First Internet Bancorp (INBK) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $5.8 million, up 11.5% sequentially and 49% year-over-year; adjusted net income was $6.2 million, with adjusted EPS of $0.72, up 22% from Q1 2024.

• Total revenue increased 11.3% sequentially to $32.4 million, with positive operating leverage and strong noninterest income growth, especially from record SBA loan sales.

• Tangible book value per share increased 1.3% sequentially and 6.3% year-over-year, reaching $42.37.

• Repositioned loan portfolio, optimized balance sheet, and diversified revenue base, with strong deposit growth and controlled deposit costs.

• Exited consumer mortgage business in Q1 2023 due to declining volumes and negative outlook.

Financial highlights

• Net interest income was $21.3 million, up 2.9% from Q1 2024 and 17.5% year-over-year; net interest margin was 1.67%, up 1 bp sequentially and 14 bps year-over-year.

• Noninterest income for Q2 2024 was $11 million, up 32% from Q1 and 87.9% year-over-year, driven by record SBA gain on sale revenue of $8.3 million.

• Noninterest expense was $22.3 million, including $0.6 million in non-recurring items; adjusted noninterest expense was $21.8 million, up 3.5% from Q1.

• Allowance for credit losses to total loans was 1.10%, up from 1.05% in Q1 2024; net charge-offs to average loans were 0.14%.

• Book value per share was $42.91, up from $42.37 in Q1 2024.

Outlook and guidance

• Management expects continued improvement in operating fundamentals, positive operating leverage, and stable asset quality for the remainder of 2024.

• Annual EPS for 2024 is expected to be around $3, with net interest income up 20% and annual loan growth of 7.5%-10%, assuming no Fed rate cuts.

• Fully taxable equivalent margin is expected to reach 1.90%-2% in Q4 2024.

• Deposit costs are expected to rise modestly as maturing CDs reprice at higher rates.

• Company expects to continue quarterly cash dividends, subject to board discretion and regulatory factors.