First Internet Bancorp Reports Annual Loan Growth of 40%

Quarterly net income up 50% year-over-year

FISHERS, Ind.--()--First Internet Bancorp (the “Company”) (Nasdaq: INBK), the parent company of First Internet Bank (the “Bank”) (www.firstib.com), announced today financial and operational results for the second quarter 2018.

David Becker, Chairman, President and Chief Executive Officer, commented, “To look at what we have accomplished in the span of one year – passing the $3 billion mark, growing net income by 50% – it’s remarkable. I am pleased with the results of the second quarter as our teams’ execution is clearly showcased.

“Loan growth picked up in the second quarter, up more than 7% over the prior quarter and nearly 40% over this time last year. Our lending teams gained momentum over the quarter and enter the third quarter with robust pipelines.

“Winning and growing relationships at the rate we have over the past several years has been possible because our employees are genuinely invested in the success of our customers and our Company. We have highly engaged employees, and it is evident they love what they do as once again this quarter, they have voted us among the very best workplaces in two separate highly recognized surveys. In the service industry, people make the difference. I thank ours for their tireless dedication.”

Second quarter net income was $6.0 million and diluted earnings per share were $0.67. This compares with first quarter net income of $6.0 million and diluted earnings per share of $0.71 and second quarter 2017 net income of $4.0 million and diluted earnings per share of $0.61.

Highlights for the second quarter include:

  • Net income increased $2.0 million, or 50.2%, compared to second quarter 2017
  • Diluted earnings per share increased $0.06, or 9.8%, compared to second quarter 2017
  • Total loan growth of $675.6 million, or 39.8%, compared to June 30, 2017
  • Net interest income of $15.5 million, increasing $2.5 million, or 19.2%, compared to second quarter 2017
  • Solid quarterly performance
    • Return on average assets of 0.82%
    • Return on average shareholders’ equity of 10.11%
    • Return on average tangible common equity of 10.31%
  • Strengthened capital levels and holding company liquidity following an equity offering
                Company     Bank
 
Total shareholders’ equity to assets 9.05 % 7.86 %
Tangible common equity to tangible assets 8.92 % 7.72 %
Tier 1 leverage ratio 9.93 % 8.66 %
Common equity tier 1 capital ratio 13.54 % 11.81 %
Tier 1 capital ratio 13.54 % 11.81 %
Total risk-based capital ratio 15.85 % 12.56 %
  • Asset quality remained strong
    • Nonperforming loans to total loans declined to 0.01%
    • Nonperforming assets to total assets declined to 0.17%
    • Net charge-offs to average loans of 0.03%

Net Interest Income and Net Interest Margin

Net interest income for the second quarter increased to $15.5 million from $15.4 million for the first quarter and $13.0 million for the second quarter 2017. On a fully-taxable equivalent basis, net interest income for the second quarter was $16.6 million, increasing $0.2 million, or 1.2%, compared to $16.4 million for the first quarter and $3.1 million, or 23.0%, compared to $13.5 million for the second quarter 2017.

Total interest income for the second quarter was $27.4 million, increasing $1.4 million, or 5.5%, compared to the first quarter and $7.4 million, or 37.3%, compared to the second quarter 2017. On a fully-taxable equivalent basis, total interest income for the second quarter was $28.6 million, increasing $1.6 million, or 5.9%, compared to the first quarter and $8.1 million, or 39.3%, compared to the second quarter 2017. The increase in total interest income compared to the linked quarter was driven primarily by a $123.5 million, or 5.7%, increase in average loan balances. The yield earned on the loan portfolio was 4.13%, consistent with the yield earned in the first quarter as higher yields in the commercial and industrial and public finance portfolios were offset by lower yields in the healthcare finance and consumer portfolios due to accelerated premium and dealer reserve amortization driven by elevated prepayment activity. The increase in total interest income driven by loan growth was partially offset by a decrease in interest income from other earning assets due primarily to a special dividend received from the Federal Home Loan Bank of Indianapolis (“FHLB”) in the first quarter. In total, the Company’s yield on interest-earning assets increased 4 bps during the second quarter to 3.85% from 3.81% for the first quarter.

