管理層發言
Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Internet Bancorp Earnings Conference Call for the First Quarter 2026. Please note this event is being recorded. It is now my pleasure to turn the call over to Julia Ferrara from ICR. You may begin your conference.
Thank you, operator. Hello, everyone, and thank you for joining us to discuss First Internet Bancorp's first quarter 2026 financial results. The company issued its earnings press release earlier this afternoon, and it is available on the company's website at www.firstinternetbancorp.com. In addition, the company has included a slide presentation that you can refer to during the call. You can also access these slides on the website. Joining us from the management team today are Chairman and CEO, David Becker; President and COO, Nicole Lorch; and Executive Vice President and CFO, Ken Lovik. David and Nicole will provide an overview, and Ken will discuss the financial results, and then we'll open up the call for your questions. Before we begin, I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial conditions of First Internet Bancorp that involves risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. The company disclaims any obligation to update any forward-looking statements made during the call. Additionally, management may refer to non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today as well as the reconciliation of the GAAP to non-GAAP measures. At this time, I'd like to turn the call over to David.
Thank you, Julia. Good afternoon, and thank you for joining us on the call today. We delivered strong first quarter results that demonstrated the resilience and strength of our diversified business model. We generated solid revenue growth, expanded our net interest margin and continued making meaningful progress on credit quality, all the while navigating an uncertain macroeconomic environment. Let me start with some of the highlights for the quarter. Total revenue reached $43.1 million in the first quarter, up 21% year-over-year, driven by a 26% increase in net interest income. Our fully taxable equivalent net interest margin expanded to 2.45%, a 54 basis point improvement from a year ago and 15 basis points sequentially. This margin expansion reflects the benefits of our proactive balance sheet management strategy and the power of our deposit franchise, combined with our scalable nationwide lending platforms. Pre-provision net revenue grew 51% year-over-year to $18.1 million, underscoring our ability to generate strong operating leverage while maintaining disciplined expense management. This performance gives us confidence in our ability to drive sustainable profitability as we continue to work through our credit normalization process. On credit, our overall loan book remains solid and continues to perform in line with industry trends. In addition, we're seeing tangible evidence that the decisive actions we've taken over the past several quarters are yielding favorable results on two problem portfolios, SBA and Franchise. Our provision for credit losses for the quarter came in better than expected, and we're observing improving trends in our portfolio with delinquencies and nonperforming loans headed in the right direction. The credit trends we're seeing, particularly in our SBA portfolio, reflect the impact of enhanced underwriting standards, more vigorous portfolio monitoring and responsive problem loan resolution. On the growth front, our commercial lending pipelines remain robust across multiple verticals. Total loans increased to $3.8 billion with particularly strong production in single tenant, lease financing and construction lending as well as in one of our emerging verticals, wealth advisory lending. While we maintain appropriately conservative underwriting standards, we're seeing great opportunities to deploy capital into high-quality commercial relationships at attractive yields. Turning to the other side of our balance sheet. Total deposits reached $5 billion, up from $4.8 billion in the prior quarter. We continue to benefit from the strength and flexibility of our Banking-as-a-Service initiatives. Importantly, we're seeing continued growth in lower-cost fintech deposits, which has also allowed us to let higher cost CDs and broker deposits mature without replacement. Our fintech deposit platform also provides us with significant balance sheet management flexibility. During the quarter, average fintech deposits totaled $2.4 billion, an increase of over 186% from the first quarter of 2025. At quarter end, we have moved approximately $1.5 billion of these deposits off balance sheet, optimizing our asset size while maintaining these valuable customer relationships and the associated fee income streams. This capability is a unique competitive advantage that enhances both our profitability and our capital efficiency. In our SBA business, while seasonality and tightened underwriting resulted in softer loan production for the quarter, we're pleased with the strong foundation we're building and how the business is positioned for long-term profitable growth. To further align our strategy in SBA, we've