the significant drop in delinquencies support our expectation for continued improvement in credit costs throughout the remainder of 2026. Turning to operating trends, total revenue was $41.1 million, a 23% increase over the prior period. When combined with well-managed expenses, pre-provision net revenue totaled $15 million, up 28% year over year, driving continued positive operating leverage. Linked-quarter revenue was down primarily due to lower gain on sale revenue from seasonally lighter SBA origination volumes and our more disciplined underwriting approach. As we think about what to expect in the third and fourth quarters, I would note that secondary market premiums remain strong, production levels picked up in the back half of the quarter, and we expect origination volumes to increase in the second half of the year. The decline in gain on sale revenue was partially offset by sustained growth in fee revenue from our fintech partners. Payments volume and fee revenue continued to build on a trailing 12-month basis, up 256% and 222%, respectively. Net interest income was $32.4 million or $33.6 million on a fully taxable equivalent basis, up 16% and 15% year over year, respectively. Net interest margin improved to 2.39% or 2.47% on a fully taxable equivalent basis, both up more than 40 basis points from a year ago. Margin expansion was driven primarily by continued improvement on the funding side of the balance sheet as the cost of interest-bearing deposits declined to 3.38% from 3.92% a year ago, benefiting from CD repricing and growth in lower-cost fintech deposits. On the other hand, earning asset yields were essentially stable. While period-end loan balances were up from the prior quarter, average balances were down about 1%. Growth in construction and investor commercial real estate, single-tenant lease financing, trailers, and emerging verticals, such as wealth advisory lending and embedded finance, was more than offset by early paydowns and lighter small business lending originations earlier in the quarter. As a result, we carried higher cash balances, which tempered the pace of margin expansion on a sequential basis. Looking forward, pipelines are strong across several commercial lending areas, and small business lending production is expected to increase significantly in the second half of the year. In addition, the increased retention of embedded finance loans is expected to further enhance net interest income and margin. Deposit repricing remains a meaningful tailwind. CD and brokered deposit balances declined more than $200 million from the prior quarter as we continued replacing higher-cost funding with lower-cost fintech deposits. The weighted average cost of CDs maturing during the second quarter was approximately 4.11%, while the average cost of on-balance sheet fintech deposits was 3.19%, and the cost of new and renewing CDs was 3.63%. The third quarter is a particularly large maturity quarter with more than $445 million of CDs coming due at a weighted average cost of 4.04%, and $700 million in total maturing in the second half of the year at a weighted average cost of 3.94%. With fintech deposit and CD replacement costs at significantly lower levels, we expect this dynamic to continue supporting net interest income and margin. To summarize our outlook on net interest income and net interest margin, lending pipelines are strong heading into the back end of the year. We continue to optimize the loan portfolio with the composition now about 42% variable rate providing the ability to maintain and increase yields on interest-earning assets. When combined with the ongoing ability to drive deposit costs lower, we expect to see sustained expansion of net interest income and margin throughout the remainder of the year. Regarding our outlook for the remainder of 2026, we remain comfortable with our full-year EPS forecast of $2.35 to $2.45. However, with a smaller balance sheet and continued opportunities to grow fee income, the mix between net interest income and non-interest income has shifted somewhat, along with a revised outlook on operating expenses. We now expect full-year loan growth of approximately 4% to 6%, reflecting elevated early payoffs, lighter first-half small business production, and, as secondary market premiums remain attractive, lower retention of guaranteed SBA balances, with stronger pipelines expected to support growth in the second half of the year. Our fully taxable equivalent net interest margin outlook remains in the range of 2.75% to 2.80% by the fourth quarter based on the dynamics I mentioned earlier and excludes any interest rate cuts or increases. With a smaller balance sheet, we now expect full year fully taxable equivalent net interest income of $141 million to $142 million. This revision is partially offset by strength in gain on sale premiums and continued fintech fee income growth, enabling us to raise our non-interest income outlook to $40.5 million to $41 million. Additionally, we are lowering our non-interest expense outlook to $106 million to $107 million, reflecting lower compensation costs, while maintaining investment in technology and AI to support revenue and risk management initiatives. Finally, we expect provision for credit losses of $47 million to $48 million for the full year. Based on the improving trends in non-accrual loans and delinquencies, we expect provision expense to improve sequentially from the second quarter to the third quarter and again from the third quarter to the fourth quarter. With that, I'll turn it back to the operator for questions. Operator: Your first question comes from the line of Brett Rabatin with StoneX. Brett Rabatin: First, I wanted to talk about the dynamic on the NII guide in the back half of the year, particularly given where you're expecting the margin to be by the end of the year. And if I'm just doing kind of some rough math, right, it basically implies kind of that your funding costs decline about 15 basis points and your earning asset yields are up about 25 to 30 basis points. Is that a fair way to think about it? And then maybe can you talk about how much Jaris and these other things might contribute to higher earning asset yields. Kenneth Lovik: Yes, I think you're in the ballpark, Brett. I mean, I think if you think about the deposit repricing opportunity, right, as we mentioned in the prepared comments, we have a lot of CDs that are coming due here in the third quarter. And to be honest with you, right now in the CD market, we are not very competitively priced. What historically was a renewal rate in, call it anywhere from 60% to 70%, is now down in the 40% range. We're just seeing a larger amount of these higher-cost CDs rolling off and simply being replaced generally by fintech deposits that are somewhere in, call it the 3.15% to 3.20% range, or small business checking, those are much cheaper. But I think we continue to expect continued deposit leverage throughout the rest of the year. I think you're going to see more of it in the third quarter than the fourth quarter, but that's our expectation there. And quite to be honest with you, in the second quarter our deposit kind of cost outlook, we were kind of right on top of that, kind of where we came up short a little bit in the second quarter was on the lending side. And we talked about average loan balances being down and some of the dynamics that drove that with lighter SBA originations in the front end of the quarter, but offset by strong growth, continued growth in construction and investor commercial real estate and single-tenant lease financing. So as we kind of look forward into the third quarter and the fourth quarter, our pipelines in construction and ICRE are very strong. We expect a lot of draw activity in the third and fourth quarters. We have a lot of investor CRE projects that we expect to fund. Those are all kind of priced at a SOFR plus 3 range. Single-tenant pipeline is very strong. And if you think about where long rates have gone here over the last, you know, call it month, month and a half or so, we're pricing single-tenant loans at kind of the highest yields