INBK - Earnings call transcript Q1 2024

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Operator

Good day, everyone, and welcome to the First Internet Bancorp earnings conference call for the first quarter of 2024. [Operator Instructions]And now, I would like to turn the conference over to Larry Clark from Financial Profiles, Inc. Please go ahead, Mr. Clark.

Larry Clark

Thank you, Sylvie. thank financial joining quarter results and First to of everyone, Bancorp's Internet for day, you us for discuss XXXX. Good the first and company's issued available company its press yesterday The earnings on website. afternoon, the release it's

In you the refer that slide can company addition, to has the a presentation included call. during

before reconciliation over and the directly turn the quantitative as information to measures. the on discussed to such this the overview, on to will access and by are the not The financial to update involve statements SEC Ken are the to you discussed future Becker; with today remind as time, and and could factors risks GAAP open on David. we and Vice contains available non-GAAP website.Joining First comparable results company and These forward-looking that forward-looking may management President the made to measures.At website. from well provide the and the other substitute call of financial like You future for the uncertainties. can we'll the Chairman David performance factors be any to also most Various which contains press company's like from The are begin, which actual statements management during Ken forward-looking your GAAP call any materially company's obligation CEO, filings, David respect different Lovik. I'd release any cause disclaims results website CFO, I'd available today, financial an these slides the non-GAAP in to that but Then this to discuss us measures, call.Additionally, refer the team are statements. or Bancorp will to to questions.However, Executive be expressed results. call intended implied supplement condition of conference the Internet

David Becker

our joining we quarter X ago, late first would of Those mark net quarters XXXX thanks margin these for low today you Good we interest quarter you, point attend bottom. us third interest net who that and discuss results. the Larry. afternoon, recall everyone, the regularly of In as predicted called for and Thank 'XX income. will the we October, meetings

large improved turn estimated in we consecutive net reported in not regardless the despite driven from interest there, continued a growth future long-term also the start We we monetary that Reserve margin recovery reducing and and would short-term in of in margin Since our profitability, rates, now whether have rates. part chose higher X what or interest of growth ongoing to Federal earnings projected. pace quarters then, around uncertainty interest policy and had the by and volatility strong income net and at

repositioning optimizing the we've meaningful check improving quarter's made quarter. to demonstrate continued progress key our This keeping Slide to our the balance loan risk the results discuss rate and sheet with I'd like on for overall X, the costs mix, and profile.Starting interest highlights in while some themes portfolio of the deposit

transition balance growth the an of portion deployed on loan optimize of liquidity to experienced or sides composition both annualized sheet. drive the we portfolio I As net to the and X% $XX a basis. of growth continued deposit just noted, quarter the strong loan over million, our during We and of

up the first quarter points with the the increased overall from points consistent New basis funded XXX XXXX from quarter deposit quarter yield loan basis origination the yields and loan XX of fourth XX on XXXX. The basis XXXX, increased fourth while cost of portfolio of were only X.XX%, points.

low, was believe by and net the volume and X margin quarter. over margin net third small Compared respectively, another growth by of revenue. investment of we XX% the XX%, quarter year, SBA estimates X%, has the well, interest and not SBA and expanded almost loan production first interest year record Despite will up of interest have net our metrics quarter were sale demonstrating cuts is rate loan solid basis originations up the trend to XX Reserve the prices, the has continued equivalent was expectation income and Since emphasis year, remainder composition of for in lower by business last income reminder, delivering quarter higher year, their a hit and stabilizing the for the confident when the made sold results the quarter any and the Notably, interest tangible do net year.Another result, the activity interest with SBA margin providing our by this Federal improving of points we to seasonally for a exceptionally of increased on expanded basis entrepreneurs business. points.With perform we consistent As the of short-term team deposit fully-taxable the prior which quarter our and the interest the capital as gain highlight net XX% country. throughout this in those guidance remain we income first January. reflect performance X portfolio in net that the to issued ago, on owners

With industry. the points.We quarter.It at small nonperforming growth, we the generally lending at our our The XX business XX remain of operating just charge-offs typical X income, annual moderate by and expense the by total low to increase of efficiency.Credit favorably additions another lenders powered points assets remains SBA to sale remained quarter loans loan pipeline to active to assets delivered and during merit margin quarter-end. saw total residential net healthy a growth, pay Furthermore, top we solid on due to points at business total due basis on that the more continue But and among overall, the over interest primarily prior these X% delinquencies benefit which of in due, reset to the X(a) in extent, net the growth loans basis improvement average loans only leverage an costs on at country. or quality in employee small increase revenue, in delinquencies increases, consecutive continued driven second of drove a and quarter Congratulations in past quarter. interest an and operating revenue also income quarter-end. XX quarter, expansion most finance portfolios. small and with increase in noninterest XX a from net nearly positive days gain continues basis increase lending, franchise revenue in total all expansion, the efforts, business is is rest loans record XX of the our totaled compare points standout team combination increase Our loans SBA and to did to mortgage. nonperforming legacy primarily to Nonperforming ratios at basis and lesser to flourish, fourth

