First Internet's Fourth-Quarter Earnings Outlook Reaches $1.07

The Tip Desk · October 29, 2026 · 3 min read

Third-quarter revenue hit a record $43.9 million and FTE net interest margin expanded 8 bps to 2.55%.

First Internet Bancorp (INBK), the branchless bank holding company, reported record quarterly revenue of $43.9 million for the third quarter ended September 30, 2026, up 7% from the prior quarter, as net interest income and noninterest income both rose.

Net interest income increased 7% to $34.7 million, or $35.9 million on a fully-taxable-equivalent basis. Fully-taxable-equivalent net interest margin expanded 8 bps to 2.55%. GAAP net interest margin was 2.47%. Interest reversals of $1.2 million on franchise finance loans placed on nonaccrual reduced NIM by 9 bps.

The company said the loan mix shifted toward investor commercial real estate, single-tenant lease financing, wealth advisory lending and embedded finance, lifting the loan portfolio yield 8 bps to 6.42%. A growing fintech deposit base allowed the bank to retire higher-cost CDs and brokered deposits. The cost of interest-bearing deposits declined 6 bps to 3.32%. Average certificates and brokered deposits fell to $1.78 billion from $2.05 billion.

Period-end total deposits rose 7% to $5.2 billion. Fintech-brokered deposits were $341.6 million at September 30, versus $23.3 million at June 30. Certificates of deposit fell to $1.48 billion from $1.68 billion. About $2.9 billion of fintech deposits were held off-balance sheet in a deposit network. The loans-to-deposits ratio was 75%.

Total loans were $3.9 billion, up $52.9 million, or 1%, from the second quarter. Investor commercial real estate rose to $753.7 million from $670.0 million and single-tenant lease financing to $308.6 million from $288.7 million. Franchise finance fell to $330.6 million from $357.2 million. The company attributed the loan increase to production in core verticals, partially offset by early payoffs and runoff in exited portfolios.

Noninterest income rose 6% to $9.2 million. Fintech fee revenue was up 13% from the prior quarter. Gain on sale of loans was $4.8 million. Adjusted pre-provision net revenue grew 14% to $17.1 million.

Net income was $4.8 million, or $0.54 a share, versus $2.4 million, or $0.27 a share, in the second quarter. Adjusted diluted earnings were $0.57 a share. The company recognized $0.4 million of pre-tax non-recurring severance costs.

The provision for credit losses fell 13% to $11.6 million from $13.4 million in the second quarter, after a decline from $16.3 million in the first quarter. Net charge-offs to average loans declined to 0.82% from 1.77%, which the company said was due to lower franchise finance and small business lending charge-offs. Specific reserves of $2.6 million related to a large franchise finance relationship taken on nonaccrual late in the quarter. Total delinquencies excluding nonperforming loans declined for a second consecutive quarter and were 0.48% of total performing loans.

Nonperforming loans to total loans rose to 1.63% from 1.58%, which the company said was due primarily to franchise finance loans moved to nonaccrual. The allowance for credit losses on loans was 1.48% of loans. ACL covered 91% of NPLs.

Preliminary CET1 was 8.86% and total capital 12.32%. Tangible common equity to tangible assets was 5.94%, down from 6.46% at June 30. Tangible book value per common share was $40.04.

For the fourth quarter of 2026, the company expects diluted earnings of $1.02 to $1.07 a share, FTE net interest margin of 2.75% to 2.80% and FTE net interest income of around $38.5 million, citing loan-portfolio optimization, stable deposit costs and an assumed additional 25 bps increase in the Fed Funds rate in December. Noninterest income is expected around $7.5 million, noninterest expense around $26.5 million, and the provision $7.5 million to $8.0 million.