that we have in quite some time. Those are priced at a 225 to 240 spread over the 5-year treasury. So those are coming on the books now. Anything that's pricing today is coming on at a 6.40% to 6.60% type yield. And then on the Jaris side too, we're kind of really excited about that partnership because we, you know, historically we'd retained, call it 10% to 12% of their origination volumes. And if you think about it in terms of what we retained from say January through May, that was probably $4.5 million to $5 million. So not very large balances. We were providing senior credit to their fund that was probably a SOFR plus 3 or 4 type yield. But going forward, early part of this month, we did acquire some loans from Jaris as they wound down their funds. We kind of got a pool of those, call it about $15 million or so earlier in July, and our expectation is we'll probably, combined with retained production, probably have balances we'll acquire kind of in the $45 million to $50 million range. And those do have very nice kind of top-level gross yields. They're kind of -- they're usually a 7-month type turn on those. It's very structured, very similar to factoring. So the faster they pay, the higher yield there is, but the gross yield on those is very high. So yes, I mean, I think we expect, and then as we continue to see the lower-yielding portfolios, some of the exited portfolios, healthcare finance, mortgage, that are 4% or lower continue to roll off. It's just the replacement dynamic combined with originations in some of our higher-yield categories with SBA originations picking up significantly as well. The pathway to a higher yield on the overall loan portfolio is very visible when you put the pieces together. Brett Rabatin: That's all really helpful color, Ken. Appreciate that. And then just on the credit side, obviously the SBA portfolio is having lower net charge-offs, delinquencies are down 20-plus basis points linked-quarter, dealing with the franchise finance portfolio. I just wanted to hear do you think you have your hands around all the issues that could be in those portfolios or have you seen anything new come up here in the past quarter with some things that were originated in the '21 to '23 vintages, or do you feel like you have your hands around all those potential problems? Nicole Lorch: As it relates to SBA, Brett, we really do feel like the changes we implemented in underwriting, as well as the changes that we have made to portfolio management throughout the end of 2025 and into this year, are really starting to show up. The vintages of '21 to '23, we believe we have worked through the worst of that. It's always possible, of course, with a small business for something to pop up. But at this point, we believe problems tend to show up in about the first 18 to 24 months with small business, especially when we're looking at business acquisition. What we are seeing, however, is much better performance from the 2025 vintage and, of course, the 2026 year-to-date vintage. So we're feeling very confident that the changes we have made to underwriting guidelines, expectations of borrower strength, and then the changes that we've made as well within portfolio management are going to yield us much better results in the future. Kenneth Lovik: Yes, and I think kind of speaking on the franchise side of things, I think as we continue to work down, we talked about how we charged off a fair number of non-performing, non-accrual loans this quarter. We referenced that the inflows to the non-accrual bucket was significantly reduced. So net-net non-accrual franchise finance loans declined quite a bit. We talked about the declines in SBA delinquencies, but even in early-stage franchise delinquencies from the beginning of the year, that number is down over 75%. So similar to SBA, the non-performing loan formation has slowed dramatically. I mean, I think there's probably still some loans that we're keeping our eye on there, but the pool of loans where maybe a borrower is a habitual 30-day late payer or something like that, the pool of loans in franchise has certainly declined significantly certainly from the beginning of the year. Nicole Lorch: Yes. In fact, just this afternoon we received a check on a loan that we had marked as doubtful. We had charged it down to, I think, $600,000 was all we had left on the books. Got a check for $600,000. So I think that also speaks well to our ability to measure the recoverability of these loans. So that also gives us confidence going forward. Brett Rabatin: Okay. Really helpful. Operator: Our next question comes from the line of Emily Lee with KBW. Emily Noelle Lee: This is Emily stepping in for Tim Switzer. Yes, so, end of period and average loan balances were impacted by early payoffs this quarter. What are your expectations for payoffs going forward? Kenneth Lovik: You know what, we think based upon what we've seen this year, we know that they're probably going to continue to have those pop up here and there. What we do like is when a borrower gives us notice. Like for example, we got notice earlier this week that a construction loan or an ICRE loan that's going to mature in '27, that they're going to pay it down probably at the end of August. So it's nice when we get advance notice on that, because we can certainly factor that into our models. And quite frankly, it's enough lead time to get out there and replace the balance elsewhere. But I think we do expect there's probably going to be some. It's kind of hard to predict. We have seen elevated payoffs in the franchise finance portfolio on performing loans there. But we've kind of began to model that in because we've seen that for the past couple quarters. But I think it'll continue to happen, but I think we're trying to do our best to capture it in our modeling. Emily Noelle Lee: I understand. That's helpful. And then this quarter, you increased the number of fintech partners. I'm just wondering if you could talk about expectations for growth from the BaaS platform going forward and how the partner pipeline is looking now. Do you still look to kind of continue opportunistically adding more partners as you see fit, or what are your plans there? Nicole Lorch: Sure, we have added 3 partners year-to-date and I think there are like, so we're now at 15 partners, 21 programs. We have 2 more programs that we expect to bring online before the end of 2026. And our pipeline of potential programs is healthy behind that. I don't expect us to grow into the triple digits by any means in the next year. We are very careful about how we curate our partnerships and we have some terrific partners. In fact, 4 of the 15 have expanded their relationship with us in the last year. I think that speaks to the kind of relationships that we're forming and the capacity that we have to grow right alongside them. So we believe that in terms of fintech partnership revenue, we're going to see growth from interest income on the lending program that we're doing. We also then will see a moderate increase from our fees that we collect, whether it's on transactions, on oversight fees. But our revenue has grown and our transactions have grown. I think our revenue is up 220% year over year, so we do see a lot of runway there. Emily Noelle Lee: Great to hear. Operator: Our next question comes from the line of Nathan Race with Piper Sandler. Nathan Race: Just in terms of thinking about the reserve trajectory going forward, I know it's difficult to predict in terms of what's going to be underlying the provisioning assumptions for the back half of this year, but was just curious if you could shed some more light on in terms of how specific reserves are trending, particularly against the SBA and franchise finance portfolios and kind of what that suggests in terms of kind of lost content expectations over the next couple of quarters. Kenneth Lovik: Yes, I mean, I think we saw, as we mentioned in our comments, right, we charged off about $11.5 million of non-performing franchise loans. That reduced our specific reserves by $6.7 million that came off. When we think about what the provision outlook