Some borrowers in of due have as current to of delinquencies timing to become of the Subsequent total payments. simply today, number XX on payments. those And of loans. this was their have these basis points to quarter-end, a declined

at remind any and to office concerns office current book common equity just at commercial estate quarter X.XX% increased and less X.X% of a key per business Tangible As shareholder include X balances remains the real of equity ratio value creation, year-over-year. during district of a capital common levels remain tier X% is X.XX% up of quarter-end. with tangible share, value measure sound and than to ratio does loan like it I'd relates total that exposure X% our everyone capital not estate, central around our industry real to exposure.Our

grown a time tangible As we by the created further since all example nearly value Internet book per share that XX% shareholders for of to XX% average for compared First period. during value banks has an have publicly-traded XXXX, of

to up small we a of of quarter. per We from a excess grown quarter share banking the which the continued This in minutes per result in up quarter challenging lending improvement $X.X that of XXXX. a fourth banks tangible operational each discuss part of also discipline handful a management just in the now and to value a past operating our prudent take share have reported is XX%.Let sheet of $X.XX, activity XX% X second the net our through and in growth period diluted our among earnings performance, balance income for very industry.As the me are of of earnings testament years, of during couple million, of consecutive XX%, was book

in offset construction, construction finance. finance team franchise finance quarter, small originating This on million by the had $XX solid another declines the lending Turning an generated up to annualized our balances produced XX% X, We by quarter, from solid we Slide loan during led growth basis. business commitments. where was portfolios.Our commercial teams, or healthcare public year-end, and million new fixed-rate in and growth partially $XX in the lending were

to to after fintech channel in side, to Additionally, total which on quarter rates line I program, declines on on months. lending, borrowers the we and were as X total specialty were $XXX higher-yielding consistent of composition with production increased credit from the expected us the XX vehicle new entered down We basis, fund positioned points outstanding call mid-X% At want is our of $XXX delinquencies our our their these Internet the range. our of funded million, long-term recreational of construction channels, were and shifting partnership the fourth partially in well deposits loan very yields. the winter towards on first ago, detail, consumer favorable super by end and cover unfunded to prime to provide quarter-end, projects. the our as basis in the on in launched linked-quarter XX% lines quarter, up update low loans construction long to drew turn in borrower commitments the at partnerships. portfolios business increased over million a quality Bank with leaving prior years Ken continues in First that the more consumer I loans.On continue grow Furthermore, portfolio lower the balances to variable-rate production during at traditionally into a offset an relationships just consumer mortgages remain in Not modestly focused customer residential existing I lending, loans.Before

Over we the forged additional years, partnerships.

capital our out proud one anyone processing Department who to earn entities payments card has workers helped origination of miles delivering in yields Revenue, state's dinner markets PXP a credit to build online necessary for of bill, used excellent split like know to cost with home to partnerships reward an ever paid bringing lower or app of economy, in-house affinity that or growth quality the with supporting delivery their an partners while Some wallet carried teams.As coffee or others underserved points is like played our have other of establish and niche growth the partnerships audience initiatives, without arena with to on-demand loan role channels. to tell the the financial online costs will gig drove us services. we innovation, past this And the evolution target well, provided and First Still have the Bank the services are for XX you, financial vital years. of Internet in acceptable

and As purpose dozen that other I implementation. noted live programs stages have scope currently in varying we and of various of several quarter, a last are programs

As not our we add these programs any new focused did live, is attention on quarter. bringing programs the during

a in temper of channel on want partners, just more did new revenue. provided to that Ken our quarterly more activate which we However, in expectations. increase significant moment.I will a one for provide fintech a sizable your service details

We rate in remaining quarters to same that continue are to revenue this grow of forecasting the at year. not

first us from revenue confidence. on year, recognized are with the to for of the in my enable this expect additional we improved and almost credit will delivered rest wrap However, strong, hit the will Xx Furthermore, quarter reoccurring be our performance we forward revenue quality capital comments, levels the remain the last forecasted service we amount year to liquidity year.To look and and sound. up the which fintech channel

we for of the higher With many evolution out SBA fell remainder Bank positive in continue improved the you of same XXXX our earnings beyond.To with a mix, of bank on outlook of and stocks, loan for that time well the to stock, portfolio as Index around First deposit team profitability the pricing, topic Internet failures Russell the many the we other I XXXX recall covered quarter, achieve and stabilized spring. are touch the regional our last continued and believe along to positioned bank

minimum market Index As we keeping on the being Russell the are reported. an we later reconstitution the where this head of are of eye quarter, estimates into capitalization

that While a in I over our the index.Finally, want inclusion there stock First Internet personally whole, qualify are stock in dedication to to to price months, the cap especially again clients thank last for their remain universe First certainly optimistic recovery the our no guarantees contributions we relative strong results. X for entire team as with a and small might Internet the the their to

constant confidence financial as the improvement of services premier long me that, provider.With turn team's of Our our to commitment financial talent to and future great results. details give Internet to and I'd for a in opportunities the First technology-forward runway Ken the ahead on over call digital more like

