First Internet Bancorp (INBK) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $7.0 million ($0.80/diluted share), up 21% sequentially and 105% year-over-year, with total revenue of $33.8 million, a 4.4% increase from Q2 2024.

• Achieved fourth consecutive quarter of double-digit earnings growth, driven by margin recovery, net interest income growth, and record SBA gain on sale revenue of $9.9 million.

• Strong deposit growth, up 12.3% from Q2 2024 and 17.5% year-over-year, improved liquidity and loan-to-deposit ratio to 84.1%.

• Tangible book value per share increased to $43.89, up 3.6% in the quarter and nearly 11% year-over-year.

• Asset quality remains sound despite a rise in nonperforming loans to 0.56% of total loans, with specific reserves on 45% of nonperforming balances.

Financial highlights

• Net interest income was $21.8 million, up 2.1% sequentially and 25% year-over-year; net interest margin was 1.62%, down 5 bps from Q2 2024 but up 21 bps year-over-year.

• Noninterest income reached $12.0 million, up 9% sequentially and 62% year-over-year, with SBA gain on sale revenue at a record $9.9 million.

• Noninterest expense was $22.8 million, up 2.1% from Q2 2024, mainly due to higher compensation and staff additions.

• Allowance for credit losses was 1.13% of loans, up three basis points from Q2 2024.

• Book value per share increased 5.9% to $44.43 since year-end.

Outlook and guidance

• Net interest income expected to increase 10%-15% in Q4, with net interest margin projected at 1.8%-1.85%.

• SBA origination growth targeted at 15%-20% for 2025, with $600 million in originations as the goal.

• Expense growth anticipated at 7%-10% in 2025, depending on SBA performance.

• Management expects Fed rate cuts to positively impact deposit pricing and plans to deploy excess liquidity to pay down higher-cost deposits and fund loan growth.

• Quarterly cash dividends of $0.06/share are expected to continue, subject to board approval and regulatory conditions.