looks like, we do -- for sometimes -- for the provision, sometimes it's kind of agnostic whether it's a charge-off or a specific reserve. But I think we again kind of continue to feel confident that with the enhancements that Nicole mentioned relative to SBA portfolio management, special assets, and where we see the potential number of franchise loans that could be a problem down the road, I think we just see continued decline there. And if you think about it in terms of a net charge-off number, I think our expectation is that for net charge-offs to come down significantly from where they were in the first and second quarter. Probably be a little bit, could be higher in the third quarter, could be less in the fourth. Like you said in your question, it's hard to predict the timing. But I think we believe the trajectory is certainly going down in the back half of the year. Nicole Lorch: And I think, too, to your question, Nate, with our enhanced portfolio management efforts and really being an ally to our borrowers, we're able to provide them more solutions when they get in touch with us earlier. So sometimes -- I've just seen over the last 18 months a night and day difference in the way we're better communicating, and that gives us more visibility into what the likelihood of loss would be. So the communication between portfolio management and finance is very, very strong, and that helps to prevent surprises. David Becker: The comment that Nicole made earlier about the $600,000 payment we got in today on a loan that we'd reserved against, we also have a significant franchise that's got 3 units, a little over $6 million. We've already reserved a 30% reserve against that loan, and we think it's going to pay off in total. So we'll get a recovery of that 30% here this quarter, plus the full $6 million to fall out of the delinquency side and off the balance sheet in total. So that's kind of a wild card there, but the whole thing we've done with the special assets group has enabled us where, as Nicole said, we've reached out and touched literally everybody in the SBA pool, everybody in the franchise pool, checking in with them, how things are going. With all the uncertainty and the economic factors out here right now, we're on a very strong offensive pull to try and reach everybody. So if things do start to go south, they'll call us, they won't run from us. And as she just pointed out, there's a lot of things we can do for them when we catch them early. When they're on their way to the bankruptcy court, it makes it tough for all of us. So we're pretty positive that we've got the right people in the right seats doing the right things right now. So it's on time. Nathan Race: Indeed, that's really helpful. Just going back to the margin discussion. And I appreciate all the color around what you have maturing on the CD front in the back half of this year. The expectation that those CDs will largely be replaced by some of the lower-cost deposit gathering programs you have going on with some of your partners? Or I mean, what's kind of the incremental replacement costs on some of those CDs, to the extent it's not backfilled with some of those other relationship deposits? Kenneth Lovik: Yes, I mean, I guess maybe the easiest way to think about it is to simply replacing in the third quarter CDs that are costing us 4.04% on a weighted average basis, being replaced with fintech at 3.20% -- 3.15% to 3.20%. That's probably the easiest way to think about it. And as I mentioned, why I think we'll probably get some more deposit cost savings in the back half of the year, certainly in the third quarter, is just the renewal rate on CDs. I mean, our renewal rate, if we're renewing CDs today, that rate is kind of around a 3.60%. So you're still looking at a 40 basis point pickup, even if we just renewed everything or had new volume, but that renewal rate is going down, which when you're backfilling more of it with fintech deposit growth, you're just going to capture more cost savings. David Becker: We're not feeling the pressure that a lot of our peers are on them because of the deposit market getting hot again and having to pay up for CDs and/or deposits with $2.5 billion off balance sheet in cash. As Ken said, if half of those CDs disappear, we'll pull $200 million in at 3.18% versus the 4.20%. So it's -- we're in a pretty enviable position right now with what's going on in the marketplace with the excess cash. Nathan Race: Yep, good stuff. And then if we were to get a rate hike later this year, can you just update us in terms of what that kind of NII or margin sensitivity would be? Kenneth Lovik: Sure. Yes and keep in mind that this is a static balance sheet, so it's not really factoring in growth. Obviously everything we've done over the last few years, we've moved ourselves much closer to a neutral position, but we still are a little bit liability sensitive. So if we had a rate hike, again, static balance sheet, it's probably about on an annual basis about a $2.4 million reduction to NII. If it went the other way, if we had a rate cut, a 25 basis point rate reduction, we would probably pick up about $2.2 million in additional NII. Nathan Race: Okay, great. And then just lastly, Ken, what's the tax rate assumptions underpinning the EPS guide for this year? Kenneth Lovik: Yes, I mean, it's a little bit varying, I'd say, between the range. I mean, it's not a huge range, but I'd say it's probably on the low end of the range, call it 6% to 6.25%. On the higher end of the range, call it 8% to 8.5%. I mean, and this is full year. So I think with our expectations of much stronger performance in the third quarter and the fourth quarter, you could probably kind of math into, if I'm giving you the tax rate for the year, you can probably back into what it could be for the quarters. Nathan Race: Yes, I think that's something that 15% range. Sounds like 15%, 20%. Does that sound right? Kenneth Lovik: Probably more 12% to 15%-ish. Nathan Race: Okay, alright, sounds good. I appreciate all the color. Operator: Our next question comes from the line of George Sutton with Craig-Hallum. George Sutton: You mentioned wealth advisory and embedded finance as our new focus areas. I wonder if you could give us a little more picture on what the wealth advisory practice is lending to. And on the embedded finance side, I'm curious, is that broader than just Jaris or are you specifically focused on Jaris there? Kenneth Lovik: I'll handle the wealth advisory piece. The wealth advisory lending is to RIAs generally, for the purpose of say, ownership transition, succession issues you may have. What you see in the RIA, the registered investment advisor world today, is you see a lot of advisors are getting near retirement and there's a lot of ownership transition, a senior partner selling to a junior partner. So that's really what that is. It's financing acquisition or succession transition, ownership transition in the advisor space. David Becker: The average owner of an RIA today, George, is 66 years old. And so there's a lot of folks kind of saying enough is enough and a little bit of volatility might be creating some of the issues, but we've been doing it for probably 18 to 24 months now, but the volume has really seemed to pick up over the last 4 to 5 months. I'll take on the embedded finance. Yes, Jaris is by far the biggest opportunity for us in the short term. We have 2 others in the queue. One is wrapping up on their due diligence and final testing and should be going live, one of the ones that Nicole was talking about coming on between now and year-end. But the big change for us in the second half of this year before the new guys come on board is Jaris. We had historically been buying about 10% of their production and the rest was going to the fund. We had actually bought out that fund and it's going to jump. We did about $5 million with them in the first half of the year, and we're probably going to do $10 million to $15 million in the second half of the year. As Ken said, that tremendously helps them at the top end on the yield on it, short-term, as I said, factoring, it can be 