Total interest expense for the first quarter was $12.0 million, increasing $1.4 million, or 13.2%, compared to the first quarter and $5.0 million, or 70.8%, compared to the second quarter 2017. The increase in total interest expense compared to the linked quarter was driven by an increase of 14 bps in the cost of funds related to interest-bearing deposits, which totaled 1.73% in the second quarter compared to 1.59% in the first quarter. The growth in interest expense was also impacted by an increase of $32.0 million, or 1.5%, in average interest-bearing deposit balances during the second quarter. Additionally, the average balance of FHLB advances outstanding increased $50.4 million, or 12.4%, during the second quarter and the cost of funds related to FHLB advances increased 19 bps during the second quarter to 1.85% from 1.66% for the first quarter.

The cost of funds related to both interest-bearing deposits and FHLB advances were impacted by the continued increase in short term interest rates during the second quarter. Additionally, as the yield curve remained flat during the quarter, $50.0 million of short term FHLB advances were converted to a ten year term structure using an interest rate swap in order to reduce long term interest rate risk and enhance asset sensitivity. Overall, the total cost of interest-bearing liabilities increased 14 bps during the second quarter to 1.82% from 1.68% for the first quarter.

Net interest margin (“NIM”) was 2.17% for the second quarter compared to 2.26% for the first quarter and 2.43% for the second quarter 2017. On a fully-taxable equivalent basis, NIM decreased to 2.33% for the second quarter compared to 2.41% for the first quarter and 2.53% for the second quarter 2017. Compared to the linked quarter, the elevated prepayment activity in the healthcare finance and consumer portfolios combined with the decline in interest income due to the special dividend received from the FHLB in the first quarter negatively impacted NIM by 3 bps. The remainder of the quarterly decline was due primarily to increases in the costs of funds related to new deposit production and FHLB advances.

Noninterest Income

Noninterest income for the second quarter was $2.2 million compared to $2.5 million for the first quarter and $2.7 million for the second quarter 2017. The decrease of $0.4 million, or 14.4%, compared to the linked quarter was due to a decline in gain on sale of loans. The Company completed two sales of single tenant lease financing loans in the first quarter which resulted in a gain of $0.4 million while no loan sale transactions were completed during the second quarter.

Noninterest Expense

Noninterest expense for the second quarter was $10.2 million compared to $10.2 million for the first quarter and $8.9 million for the second quarter 2017. Compared to the linked quarter, noninterest expense was essentially unchanged as an increase in other expenses was offset by decreases in consulting and professional fees and marketing expenses. The increase in other expenses was due to higher costs associated with commercial other real estate owned properties as well as gains on sales of residential other real estate owned properties that were recognized in the first quarter. The decrease in consulting and professional fees was due to seasonally higher legal expenses generally related to year-end reporting and the preparation of proxy materials for our annual meeting of shareholders which were incurred in the first quarter. The decrease in marketing expenses was due to lower advertising and digital marketing costs.

Income Taxes

Income tax expense was $0.8 million for the second quarter, resulting in an effective tax rate of 11.5%, compared to $0.9 million and an effective tax rate of 12.5% for the linked quarter and $1.5 million and an effective tax rate of 26.8% for the second quarter 2017. Compared to the linked quarter, income taxes were positively impacted by the continued growth in the public finance portfolio, which increased the proportion of tax-exempt income relative to overall total pre-tax income.

Loans and Credit Quality

Total loans as of June 30, 2018 were $2.4 billion, increasing $164.6 million, or 7.5%, compared to March 31, 2018 and $675.6 million, or 39.8%, compared to June 30, 2017. Total commercial loan balances were $1.7 billion as of June 30, 2018, increasing $121.9 million, or 7.5%, compared to March 31, 2018 and $581.2 million, or 50.1%, compared to June 30, 2017. The growth in commercial loan balances was driven largely by production in public finance, single tenant lease financing and healthcare finance.