strengthened the business by promoting Gary Carter to the position of National Sales Manager. Gary rejoined us a year ago as our Senior SBA Credit Officer, bringing deep industry expertise, including his role at Live Oak Bank that will help us continue building this business on a sound foundation. Our capital and liquidity position remains solid as we were able to closely manage the size of the average balance sheet while continuing to grow revenue. Regulatory capital ratios remain well above minimum requirements with a total capital ratio of 12.5% and a Common Equity Tier 1 ratio of 8.97% as well as substantial liquidity coverage. Moving to our strategic investments in technology and artificial intelligence. We continue to invest thoughtfully in digital capabilities that enhance the customer experience, improve operational efficiency and position us for long-term growth. These technology investments aren't just about maintaining our competitive position, they're also about creating sustainable advantages in how we serve customers, manage risk and drive operational excellence. Looking ahead, we're navigating an uncertain macro environment from a position of increasing strength. Our diversified business model is generating strong revenue growth. Our deposit franchise provides funding advantages and strategic flexibility. We've proven our ability to make difficult decisions and execute effectively. The credit challenges we've experienced are manageable in the context of our overall business. We've taken decisive action, strengthening underwriting standards, enhancing risk management and addressing problem loans proactively. We see the benefits in improving trends and expect continued progress throughout 2026. We are not standing still. We're investing in AI and technology to enhance efficiency and customer experience, strengthening our commercial banking capabilities, expanding fintech partnerships and repositioning our SBA business on a stronger foundation. We're confident in our strategy, our team and our ability to deliver value for shareholders. I'll now turn it over to Nicole for operational highlights, including commercial lending, SBA, Banking-as-a-Service and credit.
Thank you, David. Starting with commercial real estate, we saw solid first quarter activity with particularly strong production in construction and single-tenant lease financing. These businesses continue to perform well with strong credit quality and attractive risk-adjusted returns on new originations. We were also pleased to see higher balances in a couple of our emerging verticals, wealth advisory lending and equipment finance. The pipeline remains healthy with disciplined underwriting and good yields on new commitments. Turning to SBA. As David mentioned in his comments, the deliberate shift we communicated in our last call that prioritizes credit quality over volume, combined with a seasonally lighter first quarter resulted in lower originations for the quarter. This translated into lower loan sale volume and lower gain on sale revenue compared to the linked quarter. Regarding gain on sale revenue, while premiums have been strong so far this year, we still expect to retain more production on our balance sheet in future periods as the pricing on certain higher-quality deals will not fetch quite the same premiums in the secondary market. We generally look at a 12-month earn-back period when making decisions on whether to sell or hold loans. While this will impact gain on sale revenue for the year, it will be highly additive to net interest income and net interest margin in future periods. Nonetheless, barring any macroeconomic deterioration, we remain optimistic about the previously shared production and gain on sale targets for the full year. Importantly, while we're being selective about growth in this portfolio, we remain committed to small business lending as a core business. This is an attractive lending vertical with good long-term economics, and we have the platform, expertise and relationships to compete effectively once we've fully worked through this current credit cycle. As to credit performance, we've made substantial progress over the past several quarters through proactive and prudent actions. We've significantly enhanced our underwriting standards, added experienced talent to our credit and portfolio management teams and implemented more robust monitoring and early warning systems. We've also been proactive in working with our borrowers to prevent the formation of nonperforming loans, and we're seeing results. As of March 31, delinquencies in the SBA portfolio have improved 118 basis points quarter-over-quarter and 126 basis points year-over-year. As we look ahead, our focus in SBA is on durability and consistency rather than near-term volume. Loans originated under our revised standards are showing more stable early behavior. While these newer vintages are still early in their life cycle, we're encouraged by what we're seeing in terms of borrower performance, responsiveness and overall portfolio dynamics. The operational changes we've made across underwriting, execution and portfolio oversight are now fully