35% to 40%, depending upon the term and how quick they repay. Net yield to us at the bottom line, full reserves, processing, servicing, payment of fees, et cetera, it's still yielding in that 12% to 15% range for us. So that's double down anything else we have on the books today. So it's a great asset for us and the other folks. The pricing will be similar for those that we're turning on here in the second half of the year. George Sutton: You had historic BaaS growth. I'm just curious how much of that would be Ramp specific versus others? David Becker: We're spread out. Probably the biggest impact for Ramp is on the deposit side of things, on the fee side of it, we're there with them, but we actually have some others that the pure processing earnings are stronger. Ramp, we do their bill pay product, which has grown significantly. We started it with [ M Square Zero ] a little over 2 years ago. On June 30th and July 1st, we literally cleared $1 billion plus per day in bill payments, but they're pennies of transaction. So the real growth that we've gotten out of Ramp in the last few months, obviously the numbers are going up, but they're pennies an item, is on the deposit side. That's been very, very strong for us. The others, we've adjusted fees almost across the board with all of our clients. Everybody's kind of been a nice growth spurt. As Nicole pointed out, we're not going after every Tom, Dick, and Harry that's out there. We're pretty judicious on who we work with and who we talk to. We've got a pretty good reputation in the business of being ahead of the regulators and not having compliance issues. And we're a little bit painful to deal with, but at the end of the day, that's a win for us and the fintechs. So we've got good volume across the line. A few years back, we went from $1 million in revenue to $2 million to $4 million. We had forecasted $8 million. I think it's going to pass $10 million this year pretty easily, so it's all going up and to the right pretty quickly. George Sutton: One quick one for Nicole, if I could on SBA. Historically, you've kind of talked about your market ranking and goals for pretty material growth. Is that not necessarily the focus now? Nicole Lorch: Well, thanks for the question, George. Obviously, I mean, we want to put people in small business and help them achieve their dreams when we can and when it makes sense. We needed to retool our credit underwriting guidelines. We needed to build better portfolio management processes, so we didn't continue to add to the portfolio and then not have a way to keep up with our borrowers. So with those two things addressed, I think that we do have a good opportunity to ramp volume back up, but we're going to do that judiciously, not focus on quantity, but really focus on quality. It's painful to us when a business has to close its doors. And so we want to make sure that we're putting the right borrowers in the right business so that we can be a good partner to them. So I do think we have a good opportunity now that we have our processes in place and we have credit underwriting guidelines that we know work. We're feeling much better about our ability to scale volume again. I think we'll see some improvement in volume in the second half of this year. Our lending teams are growing slightly, and we have with some good people with new contacts that they've made. Our referral sources, we're growing more loans that have some real estate behind them, so those command a better premium. So I think we did a lot of retooling that is going to help us in future periods. David Becker: The SBA industry as a whole, George, is down about 18% year-to-date on growth year over year compared to last year. So the industry as a whole was a little bit slower than it had been. We're still in the top 10 originators in the 7(a) world and will probably stay there through the course of the year. As Nicole said, the pipelines are strong and volume second half will be a little better than it was in the first half. George Sutton: Perfect. Okay. Operator: There are no further questions at this time. I will now turn the call back to David Becker for closing remarks. David Becker: Thanks, Trevor, and thanks everybody for joining us today and for your interest in First Internet Bancorp. This was a quarter we've been working towards for some time and we're proud of the progress our teams have made on credit as well as increasingly capital-efficient fee-generating direction of our business. We remain mindful of all the macroeconomic uncertainty in the world and things going on around us, but we are executing from a position of genuine momentum, and we believe the hardest part of our credit cycle is truly behind us. We appreciate your support. Feel free to reach out to any of us if you have further questions. Thank you, and have a good evening. Operator: This concludes today's call. Thank you for attending. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. First Internet Bancorp (INBK) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in First Internet Bancorp? Here are five stocks we like better. Second-quarter results improved: Net income was $2.4 million, or $0.27 per diluted share, while revenue rose 23% year over year to $41.1 million and pre-provision net revenue increased 28% to $15 million. Credit trends showed signs of stabilization: Provision expense declined to $13.4 million, non-performing loans and total delinquencies fell sequentially, and small-business lending charge-offs dropped substantially, although franchise-finance charge-offs remained elevated. Management maintained its 2026 EPS outlook of $2.35–$2.45 and raised non-interest income guidance while lowering expense guidance. Lower funding costs, maturing high-cost CDs, and growth in fintech partnerships are expected to support margin and earnings in the second half. First Internet Bancorp (NASDAQ:INBK) reported second-quarter 2026 net income of $2.4 million, or $0.27 per diluted share, as revenue growth and a lower provision for credit losses helped offset continued elevated charge-offs in parts of its lending portfolio. Total revenue rose 23% year over year to $41.1 million, while pre-provision net revenue increased 28% to $15 million, Chairman and CEO David Becker said on the company’s earnings call. Net interest income increased 16% from a year earlier to $32.4 million, and fully taxable equivalent net interest income rose 15% to $33.6 million. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Management characterized the quarter as an inflection point for credit performance after several quarters in which credit concerns weighed on results. The company said it has spent the past 18 months strengthening underwriting, portfolio monitoring, servicing, special-assets capabilities, and early-warning processes. Provision for credit losses declined to $13.4 million in the second quarter from $16.3 million in the first quarter. Net charge-offs totaled $16.9 million, up modestly sequentially, though the composition shifted. Small-business lending net charge-offs fell to $4.8 million from $9.1 million in the first quarter. Franchise finance net charge-offs were $11.6 million, including $6.7 million covered by specific reserves previously established against the loans. Non-performing loans declined to $60.1 million, or 1.58% of total loans, from $61.6 million, or 1.63%, in the prior quarter. Total delinquencies fell 26% sequentially to $29.1 million, or 78 basis points of performing loans, from 106 basis points at the end of the first quarter. → Microsoft Just Flipped the AI Spending Narrative Overnight Becker said non-performing loans excluding government-guaranteed balances declined to 1.07% of total loans from 1.22% in the prior quarter. He also noted that small-business lending delinquencies declined to $1.5 million from $13.3 million in the first quarter. President and COO Nicole Lorch said the company believes it has worked through the worst of the 2021 through 2023 small-business lending vintages. She said the 2025 and year-to-date 2026 vintages have performed better, though she acknowledged that unexpected borrower