First Internet Bancorp Posts Strong Q4 Revenue, Navigates Credit Headwinds with Optimistic 2026 Outlook

This analysis is based on the company's Q4 2025 earnings call and financial reports.

First Internet Bancorp (INBK) closed its 2025 fiscal year on a high note, announcing a significant 21% year-over-year revenue increase for the fourth quarter. The digital-first bank's performance was driven by strategic gains in its Banking-as-a-Service (BaaS) partnerships and Small Business Administration (SBA) lending, even as it proactively addressed credit quality pressures in certain portfolios.

Chief Financial Officer Kenneth Lovik provided detailed color on the drivers behind the numbers. A key highlight is the planned retention of an additional $94 million in SBA loans, expected to yield prime plus 1.5%, which will bolster net interest income. Furthermore, the bank stands to benefit from favorable deposit repricing, with $850 million in Certificates of Deposit (CDs) maturing in the next six months at a weighted average cost of 4.15%. New CDs are being issued at roughly 3.65%, offering a 50-basis-point improvement.

However, the quarter wasn't without its challenges. The level of criticized loans—primarily in the SBA portfolio—rose by approximately $16 million. CEO David Becker contextualized this increase, noting that stress in SBA loans often surfaces 12-18 months after origination. "We are deeply engaged with our borrowers at the first sign of difficulty," Becker stated, emphasizing the bank's hands-on approach to risk management. The bank has set aside a provision of $50 to $53 million for 2026, with roughly half earmarked to cover anticipated net charge-offs, most of which are expected in the first half of the year.

The fintech and BaaS division emerged as a standout growth engine. CFO Lovik noted that deposit growth is currently fueled by established partners like Ramp and Increase, rather than a rush of new clients. Chief Operating Officer Nicole Lorch highlighted a disciplined strategy: "We're focused on deepening relationships with our existing, high-quality partners." This focus has paid off, with gross revenue from these initiatives more than doubling over the past year.

Analyst & Investor Commentary:

Michael Thorne, Portfolio Manager at Ridgecrest Capital: "INBK's revenue growth is impressive and underscores the scalability of their digital model. Their ability to maintain net interest margin in this environment, aided by that CD repricing tailwind, is a testament to savvy liability management. The credit provision is prudent, not panic-inducing."

Sarah Chen, Fintech Analyst at Aurora Insights: "The more-than-doubling of fintech revenue is the real story here. It validates their selective BaaS strategy. In a sector where many banks are rushing into fintech partnerships, INBK's focus on deepening a few key relationships looks like a sustainable competitive advantage."

Frank Dillard, Independent Banking Consultant: "Let's not gloss over that $16 million jump in criticized loans. A 21% revenue pop is great, but credit is the bedrock of banking. Their 'proactive engagement' sounds nice, but it means these loans are already on the brink. Their optimistic 2026 guidance hinges on the economy holding steady—a big 'if.' This is a classic case of growth masking underlying risk."

For a full record of the proceedings, readers are directed to the official earnings call transcript available on the First Internet Bancorp investor relations website.