embedded in the business. This enables us to remain selective today while preserving the ability to scale responsibly as conditions normalize. Our objective is an SBA portfolio with attractive long-term economics and reduced volatility across cycles, and we are building with that goal in mind. In Franchise Finance, we continue to make progress working through problem loans. Our special assets team was busy during the quarter coming to resolution on several credits. While net charge-off activity remained elevated during the quarter, it more than offset nonperforming loan formation as nonaccrual Franchise Finance loans dropped to their lowest level in four quarters. Looking at our Banking-as-a-Service operations, we continue to see strong momentum with our fintech partners. These relationships provide valuable deposit funding, generate attractive fee income and position us at the forefront of innovation in digital banking. We processed over $82 billion in payments volume during the quarter, an increase of over 260% year-over-year through a carefully curated partner network, a reflection of our efforts to strengthen and deepen existing relationships while cultivating new partnerships. We are constantly evaluating new partnership opportunities while ensuring we maintain the highest standards of compliance and risk management. Across the bank, we continue to invest strategically in AI and automation to drive efficiency and enhance customer service. Our strong data foundation built through previous investments in our data warehouse and integrated data sources now supports our infrastructure upgrades for AI agent processing. While scoping our own proprietary agents, we've already deployed third-party AI capabilities with measurable impact, such as fraud detection agents that screen outbound transfers before processing. Additionally, our virtual customer service agent resolves approximately 45% of inquiries, significantly reducing the burden on human agents and improving response times. The effects of this are validated by the favorable results from the Net Promoter Score framework and customer listening program we implemented in the first quarter with our consumer and small business banking team. Out of the gate, our scores are well above industry average. We have built relationships through transparency and delivering on our promises, and that loyalty delivers strong returns. The diversity of our business model is another key strength. We have multiple engines driving growth and profitability. Our commercial lending is performing well. Our consumer lending remains stable. Our fintech partnerships continue to grow, and we're seeing improving trends in SBA. We're executing on all of this with appropriately conservative underwriting standards that position us for sustainable profitable growth. I will now turn it over to Ken for additional insight into our first quarter performance and update to our 2026 outlook.
Thanks, Nicole. We are pleased to report solid first quarter results with net income of $2.5 million or $0.29 per diluted share. Total revenue for the quarter was $43.1 million, a 21% increase over the prior year period and when combined with well-managed expenses, pre-provision net revenue totaled $18.1 million, up 51% year-over-year. These results reflect our diversified business model, strong operational execution and sustained business momentum across our core segments. Net interest income for the first quarter was $31.6 million or $32.8 million on a fully taxable equivalent basis, up about 26% and 25%, respectively, year-over-year. Net interest margin improved to 2.36% or 2.45% on a fully taxable equivalent basis, up 14 and 15 basis points, respectively, from the prior quarter and both up 54 basis points year-over-year. The yield on average interest-earning assets for the quarter rose to 5.67% compared to 5.57% in the prior year period as higher rates on new loan originations more than offset the impact of Federal Reserve rate cuts in late 2025. We also saw a meaningful decline in funding costs during the same period with the cost of interest-bearing deposits falling 56 basis points to 3.45%. The ability to maintain and increase yields on interest-earning assets in conjunction with declining cost of interest-bearing deposits demonstrates delivery on our years-long effort to reposition the balance sheet and optimize our mix of earning assets. Noninterest income for the quarter totaled $11.5 million, up almost 11% year-over-year as fee revenue from our fintech partnerships continued to grow, supplemented by higher net loan servicing revenue following the servicing retained sale of single-tenant lease financing loans in 2025. David and Nicole both touched on our positive momentum in the Banking-as-a-Service space, which is evidenced by the growth in fee revenue with quarterly revenue increasing over 200% compared to the first quarter of 2025 and increasing over 220% on a trailing 12-month basis. Noninterest expense for the quarter totaled $25 million, up only 6% year-over-year despite continued investment in technology and AI to enhance both front and back-office operations and costs related to