The public finance portfolio increased $84.3 million, or 17.5%, compared to March 31, 2018 and $386.3 million, or 214.8%, compared to June 30, 2017. Single tenant lease financing balances increased $29.6 million, or 3.6%, compared to March 31, 2018 and $116.2 million, or 15.5%, compared to June 30, 2017. Healthcare finance balances, originated through the partnership with Lendeavor, Inc., increased $16.7 million, or 34.2%, compared to March 31, 2018 and totaled $65.6 million at quarter end. Commercial and industrial and owner-occupied commercial real estate balances decreased $8.4 million, or 4.2%, on a combined basis compared to March 31, 2018 and increased $16.1 million, or 9.1%, compared to June 30, 2017. During the second quarter, new commercial and industrial production was offset by prepayment activity and reduced balances on lines of credit.

Total consumer loan balances were $626.1 million as of June 30, 2018, increasing $42.4 million, or 7.3%, compared to March 31, 2018 and $91.2 million, or 17.1%, compared to June 30, 2017. Residential mortgage balances increased $18.8 million, or 5.9%, compared to March 31, 2018 and $44.1 million, or 15.1%, compared to June 30, 2017. Trailer portfolio balances increased $13.2 million, or 12.3%, compared to March 31, 2018 and $26.9 million, or 28.6%, compared to June 30, 2017. Recreational vehicle balances increased $6.9 million, or 9.5%, compared to March 31, 2018 and $16.4 million, or 25.9%, compared to June 30, 2017. Additionally, other consumer loan balances increased $3.8 million, or 6.8%, compared to March 31, 2018 and $8.2 million, or 16.1%, compared to June 30, 2017.

Credit quality continued to remain sound as total delinquencies 30 days or more past due were 0.03% of total loans as of June 30, 2018, down from 0.04% as of March 31, 2018 and 0.12% as of June 30, 2017. Nonperforming loans to total loans was 0.01% as of June 30, 2018 compared to 0.03% as of March 31, 2018 and 0.20% as of June 30, 2017. Nonperforming assets to total assets was 0.17% as of June 30, 2018 compared to 0.20% as of March 31, 2018 and 0.33% as of June 30, 2017.

The allowance for loan losses was $16.1 million as of June 30, 2018 compared to $15.6 million as of March 31, 2018 and $13.2 million as of June 30, 2017. The allowance as a percentage of total nonperforming loans was 5,632.6% as of June 30, 2018 compared to 2,361.2% as of March 31, 2018 and 383.8% as of June 30, 2017. The allowance as a percentage of total loans was 0.68% as of June 30, 2018 compared to 0.70% as of March 31, 2018 and 0.78% as of June 30, 2017. The decline in the allowance as a percentage of total loans was due primarily to the continued growth in the public finance portfolio, as well as growth in the residential mortgage portfolio, as these loan categories have lower loss reserve factors than other loan types. Additionally, the decrease in commercial and industrial loan balances impacted the decline in the allowance ratio as these loans have the highest loss reserve factor.

Net charge-offs of $0.2 million were recognized during the second quarter, resulting in net charge-offs to average loans of 0.03% compared to 0.05% for the first quarter and 0.01% for the second quarter 2017. The provision for loan losses in the second quarter was $0.7 million compared to $0.9 million for the first quarter and $1.3 million for the second quarter 2017. Compared to the linked quarter, the decrease in the provision for loan losses of $0.2 million, or 21.5%, was due to the composition of loan growth discussed above as well as lower net charge-offs.

Balance Sheet Management

To increase asset sensitivity and reduce long term interest rate risk, the Company continued its asset hedging strategy initiated in the fourth quarter 2017. During the second quarter, the Company implemented pay fixed / receive variable interest rate swaps with a notional value of $40.0 million on new production in the public finance portfolio. As of June 30, 2018, the Company had a total notional value of $312.4 million of pay fixed / receive variable interest rate swaps in place to hedge public finance loans, representing 55.2% of the total public finance loan balances outstanding. Including the existing $88.2 million of notional value interest rate swaps in place to hedge fixed rate investment securities, the Company had swaps with a total notional value of $400.6 million in place at quarter end to effectively convert long term fixed rate assets to variable rate and mitigate the impact of higher short term interest rates on deposit and funding costs.

