First Internet Bancorp is rebuilding the economics of a branchless bank while paying for earlier lending mistakes. Fintech partnerships are replacing expensive funding and generating fees, but loan losses still absorb most operating profit. Chairman and chief executive David Becker describes an "encouraging improvement" in credit trends. That improvement is credible in delinquencies, not yet sufficient to establish durable profitability.
The second quarter ended June 2026 produced $15.0 million of pre-provision net revenue, a non-GAAP measure of earnings before credit provisions and taxes. Provision expense consumed almost nine-tenths of that amount. The expanded jaris relationship adds a promising loan channel, while September's subordinated financing adds flexibility rather than common equity. Digital distribution does not remove the need for disciplined underwriting, and the quarter shows why: the year-over-year earnings gain is genuine, yet the operating base still needs to clear heavy loss expense before common shareholders receive much of anything.
Tangible book value of $41.09 per share offers a useful valuation anchor, not an assured recovery value. Management's full-year earnings outlook depends on much stronger second-half results. Can cheaper funding and fewer new problem loans convert an improving operating franchise into returns that justify a smaller book-value discount?