working out problem loans. Turning to credit. The provision for credit losses was $16.3 million in the first quarter, which was a little better than our initial expectations. The provision for the quarter included net charge-offs of $15.8 million and additional specific reserves in our Franchise Finance portfolio. Relative to our original forecast, the lighter provision was due to a combination of lower loan balances and unfunded commitments as well as updates to the assumptions in the CECL model. Our allowance for credit losses at quarter end was $56.5 million or 1.5% of total loans, up slightly from year-end. Nonperforming loans increased to $61.6 million or 1.63% of total loans. However, a portion of the increase consists of fully guaranteed SBA 7(a) balances where the government guarantee substantially mitigates our loss exposure. Excluding fully guaranteed balances, nonperforming loans to total loans drops to 1.22%. Another component of the increase in nonperforming loans was accruing loans 90 days or more past due. However, the largest portion of this increase, about $6 million, relates to one relationship that we expect to pay off in full in the second quarter. I will also note that our SBA team was successful in bringing some past due borrowers current shortly after quarter end, reducing delinquencies even further. At quarter end, the ratio of the allowance for credit losses to nonperforming loans was 92%. Adjusting nonperforming loans to remove the fully guaranteed SBA balances, the allowance coverage ratio improves to 122%. While we are pleased with the improvement in nonperforming loans and delinquencies, our updated allowance for credit losses model reflects our expectation that the provision for credit losses will remain elevated in the second quarter, but then improve gradually in the second half of the year. Total loans as of March 31, 2026, were $3.8 billion, an increase of $29.1 million or 1% compared to the linked quarter and a decrease of $479 million or 11% compared to March 31, 2025. David and Nicole both covered some of the lending highlights from the quarter where we experienced growth. Overall, origination activity was fairly strong across our commercial and consumer areas. We did, however, experience some early payoff and maturity activity in the Franchise Finance, Public Finance and Recreational Vehicles portfolios and in particular, saw early payoffs of some large balance relationships in the investor commercial real estate portfolio, which impacted total loan growth during the quarter. Total deposits as of March 31, 2026, were $5 billion, representing an increase of $142 million or 3% compared to December 31, 2025, and an increase of $36 million or 1% compared to March 31, 2025. David talked about the continued strong growth in fintech deposits, which has allowed us to further improve the mix of deposits and drive funding costs lower. Average CD and broker deposit balances, our highest cost of deposit funding were down over $180 million from the prior quarter. The weighted average cost of maturing CDs in the first quarter was 4.19%, while the average cost of fintech deposits was 3.19% and the cost of new CDs was 3.62%. As the cost of maturing CDs in the second quarter is 4.11% and in the third quarter is 4.06%, we have the ability to drive funding costs lower throughout the year and hence, drive net interest income and net interest margin higher even in a flat rate environment. Looking at our full year 2026 outlook, we're broadly maintaining the guidance we provided in January. However, we want to acknowledge the heightened macroeconomic uncertainty we're navigating, including volatile energy prices and other potential geopolitical developments. While we're confident in our business momentum and strategic positioning, we're taking a measured approach given the current uncertain environment. With regard to loan growth, while our commercial pipelines remain robust and our consumer business continues to produce solid results, we recognize our full year target could prove ambitious given higher-than-expected loan payoffs and the evolving macro headwinds, which could lead to further tightening of underwriting standards. We're closely monitoring the current environment, and we'll provide updates as the year progresses. In summary, we feel confident in the underlying momentum of our business and our ability to navigate the current macro environment while positioning the business for accelerating profitability in the second half of the year and into 2027. With that, I'll turn it back to the operator for questions.
分析師問答
We will now begin the question-and-answer session. And your first question comes from the line of Nathan Race with Piper Sandler.
I was wondering if you could just help us kind of unpack the charge-offs a bit more for this quarter. And just generally, what kind of visibility you have into charge-offs over the balance of this year? I know you guys have spent a lot of time scrubbing the SBA portfolio. But just curious within that context, how we should think about the $50 million to $53 million provisioning forecast that was laid out last quarter for this year.
