On October 23, 2024, First Internet Bancorp (INBK, Financial) released its 8-K filing detailing its financial performance for the third quarter ending September 30, 2024. First Internet Bancorp is a bank holding company that provides a range of commercial and retail banking services through its internet-based platform, without any physical branches.
Performance Overview
First Internet Bancorp reported a net income of $7.0 million for Q3 2024, marking a 21.0% increase from the previous quarter. However, the diluted earnings per share (EPS) of $0.80 fell short of the analyst estimate of $0.83. The company's revenue also missed expectations, with net interest income reported at $21.8 million, compared to the estimated $23.5 million.
Financial Achievements and Challenges
The company achieved a notable increase in net interest income, which rose by 2.1% from the second quarter of 2024. This growth was driven by higher earning asset yields and stable funding costs. However, the net interest margin decreased to 1.62% from 1.67% in the previous quarter, indicating challenges in maintaining profitability amidst changing interest rates.
“Our third quarter results demonstrated strong performance virtually across the board,” said David Becker, Chairman and Chief Executive Officer. “Growth in net interest income, driven by higher earning asset yields and stable funding costs, along with record gain-on-sale revenue from the continued expansion of our national SBA platform, propelled an increase in operating revenues for the fifth consecutive quarter, resulting in significant positive operating leverage.”
Key Financial Metrics
First Internet Bancorp's total loans increased by $74.7 million, or 1.9%, from the previous quarter, while deposits grew significantly by $523.8 million, or 12.3%. The loans-to-deposits ratio stood at 84.1%, reflecting improved liquidity. Nonperforming loans to total loans rose to 0.56%, indicating a slight increase in credit risk.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Net Income ($ million) | 7.0 | 5.8 | 3.4 |
| Diluted EPS ($) | 0.80 | 0.67 | 0.39 |
| Net Interest Income ($ million) | 21.8 | 21.3 | 17.4 |
| Net Interest Margin (%) | 1.62 | 1.67 | 1.39 |
Analysis and Outlook
First Internet Bancorp's performance in Q3 2024 highlights its ability to grow net income and manage asset yields effectively. However, the decline in net interest margin and the increase in nonperforming loans suggest potential challenges in sustaining profitability and managing credit risk. The company's strategic focus on revenue diversification and balance sheet optimization positions it well for future growth, but it must navigate the complexities of the current economic environment to meet its financial targets.
Explore the complete 8-K earnings release (here) from First Internet Bancorp for further details.