Kenneth Lovik

David. Thanks,

David $XXX from partnership over fourth increases at where our through deposits will prior were saw across Deposits our fintech in due X.X%, Non-maturity up turn X.X% million X, Slides base. deposits As by deposits included to demand X up deposits the money from customer million brokered XX% over from in covered loan the partners to Deposit and in let's strong fintech quarter $XXX.X grew and cover balances. more portfolio, $XX we totaled market the or detail. balances quarter million quarter-end. as I or were

strong these Additionally, the the volume linked-quarter, was the billion quarter. the payments average $XXX These new We up generated driven production demand quarter, XX% XX million recurring offset an a the an months. the interest term XX% income, and first quarter, revenue oversight in were Total first of was by to of of average from fees.Related almost up million were of fourth activity quarter, consisting and quarter processed of the with partially X.XX% renewals the weighted increase at during an by cost $XXX revenue we CD balances channel. partners $X.X in million consumer total of originated which average during $XXX,XXX and majority fintech with maturities linked cost from $XXX of in this transaction over X.XX%. volume, in partnership the in

have the of an of we XXXX in maturing third forward, average and CDs cost with quarter with $XXX the maturing million second cost in of X.XX%. X.XX%, Looking $XXX million average quarter an of

the of the and is pace slowing quarter, last CDs noted costs. re-pricing increases gap of cost the we between to continue the maturing will to which as So, cost new of CDs narrowing, deposit in contribute

for rest and balances to uninsured deposits, customer under municipal accounts larger total of existing of Additionally, we our as the is in as quarter-end, increase which Bank adjusted was used dropped to brokered industry.Moving we some to down unused estimate Loan a quarter-end, liquidity compare at cash agreements, new million, higher-cost growth at were deposits, XX% Slide uninsured the deposits or million to $XX can Federal depositor deposit sheet end favorably X, as we quarter. reduce on-balance had $X.X continues of to balances. the at callable that advance.Looking billion. liquidity we deposits strong well total total pay capacity when of CDs, balances contractual borrowing and adjusting or X, maturing continue the to Slide remains $X.X Indiana-based very up our and to After fourth balances primarily which billion, XX% The balance from and Home of due $XXX

to Loan well some reduce we at by down our provided As of quarter. deposit liquidity as loan borrowings and as the mentioned inflows growth deposit the Bank, brokered during higher-cost to pay deployed moment to Federal the a Home fund ago,

in line deposits X.XX% basis point X and and deposit average growth in from quarter-end, from adjusted cash XXX% net increase on our X.XX% of nearly X.X% to roll-forward a interest basis and further in net assets the offset expansion. in interest-bearing basis, its With continue fully-taxable X. on in to the first and rate, basis yields end the to the X that quarter cost continue growth, loan increased the interest net of up interest to earning margin net At hit be expect The and basis, Fed for X.XX%, was portfolio the earned the basis XXXX income of on on X combined of from drivers on XX shown equivalent the the building on on fully-taxable assets the Currently, fully-taxable in XX of Slide production, on our the deposit assets, basis that growth growth yield our earned and during of throughout and The increase by forecast portfolio from to net to in second year. our $XX.X balances, were change higher-yielding partially quarter quarter.The we points chart been point composition we improving with with primarily the catalyst interest- the is loan the similar quarter. in was margin the on interest the a replacing costs the quarter. linked-quarter, million, income the in deposit the relative interest-earning tracks linked-quarter, modest X.XX% what during were and deposits interest-earning loans for lower-yielding increasing represented on points, on focus total income from other for XX, Gain as noninterest uninsured equivalent balances points monthly with income, a to which income interest interest in X and respectively, up million, in million belief the on quarter. ratio average which $XXX,XXX interest variable-rate As in $XX.X first income quarter be solid re-pricing reinforcing graph the at and higher interest earned costs, we average loan the in the second Slide the Funds around point basis only rates $X.X low total produced highlights Furthermore, the to capacity The short-term interest yield stability the bearing interest-bearing and X has against the the in in narrowing and and in was on was up XX outpaced to experienced modestly.Net the top up rate assets. quarter's stabilized almost a factors third a Slide quarter, X fourth CDs, highlighted margin volume XXX% will quarter, million deposits.Turning driving to gap fourth XX.X% securities, due the and deposit to million yield -- securities compared quarter. for equivalent on last XXXX, up borrowing uninsured loans-to-deposits increase quarter increase income noninterest quarter-over-quarter. to interest quarter.Turning more XX.X% X% anticipate the we linked-quarter, X% as $XXX respectively, bar quarterly unused sale points Loan margin over fourth loans sale which fourth X.X%, of and declined higher up the setting quarter $X.X loan record up a basis totaled up growth by gain on point Slide another Net decline on than basis for seasonal down in of XX.X% and XXX yield quarter premiums, to million, yield points team. our for $XX net of X SBA Slides this XXXX. but sale X, offset a was increases on compared was or were X% due and

