First Internet Bancorp (INBK): Business Model Canvas [Dec-2025 Updated]

You're looking at First Internet Bancorp (INBK) and wondering how this digital-first bank is navigating the current rate environment after their big Q3 2025 moves. Honestly, their strategy is sharp: they are doubling down on high-yield commercial loans and growing their Banking-as-a-Service platform, which brought in 17% of deposits. To clean up the balance sheet, they offloaded $836.9 million in loans, which helped boost non-interest income by $10.6 million that quarter, even as Net Interest Income hit $30.4 million. This canvas breaks down exactly how their branchless model supports specialized lending and fintech partnerships, so you can see the real drivers behind their 9.24% CET1 ratio and the risks tied to their $34.8 million provision for credit losses.

First Internet Bancorp (INBK) - Canvas Business Model: Key Partnerships

You're looking at how First Internet Bancorp (INBK) structures its external relationships to drive its business, which is key when you see their asset size-$5.6 billion as of September 30, 2025. These partnerships are critical because they allow a bank of this size to compete in specialized, high-volume areas like fintech deposits and government-backed lending.

Fintech companies for Banking-as-a-Service (VAST) deposit growth

The Banking-as-a-Service (BaaS) segment, or VAST, shows significant scale and strategic management. You saw fintech deposits make up 17% of the total deposit mix as of the third quarter of 2025. Management is actively optimizing this channel; for instance, over $700 million of fintech deposits were strategically moved off the balance sheet in the third quarter of 2025 alone to manage balance sheet size following a large loan sale. This relationship is a major revenue driver, too; Fintech Initiatives Revenue was up 130% from the third quarter of 2024, and up 14% compared to the second quarter of 2025. To give you a sense of the operational scale with a major partner, the bank processes $1 billion in payments each month for the expense management fintech Ramp.

Here's a snapshot of the scale and growth in this area:

The bank is also integrating with other platforms, like the October 2025 announcement of a partnership with Pool and Visa for multi-user consumer financial accounts.

Government agencies for Small Business Administration (SBA) loan programs

First Internet Bancorp is a top-tier player in the SBA 7(a) program, which relies on the agency's guarantee structure. For the fiscal year ending September 30, 2025, the bank approved 487 SBA 7(a) loans totaling $712.3 million. This volume placed First Internet Bancorp as the seventh-largest lender nationally based on total loan value for that period. For comparison, J.P. Morgan Chase Bank ranked ninth with $590.5 million in approved loans for the same period. The bank's pipeline remains strong, reported at $260 million entering the fourth quarter of 2025. The gain on sale revenue from these loans was $10.6 million in the third quarter of 2025. The relationship with the SBA requires careful timing; in the second quarter of 2025, the company deferred secondary market sales to align with SBA expectations.

The SBA program's importance is clear from the volume metrics:

• SBA 7(a) Loans Approved (FYE Sept 30, 2025): 487 loans.
• Total SBA 7(a) Loan Value (FYE Sept 30, 2025): $712.3 million.
• SBA Loan Pipeline (Entering Q4 2025): $260 million.
• Gain on Sale Revenue (Q3 2025): $10.6 million.

Technology providers for AI-driven analytics and digital infrastructure

Innovation through technology partners is a stated strategic focus, especially for efficiency gains. The most recent concrete example is the October 16, 2025, partnership with Parlay Finance to deploy its AI-native Loan Intelligence System (LIS) specifically for SBA lending. This deployment is expected to deliver up to a 50% increase in efficiencies across the lending process, allowing the existing staff to handle significantly higher application volumes. Internally, the bank also implemented loan-level predictive analytics to improve portfolio management and problem loan identification. Beyond lending tech, First Internet Bank announced it now offers Zelle® to its business customers on October 20, 2025.

Key technology adoption points include:

• Anticipated efficiency gain from Parlay Finance LIS: Up to 50%.
• AI-driven analytics use: Document collection and verification steps.
• New Digital Offering (Oct 2025): Zelle® for business customers.