Yes. I think as we think about it, it's still very similar to what we had talked about last quarter where we expect the bulk of it in the second half of the year. In terms of charge-offs for this quarter, we had $15 million to $16 million of charge-offs. Our SBA charge-offs came in line with what we were forecasting. Our Franchise number was a little bit higher because we took action on some other credits sooner rather than later. We continue to feel like first quarter is probably the worst of the quarters going into the second quarter. Even though we made progress on reducing nonaccrual unguaranteed SBA balances and Franchise balances, we still have elevated nonperforming loans that we need to work through. Our special assets team is working through those and we expect resolution on many of those in the second quarter. By the time we get to the third and fourth quarters, we expect to have worked through many of the older vintages where there's still potential problems. By the end of the year, credit costs should be at a far more moderate level.
Okay. Got it. That's really helpful. Maybe changing gears to the margin. With the Fed on hold, I think that's a bit of a headwind in terms of deposit repricing. But David, you mentioned a lot of the success you're having bringing on some lower-cost deposits from some fintech relationships. So just curious how you're kind of thinking about the margin trajectory over the next few quarters, assuming the Fed remains on pause and just trying to drive that with the NII growth expectations for this year that were laid out last quarter of, I believe, $155 million to $160 million.
We're discussing the margin trajectory. We did not build any rate decreases into our forecast at the beginning of the year, and we have not modified it to include rate increases. From the start, we weren't anticipating any rate fall this year. Because CDs are maturing and running off at north of 4% and new CDs are being added at about 3.6%, there is a gap, but fintech deposits are coming in at about 3.19%, which is roughly a 100 basis point improvement versus the higher-cost funding. That will continue throughout the year. We have another $800 million in deposits rolling between now and year-end, so we could be up in that $290 million range by the end of the year.
In terms of our forecast, our expectation remains achievable that we'll see about a 10 to 15 basis point improvement per quarter through the end of the year on net interest margin.
Okay. And then David, I believe you said to get you to the $290 million by the fourth quarter, if I heard you correctly?
Yes.
Your next question comes from the line of Brett Rabatin with StoneX Group.
I wanted to just continue to talk about guidance, and you just mentioned the $290 million guidance. I think for the outlook in January, you mentioned $275 million to $280 million by the fourth quarter. It sounds like the only tweak that you've made, if I'm hearing this right, really is you're a bit more conservative on that 15% to 17% loan growth target, just given some uncertainties. But I was a little surprised you didn't tweak down maybe the expense guide a little bit from the $111 million to $112 million and then also, it seemed like the fee income guide could have increased. Any thoughts on fee income and expense guidance and just the variables that might impact that?
On the expense side, we think the guidance we provided earlier is appropriate to remain conservative. If macro headwinds impact originations, we have offsets on the expense side, such as incentive compensation tied to loan origination, which could lower expenses. On the fee side, there are levers as well. Nicole mentioned retaining more balances in SBA given higher-quality deals. If premium levels on gain-on-sale remain strong, there could be opportunities to sell more into the secondary market and drive higher fee income. There are a number of levers that could offset potential shortfalls in loan growth.
Okay. So there's leverage to both those line segments.
Yes. Absolutely.
And then I know you guys have been working really hard on the Franchise and SBA. When I think about the macro of higher oil prices, I guess the only piece of your portfolio that I start to think about would be the RV portfolio. And I know quite a few of that or a lot of that is not RVs per se. It's horse trailers and things that people use for work. But have you guys seen any migration in the RV book as you've been looking at that portfolio just to watch it as oil prices/gas has been higher?
A great question, Brett. We actually just had a credit committee meeting this morning where we discussed the impact of fuel prices across lending lines. Diesel fuel is up over $1 per gallon and regular gasoline is higher as well. Our consumer borrowers have not been affected; we are not seeing any increase in delinquencies or problem loans in the consumer book due to fuel prices. Horse trailers in particular have always performed well even with headwinds. Originations remain very solid. Even with the conflict ongoing for a little over a month, we are not seeing any decrease in new originations driven by fuel prices. In other lines of business, such as equipment finance where we lend for fleet vehicles, we are not seeing issues related to fuel prices. We've also done outbound contacting of our top SBA customers who would be most likely affected by fuel pricing across industries that have a fuel component. We are hearing no issues related to fuel pricing at this point. Some borrowers have passed along price increases to their customers, but overall we're not seeing weakness in the portfolio related to fuel prices. We all hope the conflict resolves sooner rather than later.