on will lower in The XX, loans to $X in increase to points asset the credit merit payroll for offset higher allowance accruals, of the the sponsorship in and medical end was grow, partially The quarter benefits expenses. due on basis forecasted on add up major loan expectations. portfolios also serviced X at benefits, the of with with benefits of almost as claims. annual and his provision loans, employee the and and by for ACL continued the data Slide quarters.Moving the commentary servicing as as up coverage quality in fourth the by results in losses. resets The provision to well an the the SBA origination following losses in around and rates The reflects SBA higher credit just to components of and portfolios.The credit annual allowance the for nonperforming covered strong loss for in was seasonal increase some well positive growth incentive increase other comments, impact Slide quarter. ratios, salaries $XX addition marketing the economic partially first mainly of I losses quarter. the the the expense fourth net provision and increase $X.X in quarter quarter incentive business $X.X line quarter, media certain growth primarily and taxes in losses David credit million the allowance employee We credit quarter specific due certain expenses compensation from revenue XX, for charge-offs. primarily compensation increase the was was a specific quarter reserves, total costs.Turning additional of so the X.XX% for advertising, portfolios X as last of employee was by the for million quarter the noninterest The first modest in compared was million, asset saw related fourth to first to losses additional the portfolio in and our to percentage quality marketing from as during offset reserves net million salaries small loan the result driven was The hires, increases and new as lower higher our for

comprehensive exposure, class balances. overall we reserves require XX, many office given and that banks loan asset the increases growth other inherent due company The Furthermore, quarter. lower quarter. in the which as you at was the during bank not in do ratios, cash tangible that equity on capital public capital to quarter. medium their remain have.Moving the modestly our with and other balances lower on levels allowance the long- primarily equity was fourth and throughout deposit around the This Slide excess term If an minimal mortgage by the exclude for and ratio have tangible from solid. our of represented credit ratio increased portfolios, to X.XX% first strong also coverage residential reserves balances common impacted down risk, X.XX%, the interest losses rates common finance and The accumulated the both was loss increase

you tangible provide accumulated ratio X loss perspective, capital for quarter-end, would X.XX%. common year-over-year.Before on up comprehensive cash our balances the adjusted per which be other value I common X% million, At XXXX. $XXX the ratio book exclude tangible some From tier capital remains normalized from quarter solid regulatory to fourth $XX.XX, up equity If at the wrap X% remainder of adjust equity and share a updates was would of and almost like I is up, outlook for the X.XX%.

to our XXXX per Federal maintains earnings higher-for-longer reminder, range is will the a a share for full lower during does confident As be of Fed not the Funds outlook approach annual assume feel XXXX. still year We forecasting and that the the this rate to per $X in that year share. Reserve of

it loan little However, increase, in while year XX% income, the modest. year, to relatively net with continue income still interest quarter.Related to XXXX fourth throughout for I to increase to year. mentioned that margin than growth stabilization of growth consistently be fully-taxable interest in be in to changed the at deposit the even continuing X% of optimistic secondary XX% was to loan we outlook equivalent higher deliver the to bit.With be team is have our regard net With we the in X% a and interest beginning the range to in pricing, for some expect to origination the moving X.X% noninterest to more combination and parts that income, net of with up market continuing of expect the activity range SBA the number our annual costs us as get yields earlier, of should

back However, as higher as for so take we questions. by risk fintech technology the we expect additional additional it risk our operator SBA investments management partnerships can partially and to be offset the around make turn in personnel well in expectations fee in and will revenue will processes Sylvie? that, our your management, program.With I add to higher expenses, as

Operator

at [Operator your from first Instructions] question be And Tim Switzer will KBW.

Timothy Switzer

over I the My the you on we appreciate the what and does has and does back conservative on rate XXXX more that on of time? rate cuts being half If it's beta we think first NII the of get change kind the of over excluding to say, cuts. kind And is, are NIM X time? get, that If guys then, a and cuts, of you benefit impact of guys of and series and or into trajectory, kind even NII near of do beta X you start one impact get deposits rate year, the guide a NIM? accelerate

Kenneth Lovik

Let's first take the question part of first. your

I speaking, million it, slice think, want $X cut it's rate to basis of XX depending roughly how you roughly point NII. or on so is a --

So that's on an annualized basis.

an put So on that, in to I guess, but the to you about number. choose that's would annualized have -- to wherever want timing you

side, betas Fed we we $X of the have Funds. billion have deposits are that tied over deposit on to the do -- On directly

well. re-pricing to pretty into follow you on CDs, or the And XXX% regardless. get those to So is as XXX% beta that CDs, then, you're beta be going close those if generally

will XXX%. And XX%. be way kind at other the of So XX% look It's market where mean, accounts closer money pretty consistent deposit well. going those or over probably got that's But to probably -- would savings I have been some and of isn't I on down betas re-price We way to, CDs that down. say, kind the time. that's as the beta