Loan purchasers for strategic asset sales and balance sheet optimization

Managing the balance sheet through strategic sales is a deliberate action to optimize risk and capital. In the third quarter of 2025, First Internet Bancorp completed the sale of $836.9 million of single tenant lease (STL) financing loans. This transaction was executed to improve the company's interest rate risk profile and strengthen capital ratios. Following this sale and the deposit optimization, the loans-to-deposits ratio stood at a favorable 73.9% as of September 30, 2025. The capital impact was measurable, with the Common Equity Tier 1 ratio improving to 9.24% and the Total Risk-Based Capital ratio reaching 13.11% at the end of the third quarter. This is the kind of move that frees up capacity for future, perhaps higher-yielding, loan growth. Finance: draft Q4 2025 asset sale pipeline review by next Tuesday.

First Internet Bancorp (INBK) - Canvas Business Model: Key Activities

You're looking at the core engine of First Internet Bancorp (INBK) as of late 2025. The key activities here are all about managing the balance sheet actively and driving growth through digital channels, especially with their Banking-as-a-Service (BaaS) component.

Commercial and specialty loan origination and servicing.

First Internet Bancorp continues to originate loans across several key areas, even after significant portfolio adjustments. The bank focuses on commercial and industrial, owner-occupied commercial real estate, construction, and specialty finance, including SBA financing and franchise finance, on a regional basis, while offering consumer and small business services nationally. The origination focus is clearly shifting toward higher-yielding assets; for instance, the yield on funded portfolio loan originations in Q1 2025 was 7.78%. More recently, in Q3 2025, rates on new originations hit 7.5%. The activity is strong, too; excluding the major loan sale, commercial loan balances were up \$115 million, or 3.2%, in Q3 2025.

The servicing component is also a key activity, as First Internet Bancorp retained customer-facing servicing responsibilities for the large portfolio of single tenant lease financing loans sold to Blackstone in Q3 2025, meaning they continue to earn a fee for that work.

Managing the Banking-as-a-Service (VAST) platform and fintech relationships.

The digital, branchless model is heavily supported by the Banking-as-a-Service (BaaS) offering, which brings in deposits from fintech partners. This is a significant part of their funding structure. As of Q3 2025, deposits sourced through the fintech channel accounted for 17% of the total deposit mix. The bank accepts brokered deposit accounts specifically related to its BaaS operations. This activity is evolving; for example, in October 2025, First Internet Bank partnered with Parlay Finance to modernize SBA Lending, showing a commitment to integrating with specialized fintech platforms.

Here's a look at how the funding sources break down as of September 30, 2025:

Strategic balance sheet restructuring, like the $836.9 million loan sale in Q3 2025.

Active balance sheet management is a critical, though sometimes costly, activity. The centerpiece of this in late 2025 was the strategic sale of \$836.9 million in single tenant lease financing loans in Q3 2025. This was done to optimize the earning asset base, enhance capital ratios, and improve the interest rate risk profile. The loans sold carried an average yield of just over 5.04%. The transaction was executed at approximately 95% of par value. This move immediately reduced the total loan portfolio from about \$4.3 billion to \$3.5 billion upon closing, and specifically cut the single tenant lease financing concentration down to just 5% of the total portfolio. The immediate financial impact was a \$41.6 million net loss for Q3 2025.

Digital deposit gathering and liquidity management.

First Internet Bancorp's model relies heavily on gathering deposits digitally nationwide. The bank saw robust deposit growth in Q2 2025, surging by \$353.2 million, a 7.1% increase from the prior quarter. This influx helped keep the loans-to-deposits ratio at a healthy 73.9% as of September 30, 2025. The bank maintains a strong liquidity buffer; cash and unused borrowing capacity stood at \$2.9 billion at the end of Q3 2025, covering 180% of total uninsured deposits.