issues can still arise. → Carrier Earnings Could Send the Stock to a New All-Time High In franchise finance, Lorch said the company has focused on resolving legacy problem credits. The pace of loans moving to non-accrual status slowed, while early-stage franchise delinquencies were down more than 75% from the beginning of the year, according to CFO Ken J. Lovik. Net interest margin rose to 2.39%, or 2.47% on a fully taxable equivalent basis, improving by more than 40 basis points from a year earlier. Lovik attributed the improvement primarily to lower funding costs, as the cost of interest-bearing deposits fell to 3.38% from 3.92% a year earlier. CD and brokered deposit balances declined by more than $200 million from the first quarter as the company replaced higher-cost funding with lower-cost fintech deposits. The weighted average cost of CDs maturing during the second quarter was approximately 4.11%, compared with 3.19% for on-balance-sheet fintech deposits and 3.63% for new and renewing CDs. More than $445 million of CDs are scheduled to mature in the third quarter at a weighted average cost of 4.04%, with approximately $700 million maturing in the second half at a weighted average cost of 3.94%. Lovik said the company expects the repricing dynamic to continue supporting net interest income and margin, particularly in the third quarter. Average loan balances declined about 1% from the prior quarter, despite higher period-end balances, due to early paydowns and lighter small-business lending production earlier in the quarter. Growth in construction, investor commercial real estate, single-tenant lease financing, trailers, wealth advisory lending and embedded finance was offset by runoff in healthcare finance and residential mortgage portfolios. The company expanded its relationship with Jaris, an embedded-finance technology partner. First Internet historically retained a small portion of loans originated through Jaris while the majority was sold to a Jaris-managed fund. Beginning in June, First Internet began retaining all new originations and acquired approximately $15 million of loans as the Jaris funds were wound down, Lovik said. Management expects Jaris-related balances, including retained production, to reach roughly $45 million to $50 million. Becker said the short-duration loans can generate net yields of roughly 12% to 15% after reserves, processing, servicing and fees, though gross yields can be higher depending on repayment timing. First Internet also added three fintech partners year to date, bringing its total to 15 partners and 21 programs. Lorch said the company expects to launch two additional programs before the end of 2026. Payments volume and fintech fee revenue rose 256% and 222%, respectively, on a trailing-12-month basis, according to Lovik. The company said it is also pursuing lending to registered investment advisers to finance ownership transitions and succession planning. Becker said the average owner of a registered investment adviser is now 66 years old, creating an opportunity for financing transactions involving senior partners selling ownership stakes to junior partners. First Internet maintained its full-year 2026 earnings-per-share forecast of $2.35 to $2.45. However, management revised several components of its outlook to reflect a smaller balance sheet, elevated loan payoffs and stronger fee-income expectations. Full-year loan growth is now expected to be approximately 4% to 6%. Fully taxable equivalent net interest margin is expected to reach 2.75% to 2.80% by the fourth quarter, excluding any interest-rate changes. Fully taxable equivalent net interest income is projected at $141 million to $142 million. Non-interest income guidance was raised to $40.5 million to $41 million. Non-interest expense guidance was lowered to $106 million to $107 million. Provision for credit losses is expected to total $47 million to $48 million for the full year. Lovik said the company expects provision expense to improve sequentially in both the third and fourth quarters as non-accrual loan and delinquency trends improve. Management also expects small-business lending origination volumes to increase in the second half, supported by stronger secondary-market premiums and improved production activity later in the second quarter. First Internet Bancorp is the bank holding company for First Internet Bank of Indiana, a pioneer in digital banking in the United States. Established with a focus on online-only operations, the company offers fully integrated, web-based financial solutions without the overhead of physical branches. Headquartered in Indianapolis, Indiana, First Internet Bancorp leverages technology to deliver streamlined banking services to customers across the country. The company's core offerings include a range of deposit products such as checking accounts, savings accounts, money market accounts, certificates of deposit (CDs) and individual retirement accounts (IRAs). This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "First Internet Bancorp Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Total Revenue: $41.1 million, a 23% increase year over year. Earnings Per Share (EPS): $0.27 per diluted share, up significantly from the prior-year period. Net Income: $2.4 million, up significantly from the prior-year period. Pre-Provision Net Revenue (PPNR): $15 million, up 28% year over year. Net Interest Income: $32.4 million, or $33.6 million on a fully taxable equivalent (FTE) basis, up 16% and 15% year over year, respectively. Net Interest Margin: Improved to 2.39%, or 2.47% on an FTE basis, both up more than 40 basis points from a year ago. Provision for Credit Losses: $13.4 million in Q2, down from $16.3 million in Q1. Net Charge-Offs: Totaled $16.9 million, up modestly from the prior quarter. Small-business lending net charge-offs were $4.8 million, down from $9.1 million in Q1. Franchise finance net charge-offs totaled $11.6 million, with $6.7 million covered under specific reserves. Non-Performing Loans: $60.1 million, or 1.58% of total loans, down from $61.6 million (1.63%) in the linked quarter. Delinquencies: Declined to 78 basis points of total performing loans as of June 30, down from 106 basis points at the end of Q1. Total delinquencies declined 26% from Q1 to $29.1 million. Cost of Interest-Bearing Deposits: Declined to 3.38% from 3.92% a year ago. Fintech Fee Revenue: Payments volume and fee revenue continued to build on a trailing 12-month basis, up 256% and 222%, respectively. Full-Year 2026 Outlook: EPS forecast of $2.35 to $2.45; FTE net interest income of $141 million to $142 million; non-interest income of $40.5 million to $41 million; non-interest expense of $106 million to $107 million; provision for credit losses of $47 million to $48 million. Warning! GuruFocus has detected 7 Warning Signs with INBK. Is INBK fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Total revenue grew 23% year over year, with pre-provision net revenue up 28% and EPS of $0.27, significantly higher than the prior-year period. Credit quality improved markedly: provision for credit losses declined to $13.4 million from $16.3 million in Q1, and SBA net charge-offs fell nearly 50% sequentially. Non-performing loans declined for the second consecutive quarter, down 19% from year-end, and total delinquencies dropped 26% from Q1 to $29.1 million. Net interest margin expanded to 2.39% (2.47% FTE), up over 40 basis points year over year, driven by lower deposit costs and a strong CD repricing tailwind. Fintech partnerships are scaling rapidly: payments volume and fee revenue grew 256% and 222% year over year, respectively, with the expanded jaris relationship expected to boost net interest income. Management raised the non-interest income outlook to $40.5-$41 million and lowered non-interest expense guidance to $106-$107 million, reflecting improved operating leverage. Net charge-offs remained elevated at $16.9 million, up modestly from the prior quarter, with franchise finance charge-offs of $11.6 million, though partially covered by specific reserves. Average loan balances declined about 1% sequentially due to