During the second quarter, the Company also implemented a liability hedging strategy using pay fixed / receive variable interest rate swaps to extend the duration of certain funding sources while the yield curve remained flat. Short term FHLB advances and brokered variable rate money market deposits, totaling $80.7 in the aggregate as of June 30, 2018, were converted to longer term fixed rates using interest rate swaps with a total notional value of $70.0 million. The Company also entered into an additional $60.0 million of notional value interest rate swaps with forward-start terms to hedge similar deposits that will fund in the third quarter. Like the asset hedging strategy, these structures will improve asset sensitivity and reduce long term interest rate risk.

Capital

During the second quarter, total shareholders’ equity increased $57.3 million, due primarily to an underwritten public offering of 1,730,750 shares of common stock that resulted in approximately $54.3 million of net proceeds to the Company. Net income earned during the quarter also contributed to the increase in total shareholders’ equity, partially offset by the change in accumulated other comprehensive loss and declared dividends. During the second quarter, the Company used a portion of the proceeds from the common stock offering to redeem a subordinated debenture issued in June 2013 with a principal amount of $3.0 million. The debenture bore a fixed interest rate of 8.00%, matured in June 2021, was callable after June 2016 and qualified as tier 2 capital under regulatory guidelines.

As of June 30, 2018, the Company’s tier 1 leverage, common equity tier 1, tier 1 and total risk-based capital ratios were 9.93%, 13.54%, 13.54% and 15.85% compared to 8.17%, 11.42%, 11.42% and 14.01% as of March 31, 2018, respectively. The increases in regulatory capital ratios were due primarily to the common stock offering, partially offset by continued average asset and risk-weighted asset growth. Tangible common equity to tangible assets increased 122 bps during the second quarter to 8.92% as of June 30, 2018 due primarily to the common stock offering, partially offset by continued balance sheet growth and the change in accumulated other comprehensive loss. Tangible book value per share increased to $27.25 as of June 30, 2018 from $26.05 as of March 31, 2018 and $24.43 as of June 30, 2017.

About First Internet Bancorp

First Internet Bancorp is a bank holding company with assets of $3.1 billion as of June 30, 2018. The Company’s subsidiary, First Internet Bank, opened for business in 1999 as an industry pioneer in the branchless delivery of banking services. The Bank now provides consumer and small business deposit, consumer loan, residential mortgage, and specialty finance services nationally as well as commercial real estate loans, commercial and industrial loans and treasury management services in select geographies. First Internet Bancorp’s common stock trades on the Nasdaq Global Select Market under the symbol “INBK” and is a component of the Russell 2000® Index. Additional information about the Company is available at www.firstinternetbancorp.com and additional information about the Bank, including its products and services, is available at www.firstib.com.

Forward-Looking Statements

This press release may contain forward-looking statements with respect to the financial condition, results of operations, trends in lending policies, plans, objectives, future performance or business of the Company. Forward-looking statements are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Forward-looking statements are not a guarantee of future performance or results, are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the information in the forward-looking statements. Factors that may cause such differences include: failures or breaches of or interruptions in the communications and information systems on which we rely to conduct our business; failure of our plans to grow our commercial real estate, commercial and industrial, public finance and healthcare finance loan portfolios; competition with national, regional and community financial institutions; the loss of any key members of senior management; fluctuations in interest rates; general economic conditions; risks relating to the regulation of financial institutions; and other factors identified in reports we file with the U.S. Securities and Exchange Commission. All statements in this press release, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, total interest income – FTE, net interest income – FTE and net interest margin – FTE are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the table at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”

 
First Internet Bancorp
Summary Financial Information (unaudited)
Amounts in thousands, except per share data    
           