Key liquidity and deposit metrics as of late 2025:

• Loans-to-Deposits Ratio (Q3 2025): 73.9%
• Total Loans (September 30, 2025): \$3.6 billion
• Cash and Unused Borrowing Capacity (September 30, 2025): \$2.9 billion
• Deposit Growth (Q2 2025): \$353.2 million (+7.1%)

The activity here is to use this strong liquidity position to fund new, higher-yielding loan originations, which helped the Net Interest Margin (NIM) improve to 2.04% on a fully taxable equivalent basis in Q3 2025. Finance: draft the impact analysis of the retained servicing fees on Q4 2025 fee income by next Tuesday.

First Internet Bancorp (INBK) - Canvas Business Model: Key Resources

You're looking at the foundational assets that power First Internet Bancorp's operations as of late 2025. These aren't just line items; they are the engine for their digital-first strategy.

The proprietary digital banking platform and technology stack is central. First Internet Bank started as the first state-chartered, FDIC-insured internet bank back in 1999, so this isn't a recent pivot; it's baked into their DNA. They conduct consumer and small business deposit operations almost entirely through digital channels, meaning no traditional branch overhead slows them down. This digital core allows them to integrate services, like the recent Zelle® offering for business customers, efficiently.

Liquidity is definitely a major resource, especially following the strategic balance sheet moves in Q3 2025. As of September 30, 2025, their combined cash and unused borrowing capacity totaled $2.9 billion. That's a massive cushion, representing 180% of total uninsured deposits at that time. Honestly, that level of readily available funding gives them significant operational flexibility.

The regulatory capital position remains a core strength, which is crucial for any bank. Following the strategic loan sale, regulatory capital ratios improved. Specifically, the Common Equity Tier 1 ratio stood at 9.24% as of the end of the third quarter of 2025. This ratio is a key indicator of the bank's ability to absorb unexpected losses.

Also important are the specialized lending teams that drive high-value business. Their Small Business Administration (SBA) Lending team is recognized nationally, currently ranking among the Top 10 for SBA 7(a) lenders by volume. On the commercial side, their Commercial Real Estate (CRE) Lending team has the expertise to underwrite, close, and service loans up to $25 million, focusing on acquisition, development, construction, and repositioning projects.

Here's a quick look at the scale of the balance sheet supporting these resources as of September 30, 2025:

The bank's specialized capabilities are also evident in their focus areas:

• Digital-first operations since 1999.
• SBA 7(a) lending team ranked in the Top 10 nationally.
• CRE loan servicing capacity up to $25 million per loan.
• Strong liquidity coverage exceeding 180% of total uninsured deposits.

Finance: draft the Q4 2025 capital forecast by next Tuesday.

First Internet Bancorp (INBK) - Canvas Business Model: Value Propositions

You're looking at the core value First Internet Bancorp (INBK) delivers through its distinct digital-first model. This isn't about branch traffic; it's about national access and specialized credit expertise.

Branchless, digital-first banking for national reach and lower fees.

First Internet Bank pioneered the branchless delivery of banking services, starting up in 1999 as the first state-chartered, FDIC-insured Internet bank. This digital foundation allows for a national service footprint, contrasting with the regional focus of its commercial lending. While specific fee comparisons aren't directly available, the digital model inherently supports a different cost structure compared to traditional brick-and-mortar competitors.

Specialized commercial lending in construction and investor real estate.

First Internet Bancorp maintains a focus on specialty finance, particularly in construction and investor commercial real estate. As of March 31, 2025, total commercial loan balances stood at $3.4 billion, showing growth driven by construction and investor commercial real estate compared to the end of 2024. A key strategic move in Q3 2025 was the sale of up to $869 million of single tenant lease financing loans to Blackstone, which reduced the total loan portfolio from $4.3 billion to an expected $3.5 billion post-closing. This specific portfolio segment, single-tenant lease financing, was reduced from $971 million down to $101.6 million. The total loan portfolio was $3.6 billion as of September 30, 2025.

Here's a quick look at the balance sheet context around the strategic loan sale:

Banking-as-a-Service (BaaS) for fintechs, offering compliance and FDIC insurance.

The BaaS segment is a clear growth driver. The company achieved significant growth in fintech deposits, which accounted for 17% of the total deposit mix as of September 30, 2025. Fintech Initiatives Revenue showed substantial year-over-year improvement, rising 130% from the third quarter of 2024. This offering helps fintech partners by providing the underlying compliance structure and FDIC insurance.