elevated pay-offs and lighter SBA originations, leading to higher cash balances that tempered margin expansion. Full-year loan growth guidance was revised down to 4%-6% from prior expectations, reflecting early pay-offs and lower retention of guaranteed SBA balances. The company remains liability-sensitive, with a potential 25 basis point rate hike expected to reduce net interest income by approximately $2.4 million annually. Provision for credit losses is still high at $47-$48 million for the full year, indicating ongoing credit costs despite improving trends. Franchise finance loans 90 days past due increased during the quarter, as certain loans work through the resolution process, adding uncertainty to credit outcomes. Q: Can you provide more detail on the drivers behind the net interest income and margin guidance for the back half of the year, specifically regarding funding costs and earning-asset yields?A: Kenneth Lovik (CFO) confirmed that the bank expects continued deposit leverage, with a large amount of higher-cost CDs maturing in the third quarter. These are being replaced by lower-cost fintech deposits, with the renewal rate on CDs dropping to around 40%. On the asset side, strong pipelines in construction and investor commercial real estate, priced at SOFR plus 3%, and single-tenant lease financing, priced at 225 to 240 basis points over the five-year treasury, are expected to drive higher yields. The expanded jaris relationship, with loans yielding in the 12% to 15% range net, will also contribute to margin expansion. Q: Do you believe you have your arms around all the potential issues in the SBA and franchise finance portfolios, particularly from the 2021-2023 vintages?A: Nicole Lorch (President and COO) stated that for SBA, the bank believes it has worked through the worst of the 2021-2023 vintages, as problems typically surface within the first 18-24 months. The 2025 and 2026 vintages are performing much better due to enhanced underwriting. Kenneth Lovik (CFO) added that on the franchise side, the pace of loans moving to non-accrual status has slowed dramatically, and early-stage delinquencies are down over 75% from the beginning of the year, indicating the remaining issues are manageable and increasingly concentrated. Q: What are your expectations for loan pay-offs going forward, given the elevated levels this quarter?A: Kenneth Lovik (CFO) noted that while pay-offs are hard to predict, the bank expects them to continue, particularly in the franchise finance portfolio. However, they are receiving more advanced notice from borrowers, which allows them to factor this into their models and replace the balances elsewhere. The bank is trying to capture this dynamic in its full-year loan growth guidance of 4% to 6%. Q: Can you discuss the growth expectations for the fintech/BaaS platform and the partner pipeline?A: Nicole Lorch (President and COO) stated that the bank has added three partners year-to-date, bringing the total to 15 partners and 21 programs, with two more programs expected to launch by year-end. The bank is selective in adding partners, focusing on curation rather than volume. Revenue from fintech partnerships is up 220% year-over-year, and the bank expects continued growth from both interest income on lending programs and fee income. Q: How is the reserve trajectory trending, and what does it suggest for charge-off expectations in the back half of the year?A: Kenneth Lovik (CFO) explained that the bank expects net charge-offs to decline significantly from the first and second quarter levels. While the timing is hard to predict, the trajectory is clearly downward. Nicole Lorch (President and COO) added that enhanced portfolio management and better communication with borrowers provide more visibility into potential losses, helping to prevent surprises. David Becker (CEO) highlighted a specific example of a $6 million franchise loan with a 30% reserve that is expected to pay off in full, potentially leading to a recovery. Q: What is the expectation for replacing maturing CDs in the back half of the year, and what is the incremental replacement cost?A: Kenneth Lovik (CFO) stated that the bank expects to replace CDs costing around 4.04% with fintech deposits at approximately 3.15% to 3.20%. Even if the bank renewed CDs at the current rate of around 3.60%, it would still capture a 40 basis point benefit. David Becker (CEO) added that the bank is in an enviable position with $2.5 billion in off-balance-sheet cash, reducing the pressure to pay up for deposits. Q: Can you provide an update on the bank's interest rate sensitivity, particularly in the event of a rate hike or cut?A: Kenneth Lovik (CFO) stated that on a static balance sheet, a 25 basis point rate hike would reduce net interest income by approximately $2.4 million annually, while a 25 basis point rate cut would increase net interest income by approximately $2.2 million. The bank remains slightly liability-sensitive but has moved much closer to a neutral position over the last few years. Q: Can you elaborate on the new focus areas of wealth-advisory lending and embedded finance? Is the embedded finance opportunity broader than just the jaris partnership?A: Kenneth Lovik (CFO) explained that wealth-advisory lending finances ownership transitions and succession planning for RIAs, a growing market as many advisors near retirement. David Becker (CEO) stated that jaris is the biggest short-term opportunity in embedded finance, with the bank now retaining all originations after buying out the fund. The bank has two other partners in the queue, with one expected to go live by year-end. The loans carry gross yields of 35% to 40%, with net yields of 12% to 15% after reserves and fees. Q: Given the historical focus on market ranking and growth in SBA lending, is that still the primary focus, or has the strategy shifted?A: Nicole Lorch (President and COO) stated that the bank had to retool its credit underwriting and portfolio management processes before ramping volume back up. The focus is now on quality over quantity, ensuring borrowers are well-positioned for success. The bank expects improved volume in the second half of the year, with a growing lending team and a shift toward loans with real estate backing that command better premiums. David Becker (CEO) added that the bank remains a top-10 originator in the 7(a) world. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

- Net income of $2.4 million, up significantly from $0.2 million a year ago -- Diluted earnings per share of $0.27, up significantly from $0.02 a year ago -- Company to hold earnings call today at 5pm ET - FISHERS, Ind., July 30, 2026--(BUSINESS WIRE)--First Internet Bancorp (the "Company") (Nasdaq: INBK), the parent company of First Internet Bank (the "Bank"), announced today financial and operational results for the second quarter ended June 30, 2026. Key Business Updates Significant Improvement in Credit Quality: Provision for credit losses for the second quarter of 2026 of $13.4 million, down from $16.3 million in the first quarter of 2026. Notably, total nonaccrual loans declined for the second consecutive quarter, and are down 14% from the first quarter of 2026. Furthermore, delinquencies 30 days or more past due decreased to 0.78% of total performing loans, down from 1.06% in the first quarter of 2026, driven by a significant decline in small business lending delinquencies. Revenue Momentum: Growth in net interest income (up 16%), fully-taxable equivalent ("FTE") net interest margin of 2.47%1 (up 43 basis points), and strong noninterest income drove quarterly revenue up 23% year-over-year to $41.1 million. When combined with well-managed expenses, pre-provision net revenue grew 28% year-over-year to $15.0 million1. Solid Loan Production: Commercial loan balances continued to grow during the second quarter led by construction / investor commercial real estate and single tenant lease financing. While period end and average loan balances were impacted by early payoffs, loan pipelines at the end of the quarter were solid, setting the stage for continued loan growth in the second half of 