First Internet Bancorp reports robust growth in 2024, driven by commercial lending and deposit expansion

First Internet Bancorp, the parent company of First Internet Bank, has reported strong financial and operational performance for the fourth quarter and full year ending December 31, 2024. With a focus on strategic loan and deposit growth, the company delivered substantial improvements in net income, earnings per share, and operating leverage, positioning itself for continued momentum in 2025.

David Becker, Chairman and CEO of First Internet Bancorp, stated, “Our 2024 performance reflects a year of remarkable growth and improved profitability. Significant increases in net interest income and gains from our small business lending division were key contributors to our results. These achievements underscore the strength of our commercial lending strategy and our ability to capitalise on a favourable rate environment.”

How Did First Internet Bancorp Perform in Q4 2024?

First Internet Bancorp reported a net income of $7.3 million for the fourth quarter of 2024, a 4.9% increase compared to Q3 2024. Diluted earnings per share rose by 3.8% quarter-over-quarter to $0.83. The company’s net interest income climbed to $23.6 million, reflecting an 8.2% increase over Q3, while its net interest margin (NIM) improved by 5 basis points to 1.67%.

Loan growth was a standout highlight, with total loans increasing by $134.8 million, or 3.3%, compared to Q3 2024. Commercial lending led this growth, particularly in construction, investor commercial real estate, and small business lending portfolios. Deposits also grew significantly, rising by $135.5 million, or 2.8%, during the quarter.

In December alone, First Internet Bank closed $63.1 million in Small Business Administration (SBA) loans, with the guaranteed portion scheduled for secondary market sales in early 2025.

What Were the Full-Year 2024 Highlights?

For the entire year, First Internet Bancorp reported net income of $25.3 million, a remarkable increase of 200.3% compared to 2023. Diluted earnings per share surged by 203.2% to $2.88. Net interest income for 2024 reached $87.4 million, reflecting a 16.7% year-over-year increase.

Total loans grew by $330.4 million, or 8.6%, while deposits expanded by $866.2 million, a 21.3% increase compared to 2023. These results underscore the company’s success in diversifying its revenue streams and improving its asset-liability management.

David Becker attributed these gains to enhanced loan yields and robust operating leverage, commenting, “Total revenue growth far outpaced expense growth in 2024, a testament to our strategic focus on high-yielding loan categories and disciplined cost management. We are entering 2025 with solid liquidity, capital strength, and a favourable outlook for further margin expansion.”

How Did Net Interest Income Drive Performance?

Net interest income was a key driver of First Internet Bancorp’s 2024 success. In Q4, net interest income reached $23.6 million, an 8.2% quarterly increase. On a fully taxable equivalent basis, it rose to $24.7 million.

This growth was supported by higher yields in commercial lending portfolios, particularly in investor commercial real estate, construction, and small business loans. The consumer loan portfolio also contributed, with strong origination yields in trailers and RV loans offsetting declines in residential mortgage and home equity balances.

Despite Federal Reserve rate cuts in late 2024, the company maintained competitive loan pricing, with the average yield on funded loan originations reaching 7.26%. Average balances of commercial loans increased by $99.8 million during Q4, reflecting the bank’s focus on short-duration, variable-rate lending products that enhance its interest rate risk profile.

What Were the Key Trends in Deposit Growth?

Deposit growth remained robust throughout 2024, driven by consumer demand for certificates of deposit (CDs) and fintech-brokered deposits. Average CD balances rose by 9.7% in Q4, with the weighted-average cost of new CDs declining to 4.23%.

The bank also benefited from an increase in fintech deposits, which grew by 36.3% during the quarter, reflecting higher payment volumes. By reclassifying these deposits as interest-bearing demand deposits under a Federal Deposit Insurance Corporation exemption, the bank further optimised its cost of funds.

These strategic moves contributed to a decline in overall deposit costs, aligning with the bank’s goal of improving its funding mix.

How Did Noninterest Income and Expenses Impact Results?

Noninterest income increased significantly in Q4, reaching $15.9 million, up from $12 million in Q3. This included $4.7 million in gains from interest rate swaps and prepayment-related activities. Excluding these gains, adjusted noninterest income was $11.2 million, reflecting lower SBA loan sale volumes due to year-end timing.

Noninterest expenses rose to $24 million in Q4, a 5.1% increase from Q3, driven by higher salaries and seasonal costs. Despite these increases, the bank maintained disciplined expense management, with operating leverage improving on an annual basis.

What Is the Outlook for 2025?

First Internet Bancorp enters 2025 with a strong financial position, supported by solid capital ratios and a favourable interest rate environment. The company expects continued net interest margin expansion, driven by its focus on high-yielding loans and optimised funding strategies.

David Becker expressed confidence in the year ahead, stating, “Emerging opportunities across our core businesses, combined with a more supportive macroeconomic backdrop, position us to deliver sustained earnings growth and enhanced shareholder value in 2025.”