High-yield loan portfolio with new originations yielding around 7.5% in Q3 2025.

The focus on optimizing the earning asset base is evident in new loan pricing. New loan originations during the third quarter of 2025 carried a weighted average yield of exactly 7.50%. This compares to the overall yield on average interest-earning assets, which rose to 5.68% in Q3 2025. Management noted that future portfolio yield is expected to be enhanced, with a projected portfolio yield of 6.18% going into Q4 2025.

You can see the yield dynamics here:

• New Loan Origination Yield (Q3 2025): 7.50%
• Yield on Average Interest-Earning Assets (Q3 2025): 5.68%
• Projected Portfolio Yield (Entering Q4 2025): 6.18%
• Fully Taxable Equivalent Net Interest Margin (Q3 2025): 2.12%

Finance: draft 13-week cash view by Friday.

First Internet Bancorp (INBK) - Canvas Business Model: Customer Relationships

You're looking at how First Internet Bancorp (INBK) manages its connections with clients across its digital-first and specialized lending segments as of late 2025. The approach clearly splits between high-volume digital service and high-touch relationship management for complex clients.

Automated, self-service online banking for consumers and small businesses

First Internet Bancorp operates as a pioneer digital bank, meaning its primary consumer and small business relationship is entirely digital, with no traditional branch footprint. This self-service model is supported by continuous digital enhancements; for instance, Zelle® became available for eligible business customers through the digital banking experience and mobile app as of October 20, 2025. Customer feedback suggests a preference for this digital interaction, with reports of excellent customer service and a lack of reliance on 'automated bologna or bots' when issues arise.

Dedicated relationship managers for commercial and specialty finance clients

For the segments requiring more complex service, like commercial and specialty finance, the relationship model shifts to dedicated personnel. The scale of the operation supporting this is suggested by the overall employee count, which stood at 317 as of the Q3 2025 reporting period. The importance of these segments is reflected in the deposit mix, where Commercial deposits accounted for 43% of total deposits, while Small Business deposits made up 10% of the mix in Q3 2025. The company's loan portfolio, even after a major sale, still includes significant commercial exposure, such as Construction and Investor Commercial Real Estate at 16% of the remaining portfolio.

Customized partnership team for Banking-as-a-Service clients

The Banking-as-a-Service (BaaS) segment relies on a customized partnership team for integration and scaling. This area shows significant traction. For one specific fintech partner in Q2 2025, the payment processing volume reached $10 billion in the month of June alone, and that partner's small business savings product deposit base was approaching $500 million. Overall, total deposits from all fintech partners were reported as being north of $1 billion as of Q2 2025. The success in this area is also reflected in the year-over-year growth of Fintech Initiatives Revenue, which was up 130% from Q3 2024 to Q3 2025, and the bank was recognized as a co-winner of the 2025 American Banker Innovation of the Year award.

Focus on improving credit profile and asset quality after Q3 actions

Following decisive actions in Q3 2025 to address credit issues, the focus shifted to realizing a cleaner credit profile. The company completed the sale of $836.9 million of single tenant lease financing loans in Q3 2025, which was a strategic move to enhance the balance sheet. These actions were accompanied by a significant increase in the provision for credit losses, which hit $34.8 million in Q3 2025, including $21 million in net charge-offs. The result of these efforts was a reported improvement in overall asset quality metrics as the year ended:

The company stated that entering the fourth quarter, they saw encouraging signs with asset quality improving and delinquencies at their lowest level in a year. The regulatory capital ratios also improved post-loan sale, with the Common Equity Tier 1 ratio reaching 9.24%.

The deposit base composition as of September 30, 2025, shows the relative weight of different customer types:

• Commercial deposits: 43%
• Fintech deposits: 17%
• Consumer deposits: 20%
• Small Business deposits: 10%
• Public Funds deposits: 6%
• Brokered Deposits: 4%

The bank's loans-to-deposits ratio remained favorable at 73.9% as of the end of Q3 2025. Finance: draft 13-week cash view by Friday.