Timothy Switzer

a But have don't about lease in specifically, know customers your and about of specific Red other I your a question. you borrowers more know if it's of the I then, portfolios And talk talk financing through bankruptcy, in could And disclosed that helpful. the really a finance? That's generally kind in not like your portfolios, single-tenant Lobster, franchises single-tenant you if other work? work? is have bankruptcy could exposure and how could I one but Great. you going your then, your collateral franchise company, Because who portfolio, can recently necessarily how

David Becker

stores. an got the had our things, been we the committee side just not it's involved. lease served. facilities in no portfolio, At back hearing meeting a and some with There Lobster the company now Red Lobster trouble It's mark. or point, And Lobster remember and What Red morning been borrower whatever. on really online million that's are was we all update. debt. happens to of be hands down Red from across -- the we Lobster were their is Red around this twice. -- single-tenant franchisee actually the The if system, it's changed million ordering really $XX at almost country, We've credit a a of company restructuring you franchisor has no second our hit, property peak, delivery post-COVID, of in this long-term first, when $XX company-owned COVID

a of the lot last X infrastructure of ran price some significant years, or they buildings bought put the costs. But play or not our up in right pretty Question when X paid current whether into they So metropolitan all over locations. the services. owner the are great

real is value XX%. loan average Our on the estate itself to under

and we've X delinquency and or the Lobsters a some as for years up we've X Red never months. couple a show other within label in X, matter X or And over a restaurant been years an on had go had be generally account repositioned have -- dark them We list. franchise of now,

we're borrowers they go we carry particularly confident loans have those they repositioned with be could to capacity into definitely we're things for else. the little change right vertical, pretty Red something until a a Lobster to don't bit. That into would in going they're have I full the the liquidation. months okay. So now But that think

on too So, with them. worried at going about not current the time, we're what's

Timothy Switzer

and Great. all you say them all it. That franchises? Really of properties, they're was none are company-owned appreciate these awesome color. Did

David Becker

Yes. They're all done Red It's Lobster. not the The locations. by franchisee. of operations restaurant a actual are company-owned

Timothy Switzer

Okay.

So your actual borrower is Lobster, these for all the company? Red of

David Becker

a store here They're it's our in get No. the in individual banks investors puts CVS are don't -- and we of hang and our -- call. in that Fishers, them been kind or real -- store the them estate. comes of -- Lobster are a buying take know, the on side estate -- in want of drug property things, they Tim, real buy single-tenant lease one-off. will interested the And individual I don't that aside, of consumers The virtually individuals the companies to single-tenant you've all a product, but most Red lease insurance on -- listening single them in doesn't big to new in like

we market it. Most for [ buy with So of kind them, them. them investor of fill $XX.XX that come ] an associated have and where will in individual

less So property. is the the at XX% in portfolio value right loan a or actual whole as on to

loan third-party investor, the value we look X had and to in been on. we that as of only XX we've doing franchisor now, stream. plus we kind then a or billion took And based credit So origination. $X the franchisee for repayment property, we years on the probably that the decision time, a make this we've And loss all

no had and same years and thing, King our So went reorganization. product. it's Applebee's portfolios massive rock-solid few just Burger the a weathered a X We it on did ago, different into impact reorganizations. ago X, clients. our months

Operator

from will question Group. be Rabatin at Next Hovde Brett

Brett Rabatin

Wanted just to guidance. to me I And let go the first, guess, with start back SBA. well,

higher didn't for number, you're you if But one a it both I heard X pointing fee I growth. guidance and numbers get growth XX% number like income items. X% gave And I -- you XX% now. an didn't -- get if giving for if specific a to those those think are expense little guys I were to sounds exact

David Becker

you Brett, little do bit Kent of wanted to let homework. a

Kenneth Lovik

some -- to can talked some we at say had year. about from closer closer the investments is the of would tell up where make XX% SBA you But we end XX% range. I the significantly that to that I the the probably for outlook are the Yes. to are of probably to have expenses with

Brett Rabatin

relates balance overall about the portfolio? Can it seeing was that just their Okay. the how and in another non-guaranteed, debt And as sheet you impact borrowers were portfolio your on you're specific is basically was out indicating on much anything and guaranteed to SBA, to SBA SBA if versus portfolio higher rate and struggling their SBA maybe some obligations. environment with then, bank today guys mainstream of talk that reserves building

David Becker

the What's on on our That's risk. XXX% us asset. is outstanding the sheet balance in

don't you our or agency, to the peer runs ] compared any past governmental how SBA where week. guaranteeing give know and ratio was out what to But of current That's assets, [ And SBA, between and the the COVID, which nonaccrual, I more loans a low like number. was group, last slow. they X.XX%. As over we so the nonperforming we're most as period that -- time, on anything We was a a during November balance, XX.XX X.XX%, feel, of just there received due we've XX% or sold was risk blends Brett, report rated XX end of classify information the days our -- data. that

was the So of as what we're industry whole a experiencing. X.XX%

higher a So less We've have in loss is in to. RV and industry will years rates basis than we're on used XX delinquency average, and than points have the accumulated, of potentially higher an XX for losses. SBA been

high So again, far as the risk on low end SBA numbers as spectrum little the But on for are us. a industry the we're SBA standards, of products.

