Yahoo Finance First Internet Bancorp (INBK) Q1 2024 Earnings Call Transcript Highlights: Robust Growth and ...
Net Income: $5.2 million, up 25% from the previous quarter.
Diluted Earnings Per Share (EPS): $0.59, an increase of 23% from the fourth quarter of 2023.
Net Interest Income: Increased by nearly 5% over the previous quarter.
Net Interest Margin: Expanded by 7 basis points over the prior quarter.
Loan Growth: Net loan growth of $70 million, over 7% on an annualized basis.
Deposit Growth: Grew by $206.8 million or 5.1% from the previous quarter.
Total Revenue: Increased by nearly 7% over the previous quarter.
Nonperforming Loans to Total Loans: 33 basis points.
Nonperforming Assets to Total Assets: 25 basis points.
Common Equity Tier One Capital Ratio: 9.52% at quarter end.
Tangible Common Equity Ratio: 6.79% at quarter end.
Tangible Book Value Per Share: Increased by 1% during the quarter and is up 6.6% year over year.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the impact of potential rate cuts on Net Interest Income (NII) and Net Interest Margin (NIM)? A: Kenneth Lovik, CFO, explained that a 25 basis point rate cut could reduce NII by about $1 million annually. He noted that over $1 billion of deposits are tied directly to Fed funds, so the beta on these would be 100%. For CDs, the beta would also be close to 100%, and for money market and savings accounts, it would be around 50-60%.
Q: Could you provide insights into the Red Lobster bankruptcy situation and its impact on your single-tenant lease financing portfolio? A: David Becker, CEO, mentioned that the exposure to Red Lobster was significantly reduced from $82 million to around $40 million. He reassured that the properties are in prime locations with a loan-to-value ratio under 50%, and historically, properties have been quickly repositioned if needed. He expressed confidence in the situation, noting that full liquidation of Red Lobster was unlikely.
Q: What are the expectations for fee income and expense growth, and how has the SBA portfolio performed in the current rate environment? A: Kenneth Lovik indicated that expenses might increase by 10-12% due to investments in SBA and risk management. David Becker added that the SBA portfolio performs well, with delinquency rates significantly lower than the industry average, attributing success to strong team recruitment and solid underwriting standards.
Q: Can you discuss the fintech partner pipeline and your vision for this business segment? A: David Becker discussed ongoing developments and the strategic approach amidst market volatility. He highlighted the potential for significant revenue growth from fintech partnerships, expected to triple compared to the previous year, driven by both interest income and fee income.
Q: What is the strategy for managing the loan portfolio in a higher for longer rate scenario? A: Kenneth Lovik mentioned that approximately 25% of the loan portfolio is currently variable rate, with plans to increase this proportion. He emphasized the prudence of maintaining a higher portion of variable rate assets regardless of future rate cuts.
Q: How do you foresee the deposit growth and management of excess liquidity? A: Kenneth Lovik projected that deposit growth would align closely with loan growth, with some excess liquidity expected to be managed down. David Becker added that they plan to let go of higher-cost deposits and replace them with cheaper sources as market conditions allow.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
