First Internet Bancorp

Thank you for standing by. My name is Rebecca and I'll be your conference operator today. At this time, I would like to welcome everyone to the first Internet Bancorp earnings conference call for the first quarter 2026. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, Simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. Please note this event is being recorded. It is now my pleasure to turn the call over to Julia Farah from ICR. You may begin your conference.

Thank you, operator. Hello, everyone, and thank you for joining us to discuss First Internet Bank Corp's first quarter 2026 financial results. The company issued its earnings press release earlier this afternoon, and it is available on the company's website at www.firstinternetbankcorp.com. In addition, the company has included a slide presentation that you can refer to during the call. You can also access these slides on the website. Joining us from the management team today are Chairman and CEO David Becker, President and COO Nicole Lorch, and Executive Vice President and CFO Ken Lobbitt. David and Nicole will provide an overview, and Ken will discuss the financial results, and then we'll open up the call for your questions. Before we begin, I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial conditions of First Internet Bank Corp. that involves risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC followings, which are available on the company's website. The company disclaims any obligation to update any forward-looking statements made during the call. Additionally, management may refer to non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the gap to non-gap measures. At this time, I'd like to turn the call over to David.

Thank you, Julia. Good afternoon, and thank you for joining us on the call today. We delivered strong first quarter results that demonstrated the resilience and strength of our diversified business model. We generated solid revenue growth, expanded our net interest margin, and continued making meaningful progress on credit quality, all the while navigating an uncertain macroeconomic environment. Let me start with some of the highlights for the quarter. Total revenue reached $43.1 million in the first quarter, up 21% year over year, driven by a 26% increase in net interest income. Our fully taxable equivalent net interest margin expanded to 2.45% a 54 basis point improvement from a year ago and 15 basis points sequentially. This margin expansion reflects the benefits of our proactive balance sheet management strategy and the power of our deposit franchise, combined with our scalable nationwide lending platforms. Pre-provision net revenue grew 51% year over year to $18.1 million, underscoring our ability to generate strong operating leverage while maintaining disciplined expense management. This performance gives us confidence in our ability to drive sustainable profitability as we continue to work through our credit normalization process. On credit, our overall loan book remains solid and continues to perform in line with industry trends. In addition, we're seeing tangible evidence that the decisive actions we've taken over the past several quarters are yielding favorable results on the two problem portfolios. SBA and franchise. Our provision for credit losses for the quarter came in better than expected, and we're observing improving trends in our portfolio with delinquency and non-performing loans headed in the right direction. The credit trends we're seeing, particularly in our SBA portfolio, reflect the impact of enhanced underwriting standards, more vigorous portfolio monitoring, and responsive problem loan resolution. On the growth front, our commercial lending pipelines remain robust across multiple verticals. Total loans increased to $3.8 billion with particularly strong production in single-tenant, lease financing, and construction lending, as well as in one of our emerging verticals, wealth advisory lending. While we maintain appropriately conservative underwriting standards, we're seeing great opportunities to deploy capital into high-quality commercial relationships at attractive yields. Turning to the other side of our balance sheet, total deposits reached $5 billion, up from $4.8 billion in the prior quarter. We continue to benefit from the strength and flexibility of our banking as a service initiatives. Importantly, we're seeing continued growth in lower-cost fintech deposits, which has also allowed us to let higher-cost CDs and broker deposits mature without replacement. Our FinTech deposit platform also provides us with significant balance sheet management flexibility. During the quarter, average FinTech deposits totaled $2.4 billion, an increase of over 186% from the first quarter of 2025. At quarter end, we had moved approximately $1.5 billion of these deposits off balance sheet. Optimizing our asset size while maintaining these valuable customer relationships and the associated fee income streams. This capability is a unique competitive advantage that enhances both our profitability and our capital efficiency. In our SBA business, while seasonality and tightened underwriting resulted in softer loan production for the quarter, we're pleased with the strong foundation we're building and how the business is positioned for long-term profitable growth. To further align our strategy in SBA, we've strengthened the business by promoting Gary Carter to the position of national sales manager. Gary rejoined us a year ago as our senior SBA credit officer, bringing deep industry expertise, including his role at Libo Bank. That will help us continue building this business from the sound foundation. Our capital and liquidity position remained solid as we were able to closely manage the size of the average balance sheet, while continuing to grow revenue. Regulatory capital ratios remain well above minimum requirements, with a total capital ratio of 12.5% and a common equity Tier 1 ratio of 8.97%, as well as substantial liquidity coverage. Moving to our strategic investments in technology and artificial intelligence, we continue to invest thoughtfully in digital capabilities that enhance the customer experience. improve operational efficiency, and position us for long-term growth. These technology investments aren't just about maintaining our competitive position. They're also about creating sustainable advantages in how we serve customers, manage risk, and drive operational excellence. Looking ahead, we're navigating an uncertain macro environment from a position of increasing strength. Our diversified business model is generating strong revenue growth. Our deposit franchise provides funding advantages and strategic flexibility. We've proven our ability to make difficult decisions and execute effectively. The credit challenges we've experienced are manageable in the context of our overall business. We've taken decisive action, strengthening underwriting standards, enhancing risk management, and addressing problem loans proactively. We see the benefits in improving trends and expect continued progress throughout 2026. We are not standing still. We're investing in AI and technology to enhance efficiency and customer experience, strengthening our commercial banking capabilities, expanding FinTech partnerships, and repositioning our SBA business on a stronger foundation. We're confident in our strategy, our team, and our ability to deliver value for shareholders. I'll now turn it over to Nicole for operational highlights, including commercial lending, SBA, banking as a service, and credit.