we're on underwriting. the So diligent

comply anybody view, people loan and standards get guaranteed, a We it view that only very credit we government don't because still you solid underwriting way. XX% that with. have Some We SBA an can risk. have it's

high it's us, where from industry portfolio we're an comfortable our again, but at. level, So very is for

Brett Rabatin

And the perspective helpful. building office then, back you lastly, with That's mentioned Okay. up just a from risk fintech hires.

some that regulators and and capital other now nodal well, ] building from as of to should you're from SEC, the we to the sheets? think are from that the requirements about is [ maybe fair how ratios going it guidance Or be imposing balance the assume activity on With liquidity here? regulators

Kenneth Lovik

specific tell one I probably can mean, we of last I -- view exam business. of over Brett, and We liquidity. completed -- of we've in had years. liquidity overall ratios I as levels safety line Well, concerns think, anyways. pretty our -- and no necessarily not ratings, the but capital for -- overall questions think you capital year can't I don't the just perspective, give And well, liquidity about several think from I the this to think on building our mean, they -- an the mean, high it context we organization, soundness XXXX, or I you we've -- maintained high obviously we

Operator

Group. Next question George be Capital at Craig-Hallum will from Sutton

James Rush

about of customers How on pipeline is George. with Could James partner talk This have pipeline results. fintech partnerships vision for the for financial fintech in the deposit lending in what's And of of growing? like that bit? term, longer the of kind and Is been potential versus the for are Nice you your pipeline terms franchise evolving? sort a contribution? then, the a types while little conversations the

David Becker

more Ken of might it, some the then, it. you pipeline and color side sales end give I'll take the or on

the we're of of being We're We testing. diligence of We're have kind XX process in in looking negotiations, XX We've sitting more. in we're some state XX on due contract live. got some some at. part of about that that

being We've is Our operation. has to in or There's very being their that up some acquired of now purchased. Synapse going process got with Treasury craziness lot lot of kind of Prime a play pipeline. There's a in of clean prospects. a just solid on. noise changed lot, fintech the

the nice pipeline quarter. double in strong going a revenue the we some some here down not stated, and the year first quarter. As players had we've stuff really It's every got of the in nice bump-up for in to rest Ken But coming.

marketplace. that's some of the happening interesting some So we're with the things that at getting in

pressure powder XX to the for live, So we're are tell of keep growth. on from investors are done about there their the you, going a cared to really I line, as and kind months them. our that's or bottom on that XXX capital it that would in ability dry getting and all that ago, constraints about them now, XX, good XX capital some Nobody original because additional raise not -- they're we part, of and opportunities. their know, look of was all

all not bottom it's line, Now, about necessarily growth.

trying them of bottom are a figure line. to out some to to positive And how get

business XX opportunity. of So marketplace, the also the greatest there's my it's one greatest for years in philosophies chaos in is, the when

So where up on, we'll of can. we watching selectively pick opportunities we're what's kind going and

Some and folks out will of in. the drop folks will some pop

said, Ken at our growing some we to, year, now, new is comment those triple of So -- installing back tools. part some A did A staffing the last as lot of good it's things business. growth.And be about part to going new on on go other of -- which I'll and those side still we're the Ken stuff down a minimum, great tools, of lot what of can new services. electronically stuff. also compliance the tracked we're mentioned,

staff. of So it combination is a

some and newer tools. the staying obviously of lot best operation run technology Somebody on But those out to with a top has of an here control are easier tools got the today. companies

even a that of is, up, So to a bit house little get little bit grow them and will order some that that get of the in allow to set us faster.

all. So crazy think but market in all still a I market, it's good

James Rush

versus loan cuts? rate of is higher-for-longer And what mix you. get you a trend would couple book percent where then, of in a rate? today variable expect a scenario Got And to the scenario that where we

Kenneth Lovik

XX%. XX% from low -- kind look, closer and XX%. XX% somewhere probably portfolio, of that's getting in to to the goal We're And the to coming probably of our closer

just scenario, assets. in down, if managing even want probably So keep certainly come it. to higher just still have -- I to variable-rate it's portion think higher-for-longer prudent a the portfolio But we of rates the

we're to So next number that years. high as drive we as the here couple of trying over can

James Rush

Makes for sense. And one last then, me.