First Internet Bancorp (INBK) - Canvas Business Model: Channels

You're looking at how First Internet Bancorp (INBK) gets its value proposition to its customers, and for them, it's almost entirely digital and specialized sales, not brick-and-mortar locations. This is the core of their delivery strategy.

Exclusively online and mobile banking platforms (zero physical branches).

First Internet Bancorp, through its subsidiary First Internet Bank, has maintained its branchless delivery model since opening in 1999. The bank does not maintain any traditional physical branch locations aside from its main office in Fishers, Indiana. This digital-first approach allows for a national footprint for consumer and small business deposit operations.

National reach across 50 states for consumer and specialty finance.

The bank's consumer and small business customers are located throughout the entire United States, which is a direct result of their internet-based delivery channel. This national reach supports their consumer loans, such as credit cards, auto, personal, and student loans, alongside small business deposit services.

Direct commercial sales force for regional lending and treasury management.

While deposits are national, commercial lending and treasury management services are offered on a regional basis. This implies a targeted, direct sales force focused on specific geographic areas for these higher-touch commercial products. The small business lending team is a key component of this strategy, and for the SBA 7(a) program, First Internet Bancorp was ranked as the 8th largest lender for the SBA's 2025 fiscal year-to-date. For Q1 2025, the bank originated $285 million in new production and renewals. As of Q3 2025, the SBA pipeline stood at $260 million.

Fintech partners' platforms for embedded deposit products (VAST).

First Internet Bancorp heavily utilizes its Banking-as-a-Service (BaaS) model, often referred to in context with its fintech partnerships, to drive liquidity and deposit growth. This channel delivers embedded deposit products to a broader network of end-users via technology partners. This focus earned the bank a co-winner recognition for the 2025 American Banker Innovation of the Year award in the Payments category. The company noted significant growth in fintech deposits, which contributed to maintaining strong balance sheet liquidity. The BaaS business delivered robust revenue growth and liquidity management benefits.

Here's a quick look at the balance sheet context supporting these channels as of the end of Q3 2025:

The digital channel is also supported by the bank's operational structure, which includes a dedicated partnership team for its fintech collaborators. The bank's strategy involves moving deposits off-balance sheet through these fintech arrangements for optimization.

You can see the diversification of their funding sources, which are critical for supporting the lending channels:

• Commercial Deposits: 43% of total deposits
• Consumer Deposits: 20% of total deposits
• Small Business Deposits: 10% of total deposits
• Public Funds Deposits: 6% of total deposits
• Brokered Deposits: 4% of total deposits

The bank's ability to service these diverse channels is underpinned by its liquidity; cash and unused borrowing capacity totaled $2.9 billion as of September 30, 2025.

First Internet Bancorp (INBK) - Canvas Business Model: Customer Segments

You're looking at how First Internet Bancorp (INBK) structures its funding and lending across its key client groups as of late 2025. The bank's customer base is segmented clearly by how they interact with the balance sheet, particularly on the deposit side, which is the core funding source.

The deposit mix as of September 30, 2025, shows a clear reliance on commercial relationships, which form the largest funding block. This mix is critical because it directly informs the bank's capacity and strategy for its lending activities. Here's the quick math on the deposit composition by customer type:

Commercial clients represent the single largest funding source, holding 43% of total deposits as of the third quarter of 2025. This segment is foundational to First Internet Bancorp's stability.

The Fintech partners and their end-users segment is a significant and growing component, contributing 17% of total deposits. The success of the Banking-as-a-Service (often referred to as VAST) model is evident here, with fintech initiative revenue rising 130% year-over-year for Q3 2025.

Consumer deposit and loan customers account for 20% of the deposit base. On the lending side, this group includes residential mortgage and home equity portfolios, though balances saw expected declines in Q1 2025.

For Small business and specialty finance borrowers, the focus is on the lending side, which has seen strategic adjustments. The total commercial loan balances were $3.4 billion as of March 31, 2025. Within specialty finance:

• SBA loan origination pipeline stood at $260 million.
• Franchise finance and small business lending portfolios were areas where the bank took decisive action on credit quality in Q3 2025.

