According to Yahoo Finance, First Internet Bancorp (Nasdaq: INBK) reported second-quarter 2026 net income of $2.4 million, or $0.27 per diluted share — a sharp improvement from just $0.02 per share in the same quarter last year, and well ahead of the roughly $0.15-$0.16 analyst consensus estimate. Notably, this represents earnings growth, not the decline described in some earlier characterizations of the quarter.
Revenue and Margin Trends
Total revenue grew 23% year-over-year to $41.1 million, though that came in slightly below the roughly $43.8 million analysts had expected. Net interest income rose 16%, and the fully-taxable-equivalent net interest margin expanded 43 basis points to 2.47%. Pre-provision net revenue increased nearly 28% year-over-year. Noninterest income grew more than 56% year-over-year, driven in part by strength in the company’s fee-based businesses, including 172% year-over-year growth in Banking-as-a-Service fee revenue.
Credit Quality Improvement
Management described the quarter as a meaningful inflection point in the company’s credit cycle. Provision for credit losses fell to $13.4 million, down from $16.3 million in the first quarter of 2026. Total nonaccrual loans declined for a second consecutive quarter, down 14% from Q1 2026, while delinquencies of 30 days or more past due also improved, aided by a marked decline in small business lending delinquencies.
Executive Commentary
David Becker, Chairman and CEO of First Internet Bancorp, said the quarter reflected strong business momentum paired with an encouraging improvement in credit trends, pointing to 23% year-over-year revenue growth, nearly 28% growth in pre-provision net revenue, and the 43-basis-point expansion in net interest margin. He added that declining credit provisions, the first sequential drop in nonperforming loans in several quarters, improved small business lending charge-offs, and sharply lower portfolio-wide delinquencies all point to proactive credit actions taken over recent quarters beginning to pay off.
Guidance and Dividend
Reflecting the stronger results, First Internet Bancorp raised its full-year 2026 diluted EPS guidance to a range of $2.35 to $2.45, up from a prior consensus estimate of roughly $2.10. The company also paid a quarterly dividend of $0.06 per share on July 15 to shareholders of record as of June 30 — a $0.24 annualized dividend and roughly a 0.8% yield — continuing a streak of dividend payments that now spans 15 consecutive years.
Outlook and Guidance Assumptions
According to Yahoo Finance, management maintained full-year 2026 EPS guidance of $2.35 to $2.45, supported by expected sequential improvement in provision expense over the third and fourth quarters. Net interest margin is projected to reach 2.75% to 2.80% by the fourth quarter, assuming continued deposit repricing tailwinds and strong funding pipelines in construction and investor commercial real estate. The company expects to replace $700 million in maturing CDs — carrying a weighted average cost of 3.94% — with lower-cost fintech deposits during the second half of the year to support margin expansion. Full-year loan growth guidance was revised to a range of 4% to 6%, reflecting elevated early payoffs and a more disciplined, quality-focused approach to SBA originations. Non-interest income guidance was raised to $40.5 million to $41 million to help offset a downward revision in net interest income guidance, driven by strong secondary-market premiums on SBA loans and continued growth in fintech fee revenue.
Risk Factors and Structural Adjustments
Franchise finance net charge-offs remained elevated at $11.6 million as the special assets team worked aggressively to resolve legacy problem credits, though new nonaccrual formation slowed dramatically. The company is also carrying higher cash balances due to early loan paydowns and lighter early-quarter SBA production, which temporarily slowed the pace of sequential margin expansion. Management noted that while SBA industry volume overall is down 18% year-over-year, First Internet remains a top-10 SBA originator, having tightened underwriting to prioritize borrower strength over volume. Operating expense guidance was lowered to $106 million to $107 million, primarily reflecting lower compensation costs, even as the company continues investing in AI and technology.
Q&A Highlights
On drivers of net interest income and margin expansion through year-end, management pointed to significant expected deposit leverage as high-cost CDs roll off and are replaced by fintech deposits yielding 3.15% to 3.20%. Yields are also expected to benefit from the company’s Jaris partnership, where retained loans yield 12% to 15% net, alongside new single-tenant lease originations pricing at 6.40% to 6.60%.
On credit quality in legacy SBA and franchise finance portfolios, management said it believes the company has worked through the worst of its 2021-2023 loan vintages, with 2025 and 2026 vintages performing in line with expectations. Early-stage franchise delinquencies have declined more than 75% since the start of the year, suggesting remaining issues are increasingly concentrated and manageable.
On expansion plans for Banking-as-a-Service and wealth advisory lending, management said wealth advisory lending is targeting ownership transitions among registered investment advisors, where the average owner age is 66, and has seen a meaningful pickup in volume in recent months. The fintech partner pipeline remains healthy, with two new programs expected by year-end focused on high-volume transaction fees and low-cost deposit acquisition.
On interest rate sensitivity, management said the balance sheet is slightly liability-sensitive, with a 25-basis-point rate cut estimated to provide a $2.2 million annual boost to net interest income. The full-year tax rate is expected to fall between 6% and 8.5%, with quarterly rates likely in the 12% to 15% range during the second half of the year.