2026. Additionally, the Company expects to increase its retention of embedded finance small business loans originated for one of its fintech partners, an asset class with very attractive risk-return characteristics. Fee Revenue Acceleration: Noninterest income grew 56% year-over-year, supported by the continued growth in the Banking-as-a-Service ("BaaS") platform. As we have selectively increased the number of fintech partners, and have expanded relationships with existing partners, fee revenue from BaaS increased 172% from the prior year period. Second Quarter 2026 Financial Performance Net income of $2.4 million and diluted earnings per share of $0.27, both up significantly from the prior year period Total revenue of $41.1 million, which increased 23% from the prior year period Net interest income of $32.4 million and FTE net interest income of $33.6 million1, increased 16% and 15%, respectively, over the prior year period Net interest margin of 2.39% and FTE net interest margin of 2.47%1, both increasing 43 basis points ("bps") from the prior year period Noninterest income of $8.7 million, which increased 56% from the prior year period Pre-provision net revenue ("PPNR") of $15.0 million1, which increased 28% from the prior year period Total loan balances of $3.8 billion, up $35.2 million, or 1%, from the first quarter of 2026 Total deposits of $4.8 billion, down $150.3 million, or 3%, from the first quarter of 2026 Provision for credit losses of $13.4 million, down $2.9 million, or 18%, from the first quarter of 2026 Net charge-offs to average loans of 1.77%, an increase from 1.65% in the first quarter of 2026 Nonperforming loans ("NPLs") to total loans of 1.58%, compared to 1.63% in the first quarter of 2026; allowance for credit losses - loans ("ACL") to total loans of 1.39%, compared to 1.50% in the first quarter of 2026 Tangible common equity to tangible assets of 6.46%1, and 6.98%1 ex-AOCI and adjusted for normalized cash balances; CET1 ratio of 8.90%2; total capital ratio of 12.22%2 Tangible book value per share of $41.091, up from $40.871 in the first quarter of 2026 "Our second quarter results reflect strong momentum across the business, paired with a meaningful and encouraging improvement in our credit trends," said David Becker, Chairman and CEO of First Internet Bancorp. "Total revenue grew 23% year-over-year and pre-provision net revenue increased nearly 28%, while our fully-taxable equivalent net interest margin expanded 43 basis points to 2.47%. Just as importantly, our credit provision declined, nonperforming loans decreased sequentially for the first time in several quarters, small business lending net charge-offs improved significantly, and delinquencies across the portfolio fell sharply - clear evidence that the proactive credit actions we have taken over the past several quarters are working. "We are equally encouraged by the acceleration of our fee-based businesses. Noninterest income grew more than 56% year-over-year, driven by the continued strength of our Banking-as-a-Service platform and the deepening of our fintech partnerships, including an expanded relationship with jaris under which we will retain all small business loans originated through its platform. We also continue to invest in AI, automation, and digital capabilities that drive efficiency and elevate the customer experience. With improving credit, growing fee income, and a more capital-efficient balance sheet, we are well-positioned to build on this momentum through the remainder of 2026 and beyond." Full Year 2026 Outlook Diluted earnings per share of $2.35 to $2.45 Loan growth in the range of 4% to 6%, driven by solid pipelines across our commercial lending verticals FTE net interest margin expansion, reaching 2.75% to 2.80% by the fourth quarter of 2026, driven by ongoing deposit repricing and optimized asset mix FTE net interest income in the range of $141 million to $142 million Noninterest income in the range of $40.5 million to $41 million, reflecting continued BaaS growth and increasing small business lending originations and gain on sale activity in the second half of 2026 Noninterest expense in the range of $106 million to $107 million Provision for credit losses, including net charge-offs and reserves related to problem loans, of $47 million to $48 million Conference Call and Webcast The Company will host a conference call and webcast at 5:00 p.m. Eastern Time today, July 30, 2026, to discuss its quarterly financial results. The call can be accessed via telephone at (833) 461-5787; meeting id: 115638970. To access the webcast and view the presentation slides, please visit www.firstinternetbancorp.com and click the link provided for Earnings Call Webcast. The webcast and slides will be available on the Company’s website shortly after the call has ended and will be archived on the Company’s website for 12 months. About First Internet Bancorp First Internet Bancorp is a bank holding company with assets of $5.6 billion as of June 30, 2026. The Company’s subsidiary, First Internet Bank, opened for business in 1999 as an industry pioneer in the branchless delivery of banking services. First Internet Bank provides consumer and small business deposits, commercial real estate and construction financing, SBA financing, public finance, consumer loans, and specialty finance services nationally, as well as commercial and industrial loans and treasury management services on a regional basis. First Internet Bancorp’s common stock trades on the Nasdaq Global Select Market under the symbol "INBK" and is a component of the Russell 2000® Index. Additional information about the Company is available at www.firstinternetbancorp.com and additional information about First Internet Bank, including its products and services, is available at www.firstib.com. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements with respect to the financial condition, results of operations, trends in lending policies and loan programs, plans and prospective business partnerships, objectives, future performance and business of the Company. Forward-looking statements are generally identifiable by the use of words such as "anticipate," "believe," "better than," "continue," "could," "drive," "enhance," "estimate," "expand," "expect," "future," "going forward," "growth," "improve," "increase," "looking ahead," "maintain," "may," "ongoing," "opportunities," "pending," "plan," "position," "preliminary," "progress," "remain," "setting the stage," "should," "stable," "thereafter," "well-positioned," "will," or other similar expressions. Forward-looking statements are not a guarantee of future performance or results, are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the information in the forward-looking statements. Such statements are subject to certain risks and uncertainties including: our business and operations and the business and operations of our vendors and customers; general economic conditions, whether national or regional, and conditions in the lending markets in which we participate that may have an adverse effect on the demand for our loans and other products; our credit quality and related levels of nonperforming assets and loan losses, and the value and salability of the real estate that is the collateral for our loans. Other factors that may cause such differences include: failures or breaches of or interruptions in the communications and information systems on which we rely to conduct our business; failure of our plans to grow our commercial and industrial, construction, and SBA loan portfolios; competition with national, regional and community financial institutions; the loss of key members of senior management; the anticipated impacts of inflation and rising interest rates on the general economy; risks relating to the regulation of financial institutions; and other factors identified in reports we file with the U.S. Securities and Exchange Commission. All statements in this press release, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. Non-GAAP Financial Measures This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles ("GAAP"). Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, total interest income – FTE, net interest income – FTE, net interest margin – FTE, pre-provision net revenue adjusted tangible common equity, adjusted tangible assets, adjusted tangible common equity to adjusted tangible assets, adjusted nonperforming loans to total loans and adjusted allowance for credit losses – loans to nonperforming loans are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the table at the end of this release under the caption "Reconciliation of Non-GAAP Financial Measures." View source version on businesswire.com: https://www.businesswire.com/news/home/20260727375112/en/ Contacts Contact Information Investors/Analysts Paula DeemerDirector of Corporate Administration(317) [email protected] Media PANBlastZach [email protected]