The bank's overall loan portfolio, following a strategic sale of single tenant lease financing loans, is now more diversified, with Construction and Investor Commercial Real Estate at 16%, Public Finance at 13%, and Residential Mortgage at 13% of the remaining total portfolio as of Q3 2025.

Finance: draft 13-week cash view by Friday.

First Internet Bancorp (INBK) - Canvas Business Model: Cost Structure

You're looking at the core expenses First Internet Bancorp (INBK) is managing as of late 2025. These costs are central to how the bank operates its digital-first model.

Non-Interest Expenses are a key area of focus, reflecting the operational cost base outside of funding the balance sheet. For the third quarter of 2025, total noninterest expenses were reported at $25.5 million. This figure reflects ongoing investment in the digital platform and personnel costs associated with running a technology-focused bank. For the nine months ending September 30, 2025, total noninterest expenses rose to $70.8 million, a 7.0% increase compared to the same period in 2024. The bank has emphasized strategic investments in technology, including AI, to enhance process efficiencies.

The cost structure was heavily impacted by significant credit actions in Q3 2025. The bank recognized a provision for credit losses totaling $34.8 million for the quarter, primarily related to small business lending and franchise finance portfolios. This provision included $21 million in net charge-offs. These actions led to the allowance for credit losses increasing to $59.9 million at the end of Q3 2025.

Here's a quick look at the major expense and loss components from the third quarter of 2025:

Interest expense on deposits is directly tied to the bank's funding mix. First Internet Bancorp noted that approximately 27% of its deposits, equating to about $1.3 billion based on recent total deposit figures, are indexed to the Fed Funds Rate. This indexing directly influences the variable cost of funding as the Federal Reserve adjusts rates.

The bank's operational model keeps a specific cost category low. First Internet Bancorp operates as an industry pioneer in the branchless delivery of banking services, which inherently results in:

• Low physical infrastructure costs.
• Reduced overhead associated with maintaining a physical branch network.

Finance: draft 13-week cash view by Friday.

First Internet Bancorp (INBK) - Canvas Business Model: Revenue Streams

You're looking at the core ways First Internet Bancorp brings in money, focusing on the hard numbers from late 2025. Honestly, the story is dominated by interest income, even with the big strategic moves they made on the asset side.

The primary engine remains the spread between what First Internet Bancorp earns on its assets and what it pays for liabilities. They achieved eight consecutive quarters of increasing Net Interest Income (NII) leading into Q3 2025. The fully-taxable equivalent Net Interest Margin (FTE NIM) was $\mathbf{2.12\%}$ for the quarter, up $\mathbf{8 \text{ basis points}}$ from the linked quarter.

Here's a look at the key components making up the revenue picture for the third quarter ended September 30, 2025:

The non-interest income side was heavily impacted by balance sheet restructuring. While the outline specifies a $\mathbf{\$10.6 \text{ million}}$ gain from SBA loan sales, the overall noninterest income for Q3 2025 was a $\mathbf{loss of \$24.6 \text{ million}}$. This loss was driven by the strategic sale of $\mathbf{\$836.9 \text{ million}}$ in single tenant lease financing loans, which resulted in a pre-tax loss of $\mathbf{\$37.8 \text{ million}}$.

The interest generated from the remaining loan portfolio, which is the core of the NII, is concentrated in specific areas following that sale. You can see the focus areas that drive that interest income:

• Construction and investor commercial real estate now represents $\mathbf{16\%}$ of the total remaining loan portfolio.
• The yield on average interest-earning assets was $\mathbf{5.68\%}$.
• Rates on new originations during the quarter were $\mathbf{7.5\%}$.
• First Internet Bancorp projects Q4 2025 loan balance growth in the $\mathbf{4-6\%}$ range.

So, while the NII is growing steadily, the non-interest income stream is volatile, heavily influenced by strategic asset sales and the associated gains or losses. Finance: draft 13-week cash view by Friday.