First Internet Bancorp's 2025 Results: A Pivot After a Painful Quarter

FISHERS, IN – January 13, 2026 – As First Internet Bancorp (Nasdaq: INBK) prepares to announce its fourth-quarter and full-year 2025 financial results on January 29, investors and market analysts are watching with keen interest. The upcoming report is more than a routine financial disclosure; it represents a crucial checkpoint for the digital banking pioneer following a tumultuous third quarter defined by a massive strategic overhaul of its balance sheet.

The Fishers-based company, which blazed a trail in branchless banking nearly three decades ago, will release its figures after the market closes, followed by a conference call where executives will face questions about a year of profound transition. The narrative they present will be critical in determining whether shareholders view the recent pain as a necessary surgery for long-term health or a sign of deeper issues.

A Quarter of Strategic Pain, A Year of Transition

To understand the significance of the upcoming report, one must look back at the third quarter of 2025. On the surface, the numbers were jarring: First Internet Bancorp reported a net loss of $41.6 million. This stark figure was driven almost entirely by a single, decisive action—the sale of a massive loan portfolio, which resulted in a pre-tax loss of $37.8 million.

However, a closer look reveals a more complex picture. When excluding the impact of the loan sale, the bank's adjusted total revenue for the quarter reached $43.5 million, a 30% increase from the prior quarter and a figure that comfortably beat analyst estimates. More importantly, net interest income (NII), a core measure of a bank's profitability, grew for the eighth consecutive quarter to $31.5 million on a fully taxable equivalent (FTE) basis. The net interest margin (NIM), which measures the difference between interest earned on assets and interest paid on liabilities, also expanded by 8 basis points to 2.12% (FTE), signaling underlying operational strength.

This juxtaposition of a headline loss against improving core metrics is at the heart of the story. While some asset quality indicators showed deterioration in Q3, with non-performing assets rising, the company simultaneously reported a significant 79% reduction in delinquencies within its franchise finance portfolio. The upcoming full-year results will provide a clearer picture of whether these positive operational trends have continued and if the bank has successfully stabilized its asset quality post-restructuring.

Shedding Assets to Sharpen Digital Focus

The pivotal event of 2025 was the sale of $836.9 million in single tenant lease financing loans to an affiliate of Blackstone. This strategic disposition dramatically reshaped First Internet Bancorp's loan portfolio, reducing its exposure to that specific asset class to just 5% of its total loans. While the sale came with a substantial one-time loss, management framed it as a necessary move to de-risk the balance sheet, improve regulatory capital ratios, and unlock capital for redeployment into higher-yielding, core business lines.

This strategic pivot appears to be a doubling-down on the bank's established strengths. A key area of focus is Small Business Administration (SBA) lending. For the fiscal year ending September 30, 2025, First Internet Bank ranked as the seventh-largest SBA 7(a) lender in the United States by total loan value, approving 487 loans worth a staggering $712.3 million. This places the digital-first institution ahead of behemoths like J.P. Morgan Chase in this critical small business financing space, highlighting its expertise and efficiency in a highly specialized market.

By shedding lower-margin assets, the bank aims to concentrate its resources on these more profitable segments, including its expanding commercial and industrial, construction, and public finance portfolios. The success of this strategy will be judged by the growth and profitability of these core areas in the fourth quarter and beyond.

The Path Forward: BaaS, SBA, and Shareholder Value

For shareholders, the key question is whether this strategic shift will translate into sustainable long-term value. Despite the Q3 loss, management has projected confidence. In December, the Board of Directors declared a quarterly cash dividend of $0.06 per share, a signal that it believes the bank's capital position is secure and its earnings power is set to rebound.

Analyst expectations for the fourth quarter anticipate an earnings per share (EPS) of around $0.51. More telling are management's own projections, which forecast the FTE net interest margin to continue its expansion, landing between 2.4% and 2.5% in Q4. Looking ahead, early models for fiscal year 2026 project a significant 20% increase in EPS, with net interest income potentially reaching $150 million.

A significant driver of this optimistic outlook is the bank's growing Banking-as-a-Service (BaaS) model. By partnering with fintech companies, First Internet Bank is leveraging its banking infrastructure to create new revenue streams. In Q3 2025, total revenue from these fintech initiatives grew 130% year-over-year. Recent partnerships, such as the one announced with Parlay Finance in October to modernize SBA lending, demonstrate a continued commitment to this high-growth area.

This focus on innovation is also evident in its direct-to-customer offerings. The bank's Do More Business™ Checking account recently won a Best in Biz Award for the third consecutive year, and the company expanded its services by offering Zelle® for its business clients, keeping its product suite competitive in a crowded digital marketplace.

Navigating Headwinds and a Crowded Market

First Internet Bancorp's strategic pivot is occurring within a challenging macroeconomic environment. Fluctuating interest rates continue to pressure bank margins across the industry. However, the company noted in its last earnings call that new loan originations carried a weighted average yield well above its portfolio average, suggesting it is successfully pricing new business to reflect the current rate environment while simultaneously managing its deposit costs.

As a pioneer, the bank now operates in a world filled with the digital challengers it helped inspire. Sustaining its competitive edge requires continuous innovation and flawless execution. The upcoming earnings report and subsequent conference call will be management's opportunity to articulate how its leaner, more focused strategy positions it to not only navigate economic headwinds but also to thrive and grow.

Investors will be listening closely for updates on loan pipeline strength, progress in fintech partnerships, and detailed guidance for 2026. The numbers will tell part of the story, but the narrative that accompanies them will ultimately determine whether the market buys into First Internet Bancorp's vision for a more profitable future.