do you SBA? so Just what working think well is guys in

David Becker

are operational some of some much sudden, the would last they COVID, smaller up balance where, any peers, issues, reasons, say, XX arena I for to been better sources, months, that customers banks our SBA myriad fact to that in issues and in a of can sheet the money oversight. with There's all we've people pulled and background, the good XX of absolutely woke community have of to there last lot good out months, the very back in of over deposit pulling with XX tremendous good over to the get coming lead veterans some elsewhere a deposits. seasoned of XX just people able the industry, hire

been has a to total period quite last the and honestly, put of stopped have or the we've lot key over versus XX market, time. think to in folks of been XX people on I as the the attract either rest a back success lending to brakes So months, for the pulled able of our

well As good long. know, stand for any idle you salesperson can't very

hit fortunate been of at the and kind we've the build right of time a market team tremendous SBA arena. country very really the in to the So across very, all people

loan of we to some think And anybody. still ability in I protocol So underwriting today. do little view the think we not of have And some every we're little a loan faster to see. again, that of success don't some efficient standards, that the to a compared in the more some respects, and We we're to maybe facilities some able our we approve I SBA We the other that's our and tech standards through. key as other because market of use. folks go license than to

SBA very the Some in systems are of antiquated.

things it And behind green screen our we've move but still, is to Some are people. of real I old them can really to think great close got people success along. that key

Operator

at Sandler. Next question Nathan Race be Piper from will

Nathan Race

that couple out, quarters, maturing CDs of the next today... just sure called but if you the comments kind cost some over to your of of in are it replacement terms going around not of Just I'm back the

Kenneth Lovik

we're the the $X.X fact, currently, same our of much that get by third at there's XX Yes. [ rate of to assumption -- the originations over I is new roughly and a top guess, quarter, Well, that. make CDs maturing X.XX% ] which time if renewals of in we the you number, pretty blended next right on rate. months, billion that of on -- our if kind kind And you

another so, re-pricing So re-pricing or the to X. that gap is going quarter again, kind hit of essentially we've where we're in --

David Becker

rates dump doesn't Fed [ the on us ]. Provided

Nathan Race

perspective, are to Fed you pause your other guys thinking from of Right. potentially? seeing guidance rates you Or that about the on the opportunity And end competitive banks, certain this Internet just on guys relative how ahead in based a Fed cuts? margin are what reduce foresee year, remains opportunity through of assuming do you kind to the of

David Becker

drop X a a ] points. earlier this up We dropped X on talked [ them, from CD months rates, about we're few of just to month basis another Nate, going week, ago. We

-- So Express, from you've I rates, a of bunch have institution been if money think financial Ally, watching is American down. level, market everybody bumped the folks

basis their lowered X think market XX has XX here Cap basis rates last days. by the points XX, money One in points, I

we'll will So CD we're I actually as the think level. as on do, ready as industry they get top to is the And Ken think we other said, the And I And well. it drop that on rates. of turned way. right around

what's be XXX% replacements will the XXX% across on rolling the Ken. the the agree CD that I cheaper than the too. beta, with on almost the board But be Fed today if line, bump off world, on So be XXX% not-too-distant anything, floaters. it'll coming in Fed If -- does future. And will Funds obviously, the

$X quarter million going market than X and for beta, yes, money the moves. maybe great anything point, rolling than Fed But bump-down will a less be position point folks be in funds stay a basic us. constant won't XXX% deposits, fourth the help forward we position that that account off. pretty will cheaper could for in in a in we're and the Our third when XX And the to rate what's be a actually replacement think I probably

Nathan Race

guided XX% bleed a growth balance at had to that some cash the deposit there the will helpful. expectations, excess growth level? expectation you on Okay, sheet? run opportunity great. you year. this loan down that still consistent Or Very an of think, I largely to have And is then, on the to Is maybe growth just just deposit Ken, X%

Kenneth Lovik

We've the quarter. little right? of some here both, a first Probably built bit in liquidity

bit bleed relatively throughout with be it little to in down, loan it down much higher deposit should bleed expect -- rest more historical, cash growth quarter, a recognize keep it expect obviously, mean, I think we more some of bit but it pace loan to than to maybe of should I the should as we there's think the year. we -- the growth, smarter with growth I loan than it's first growth but in But line I probably little probably was keep liquidity but a -- that.

David Becker

next we now and also over XX-month blowing financial a plus commitments X back XX XX-month, a $XXX to plus coming Funds craziness the $XXX made XX of long-term Silicon position basis And points, less everything million let it following Fed at that We X points. commitments Fed we're can to time Valley in basis replace we've that months. we here, some basis money. the long-term the made away XX have with in with got points, that commitments, individuals We due Funds go almost bunch some XX-month, had pretty of And up. than that and million plus a

sheet So, today opportunities some here as that little that X Ken extra over like and months. broker-type more the said, stuff let go balance of away the next re-price we're for money liquidity a to keeping X on

Nathan Race

Got or expected And disclosed released. is it. That to sense. mentioned versus you partnerships from number that David, necessarily makes I guess I XXXX. think double earlier, is revenue not year-over-year

out you can kind around help of So frame specifics that?

