First Internet Bancorp Receives Analyst Boost Amid Strong Growth Outlook

First /ME US31866P1021

First Internet Bancorp (ticker: /ME) is entering its new fiscal year with notable momentum. The digital bank's recent quarterly performance and strategic balance sheet initiatives have prompted a more favorable view from market analysts. However, questions remain about its ability to meet ambitious 2026 targets as credit pressures emerge in certain loan segments.

Key Financial Highlights:
* Q4 Earnings Per Share: $0.64 (Consensus Estimate: $0.59)
* Year-over-Year Revenue Growth: +21%
* 2026 Forecast: Loan growth projected between 15% and 17%
* Quarterly Dividend: $0.06 per share

The positive sentiment follows the company's earnings release on January 29, which exceeded market expectations. First Internet Bancorp reported quarterly revenue of $42.1 million, driven significantly by a 27% surge in net interest income to $30.3 million. The net interest margin also saw improvement, expanding by 18 basis points from the prior quarter to reach 2.3%.

A primary area of focus, however, is asset quality. The level of non-performing loans increased to $58.5 million, with management attributing the rise largely to stress within its franchise finance portfolio.

Institutional Investors Show Growing Conviction

This upgraded assessment aligns with observable activity among major investors. According to recent filings, Simcoe Capital established a new position in Q4 2025 valued at approximately $1.94 million. Existing institutional shareholders have also been adding to their stakes; Strs Ohio increased its holding by 7.9%, while Sowell Financial Services boosted its position by 13.2%. The analysis platform Wall Street Zen has formally raised its rating on the stock, reflecting this building institutional interest.

Management Sets Aggressive 2026 Targets

Looking ahead, the bank's leadership has outlined clear objectives for 2026. They are targeting substantial loan growth of 15% to 17%, with an emphasis on commercial and industrial lending. Furthermore, the goal is to expand the net interest margin to a range of 2.75% to 2.80% by the fourth quarter of 2026.

Achieving these goals will require navigating near-term credit costs. The bank has provisioned for expected credit losses between $50 million and $53 million for the full year, with a significant portion—estimated between $17 million and $19 million—anticipated in the first quarter alone.

A key component of the strategy involves leveraging Banking-as-a-Service (BaaS) models. This initiative aims to replace higher-cost funding sources with more economical deposits sourced through fintech partnerships, thereby optimizing the balance sheet. The effectiveness of this strategic shift will become clearer with the next quarterly report scheduled for April.