First Internet Bancorp (INBK) came out with quarterly earnings of $0.27 per share, beating the Zacks Consensus Estimate of $0.03 per share. This compares to earnings of $0.02 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +800.00%. A quarter ago, it was expected that this internet bank would post earnings of $0.08 per share when it actually produced earnings of $0.29, delivering a surprise of +262.5%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. First Internet, which belongs to the Zacks Banks - Northeast industry, posted revenues of $41.12 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 3.12%. This compares to year-ago revenues of $33.55 million. The company has not been able to beat consensus revenue estimates over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. First Internet shares have added about 28% since the beginning of the year versus the S&P 500's gain of 6.9%. While First Internet has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for First Internet was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.67 on $46.65 million in revenues for the coming quarter and $1.98 on $182.4 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Northeast is currently in the top 21% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the broader Zacks Finance sector, Sky Harbour Group Corporation (SKYH), has yet to report results for the quarter ended June 2026. This company is expected to post quarterly loss of $0.14 per share in its upcoming report, which represents a year-over-year change of -40%. The consensus EPS estimate for the quarter has been revised 9.5% higher over the last 30 days to the current level. Sky Harbour Group Corporation's revenues are expected to be $9.2 million, up 39.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First Internet Bancorp (INBK) : Free Stock Analysis Report Sky Harbour Group Corporation (SKYH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Merchants Bancorp (MBIN) came out with quarterly earnings of $1.48 per share, beating the Zacks Consensus Estimate of $1.22 per share. This compares to earnings of $0.6 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +21.31%. A quarter ago, it was expected that this bank holding company would post earnings of $1.16 per share when it actually produced earnings of $1.25, delivering a surprise of +7.76%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Merchants Bancorp, which belongs to the Zacks Banks - Northeast industry, posted revenues of $182.22 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 0.13%. This compares to year-ago revenues of $179.2 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Merchants Bancorp shares have added about 42% since the beginning of the year versus the S&P 500's gain of 8.3%. While Merchants Bancorp has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Merchants Bancorp was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.30 on $185.19 million in revenues for the coming quarter and $5.15 on $734.26 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Northeast is currently in the top 29% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, First Internet Bancorp (INBK), is yet to report results for the quarter ended June 2026. The results are expected to be released on July 30. This internet bank is expected to post quarterly earnings of $0.03 per share in its upcoming report, which represents a year-over-year change of +50%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. First Internet Bancorp's revenues are expected to be $42.45 million, up 26.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Merchants Bancorp (MBIN) : Free Stock Analysis Report First Internet Bancorp (INBK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Princeton Bancorp (BPRN) came out with quarterly earnings of $1.04 per share, beating the Zacks Consensus Estimate of $0.9 per share. This compares to earnings of $0.1 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +15.56%. A quarter ago, it was expected that this bank would post earnings of $0.85 per share when it actually produced earnings of $0.91, delivering a surprise of +7.06%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Princeton Bancorp, which belongs to the Zacks Banks - Northeast industry, posted revenues of $22.48 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.91%. This compares to year-ago revenues of $21.06 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Princeton Bancorp shares have added about 8.7% since the beginning of the year versus the S&P 500's gain of 9.6%. While Princeton Bancorp has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Princeton Bancorp was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.93 on $22.43 million in revenues for the coming quarter and $3.67 on $88.35 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Northeast is currently in the top 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. First Internet Bancorp (INBK), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on July 30. This internet bank is expected to post quarterly earnings of $0.03 per share in its upcoming report, which represents a year-over-year change of +50%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. First Internet Bancorp's revenues are expected to be $42.45 million, up 26.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Princeton Bancorp, Inc. (BPRN) : Free Stock Analysis Report First Internet Bancorp (INBK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Northern Trust Corporation (NTRS) came out with quarterly earnings of $2.97 per share, beating the Zacks Consensus Estimate of $2.68 per share. This compares to earnings of $2.13 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +10.82%. A quarter ago, it was expected that this company would post earnings of $2.37 per share when it actually produced earnings of $2.71, delivering a surprise of +14.35%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Northern Trust, which belongs to the Zacks Banks - Major Regional industry, posted revenues of $2.62 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 19.27%. This compares to year-ago revenues of $2 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Northern Trust shares have added about 35.5% since the beginning of the year versus the S&P 500's gain of 9.7%. While Northern Trust has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Northern Trust was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.78 on $2.23 billion in revenues for the coming quarter and $11.29 on $8.84 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Major Regional is currently in the top 12% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the broader Zacks Finance sector, First Internet Bancorp (INBK), is yet to report results for the quarter ended June 2026. The results are expected to be released on July 30. This internet bank is expected to post quarterly earnings of $0.03 per share in its upcoming report, which represents a year-over-year change of +50%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. First Internet Bancorp's revenues are expected to be $42.45 million, up 26.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Northern Trust Corporation (NTRS) : Free Stock Analysis Report First Internet Bancorp (INBK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research