Yes. I think everyone knows that. One last question about the $82 billion of payments processed: when I look at the fintech work you've been doing, I consider fee income and would expect some momentum in fees aside from whatever happens in the SBA bucket. Are we starting to see larger fees from these fintech initiatives, or is that something that will take time? It seems like you're gaining fintech momentum, but it hasn't yet shown up in a meaningful way in fee income.
We are seeing momentum there. Importantly, we have negative net revenue churn, which means we are seeing strong retention from our existing programs, and we have been able to increase our fee structure to support them and the growth of the program. We're not bringing on new programs at an unsustainable rate. We have a backlog of customers under due diligence—about half a dozen programs—and we are making sure we bring them on responsibly. Some programs are meaningful partners and could move faster, but we are mindful of compliance and risk. On a year-over-year basis, we've doubled the fees we see in our fintech partnership line of business. The impacts show up in different places across the income statement: balances pushed off balance sheet do not show up in interest income or interest expense but do show up in noninterest income. Fees also contribute to noninterest income, and some lending programs will show up in interest income.
That is helpful. Do those things show up in the other line? Or what line items did those show up in?
They show up in other noninterest income and in service charges and fees. To put some numbers around it, in the fourth quarter we had just over $1 million in fee income for the quarter and in the first quarter of 2026 we had a little over $1.5 million of fee income from fintech partnerships. With higher volumes, payments volumes and deposits pushed off balance sheet, that represents roughly a 50% year-over-year increase and is becoming meaningful.
Okay. And Ken, just to be clear, that $1.5 million, that encompasses all of your fintech operations?
Yes. That's just fees. It does not include any interest income from lending partners. That's pure fee income.
Your next question comes from the line of Emily Lee with KBW.
This is Emily stepping in for Tim Switzer. Yes. So you mentioned you're in due diligence with about half a dozen programs right now on the fintech side. Can you speak more on just those partners in the pipeline and maybe the projected timing of those launches or an idea of kind of potential earnings impact surrounding those?
We have a reputation for rigorous due diligence in the fintech space, and we expect programs to fully understand our expectations since we effectively serve as the regulator for these programs as they are our customers. We have a couple of lending programs and a couple of deposit programs in the pipeline. One program is moving much closer to approval and we expect a potential second-quarter onboarding event. Some programs will proceed more slowly, particularly consumer lending programs, which have longer due diligence processes. Business payments programs can move faster. It also depends on whether a program is converting from another sponsor bank; conversions can be quicker to impact the financials versus brand new programs that need to ramp. We expect some onboarding in the next quarter and additional programs in the third quarter.
Understood. And then also just on the NIM. You mentioned 10 to 15 basis points of improvement per quarter through the end of the year as a very achievable target. That's if the Fed doesn't cut, but what would be the impact of 125 basis points of cuts?
If the Fed cuts 125 basis points and we run it on a static balance sheet—which does not assume growth—you'd be looking at roughly a $2.2 million to $2.3 million annual impact to net interest income.
Your next question comes from the line of George Sutton with Craig-Hallum.
This is Logan on for George. First one for you, Ken. I was wondering if you could just kind of talk about the loan-to-deposit ratio. I've got it kind of stepping down again this quarter, and you've talked about how it's kind of a historically low point for you guys. I wonder if you could just sort of address sort of the path for that from here, especially as we think about potentially lower loan growth this year and just sort of how you plan to manage that?