Kenneth Lovik

Yes.

had It was As I to we of fintech up forecast, think first in look in And comments, when we quarter. the that number at grow. about that's going a that expect recurring revenue. every revenue said I But XX% our XX% is $XXX,XXX that that partnership comments, is my is here. piece of quarter almost fourth he was quarter. trying In over don't to David's what to say grow there big plus

growth in be and income revenue So fintech more includes that which But what kind we're for number. about last partnership some of the interest year. fee Xx see our is single-to-low our expectation income, revenue, going year, to that -- full more will double-digit was

David Becker

for And that you, one I'll pinpoint Nate.

around revenue year was last Our $XXX,XXX.

it between going that up million $X.X year. this to we're to push $X So million mark

Nathan Race

including you... income that's If both interest and I income? heard fee And

David Becker

correct. Yes, Yes.

Nathan Race

just rate going forward? the Ken, tax lastly, on

Kenneth Lovik

who year, quarter But think, migrate term quarters. the number that the number going year into a okay -- near probably for that's think few I this grow fourth It's of tax not depends next quarter we President, number. that Obviously, XX%. X.X%. rate as a It I No, next becomes closer right? to to bad take rate just XX% continues X.X% here, and in to you X% probably was kind next to is probably if income on our to run is EPS and an well, probably as for effective number get as

Operator

Rodis Janney. Next at question is from John

John Rodis

Ken, Actually, XX%, to I'm X%. wide Last going a you guess, loan on the the tax X% just But I you X% I range. rate. quarter, growth, pretty on was ask curious, that's to to said

a Just wide such curious range? why

Kenneth Lovik

to is slow -- of down even slow probably they in the but probably think in environment, mean, Some -- this of probably that it some and year. what this we model down speeds too, I -- I slowed begin prepayment surprise had we've seen, doesn't anyone, we this some further to with, is had

quarter, or early second holding quarter first the of just our to we've kind at So We've would well. we're and in a originally be forecast. about bucket, we as them we've very into put having rate few balances in them but we investor a the here down deals pay a to continues team probably had higher strong then, scheduled longer. SBA retaining were a that mini than space And perm, for CRE our we'll converted to talked have construction with those do year, construction and

impacting So that that year. those overall for the are just of some growth the of growth dynamics are estimate --

David Becker

the are larger stored John, built other in being and locally, warehouse space, locally as side and stuff the is U.S. The shipped opportunities, particularly construction huge. out -- too, on seeing more and back warehousing more the to locally, we're there, deals is, transactions we're coming

announced state hours, those -- the choppy in and Just big X XX they've the that are needs And warehouse of Indiana. companies of of here kind into in are choppy. million coming Indiana, big in state last chunks the space like

And of which great we pick and would So of that business be some activity. just could us. for there's up a lot

bullish now. our there So right on what's the in are guys pretty CRE out marketplace

John Rodis

the to back rate. just tax Ken, Okay.

So maybe said then it so to of couple that to sounds to said quarters, X%, near like the going sort you next XX% XX% term, X.X% range? and of you

Kenneth Lovik

there, 'XX or in up in build 'XX Yes, probably on work X% up maybe a you it's somewhere it this year. as And the even again, a -- as probably to maybe to starting number, can there. would maybe income range X.X% you're model, we to probably -- X% even -- net XX% to we probably XX% maybe higher, quarter-over-quarter. if it through to continue I walk have that's walk XX% your Yes. from

John Rodis

Ken, question. then, just And one Okay. final

XX% at Just SBA be total it's XX%, that you for if can too, grow the to you to do Do sort income strong, with of you you I Is XX%, guess? with in approaching you think think going to high revenue, look think that the fee the level the margins -- continues of sort right quarter, stay of up about XX%. that way to it?

Kenneth Lovik

think so. I Yes,

no I book I loan NII deposit we're costs on eventually, think we probably up, we'll yield guess, we're assume this more accelerate. real -- that if loan look because rate to you're and growth and rate getting cuts -- the at we might growing repositioning NII year are the it think going than with making a at change that's that's But bit think John. right will I start it, good. way some looking cuts, because When little I for

Operator

questions registered. we Becker, Please other Mr. time, this no have proceed. at And

David Becker

construction, rate Thanks, market us drive shareholders, about do issues strong for committed the and afternoon. about of us, inflation discussed lending lot Fed space. business call. and we Thank on you, consumer out in a joining based in just Thanks in value. remain your it we support, improved profitability today's favorable performance, our current the and a at time wish of revenue the thank small And optimistic path for including kind and to about your outlook, everybody, fellow deposit The shareholder in a the the might a us for stabilized going experienced We're commercial take, on and though on you teams, you can today, good earnings enhancing to that paints the what of everybody. forward.As picture all Sylvie. cuts. craziness for as that, here driving even going regardless lot of our what happens we Obviously, is a cost, greater time, there's growth real growth we've and

Operator

do sir. Ladies And indeed does you at conference gentlemen, today. you, please for thank for we and time, ask Thank your you attending. disconnect Once lines. conclude again, your that call this this

First Internet Bancorp (INBK) 25 Apr 242024 Q1 Earnings call transcript