Over the course of the year, we expect the loan-to-deposit ratio to increase. We ended the quarter with healthy cash balances, and quarter-end cash can be influenced by payments activity, which can inflate balances. We do have excess cash that we can deploy into loans. If we're around 75% to 76% this quarter, we expect a gradual step-up and probably be closer to 85% to 90% in the fourth quarter. We like that because it deploys cash into higher interest-earning assets while keeping balance sheet growth relatively controlled.
We had a couple of very large commercial loans where one paid off on the last day of the quarter for over $50 million, which impacted the ratio. That kind of timing can cause swings. On the deposit side, quarter-end activity such as bill payments and deal closings also affect the number. The decline in the ratio was not intentional; it was the result of timing and the way activity occurred in the last week of the quarter.
Okay. Got it. And then maybe just a high-level one for you, David. I mean the last few quarters, you kind of mentioned that returning to that 1% return on asset level. And obviously, there's a lot of moving dynamics this year. But maybe just talk about sort of the steps that you need to take to sort of get back there and call it, the medium term?
If we deliver the improvement we expect in the fourth quarter, that will set us up to be back at a 1% return on assets for 2027. We will continue executing on margin expansion, balance sheet optimization, disciplined underwriting, and the other initiatives we've outlined. With those improvements, our expectation is to reach 1% by the end of 2027.
Your next question comes from the line of John Rodis with Brean Capital.
Ken, what drove the tax benefit this quarter? And how should we think about the tax rate going forward?
When net income is low, we receive a significant benefit from our tax-exempt businesses, particularly our Public Finance portfolio. We need to reach a certain level of pretax income before applying higher effective tax rates. If pretax income is low—say roughly $3 million or less—the tax rate can be nonexistent or even a credit. If pretax income moves into a mid single-digit pretax range, you'll likely see a low mid-single-digit effective tax rate. If pretax income gets into the $10 million to $12 million pretax range, you're probably looking closer to a 7% to 9% effective tax rate. When pretax income is low, we also benefit from LIHTC investments and an NOL carryforward from last year, so effective tax can be quite favorable at lower pretax income levels.
Okay. It's a moving target then.
It is.
Your final question comes from the line of Nathan Race with Piper Sandler.
Just on the SBA revenue going forward, I appreciate Nicole's comments earlier around holding some production for a longer seasoning period, I think, was what she was alluding to. So I'm just trying to think about kind of the cadence of SBA revenue. I think in the past, it's been more back half loaded. But I know you guys have made a number of changes to your platform and credit infrastructure over the last handful of quarters. So I was just hoping you could kind of speak to the cadence of kind of SBA revenue within that context.
Historically, first quarter is seasonally light for originations, though fourth quarter can provide loan-sale benefits. Originations typically ramp in the second quarter, accelerate in the third quarter, and may moderate somewhat in the fourth quarter. Given our revised underwriting approach and the seasonality we saw in the first quarter, we expect originations to ramp throughout the year. Second quarter should be higher than first, and third and fourth quarters should be meaningfully higher, with third and fourth being the strongest in origination volume.
Our pipeline is building and is up about one third from where it was at year-end, which suggests we will be in a good position to execute on that ramp throughout the year.
Okay. So it sounds like the base case is SBA revenue grows from here and the guidance from last quarter on total fee income, which I believe was $33 million to $35 million, it's going to be higher than that, correct?
Keep in mind that's total fee income. Last quarter, our commentary on pure gain-on-sale was roughly in the $19 million to $20 million range for that line item. We still feel good about total fee income, though the timing may shift more toward the third and fourth quarters than earlier in the year. We had a solid first quarter, and our view is that third and fourth quarters will be stronger than the second quarter.
I will now turn the call back over to David Becker for closing remarks.
We thank you for joining us today and for all the thoughtful questions we had. We're pleased with the strong momentum that we built during the first quarter. We remain confident in our ability to execute on the priorities we've outlined for the year. We are very mindful as we have said many times about the macroeconomic uncertainty, but we think we're executing from a position of strength and we're well positioned for improving profitability throughout this year and beyond. So we appreciate your continued support. Look forward to keeping you updated on our progress next quarter. Thank you very much.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.