 
Three Months Ended Six Months Ended
 
June 30, March 31, June 30, June 30, June 30,
2018 2018 2017 2018 2017
 
Net income $ 6,008 $ 6,028 $ 4,001 $ 12,036 $ 6,833
 
Per share and share information
Earnings per share - basic $ 0.67 $ 0.71 $ 0.61 $ 1.38 $ 1.04
Earnings per share - diluted 0.67 0.71 0.61 1.38 1.04
Dividends declared per share 0.06 0.06 0.06 0.12 0.12
Book value per common share 27.71 26.60 25.15 27.71 25.15
Tangible book value per common share 27.25 26.05 24.43 27.25 24.43
Common shares outstanding 10,181,675 8,450,925 6,513,577 10,181,675 6,513,577
Average common shares outstanding:
Basic 8,909,913 8,499,196 6,583,515 8,705,689 6,565,760
Diluted 8,919,460 8,542,363 6,597,991 8,731,331 6,599,681
Performance ratios
Return on average assets 0.82 % 0.87 % 0.73 % 0.84 % 0.67 %
Return on average shareholders' equity 10.11 % 10.96 % 9.95 % 10.51 % 8.72 %
Return on average tangible common equity 10.31 % 11.19 % 10.25 % 10.73 % 8.99 %
Net interest margin 2.17 % 2.26 % 2.43 % 2.22 % 2.46 %
Net interest margin - FTE 1 2.33

%

2.41 % 2.53 % 2.37 % 2.55 %
Capital ratios 2
Total shareholders' equity to assets 9.05

%

7.85 % 6.88 % 9.05 % 6.88 %
Tangible common equity to tangible assets 8.92

%

7.70

%

6.70 % 8.92

%

6.70 %

Tier 1 leverage ratio

9.93

%

8.17

%

7.50

%

9.93

%

7.50

%

Common equity tier 1 capital ratio

13.54

%

11.42

%

9.74

%

13.54

%

9.74

%

Tier 1 capital ratio

13.54

%

11.42

%

9.74

%

13.54

%

9.74

%

Total risk-based capital ratio

15.85

%

14.01

%

12.68

%

15.85

%

12.68

%

Asset quality
Nonperforming loans $ 285 $ 659 $ 3,438 $ 285 $ 3,438
Nonperforming assets 5,335 5,710 7,952 5,335 7,952
Nonperforming loans to loans 0.01 % 0.03 % 0.20 % 0.01 % 0.20 %
Nonperforming assets to total assets 0.17 % 0.20 % 0.33 % 0.17 % 0.33 %
Allowance for loan losses to:
Loans 0.68 % 0.70 % 0.78 % 0.68 % 0.78 %
Nonperforming loans 5,632.6 % 2,361.2 % 383.8 % 5,632.6 % 383.8 %
Net charge-offs to average loans 0.03 % 0.05 % 0.01 % 0.04 % 0.02 %
Average balance sheet information
Loans $ 2,278,415 $ 2,154,876 $ 1,552,456 $ 2,216,987 $ 1,436,903
Total securities 480,713 485,173 500,816 482,931 487,902
Other earning assets 79,346 104,685 67,989 91,946 56,753
Total interest-earning assets 2,856,029 2,762,620 2,139,040 2,809,583 1,999,759
Total assets 2,921,540 2,823,790 2,194,652 2,872,935 2,050,992
Noninterest-bearing deposits 44,524 43,976 32,897 44,252 32,184
Interest-bearing deposits 2,137,045 2,105,092 1,593,364 2,121,157 1,522,415
Total deposits 2,181,569 2,149,068 1,626,261 2,165,409 1,554,599
Shareholders' equity 238,465 223,131 161,228 230,840 158,030
 

1

 

On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate in 2018 and a 35% tax rate in 2017

2

Regulatory capital ratios are preliminary pending filing of the Company's regulatory reports

     
First Internet Bancorp
Condensed Consolidated Balance Sheets (unaudited)
Amounts in thousands
   
 
June 30, March 31, June 30,
2018 2018 2017
 
Assets
Cash and due from banks $ 3,694 $ 5,675 $ 5,425
Interest-bearing deposits 138,666 58,072 60,818
Securities available-for-sale, at fair value 460,822 463,652 489,775
Securities held-to-maturity, at amortized cost 19,203 19,206 19,215
Loans held-for-sale 20,672 17,067 27,335
Loans 2,374,035 2,209,405 1,698,421
Allowance for loan losses   (16,053 )   (15,560 )   (13,194 )
Net loans 2,357,982 2,193,845 1,685,227
Accrued interest receivable 14,540 11,898 8,479
Federal Home Loan Bank of Indianapolis stock 22,050 20,250 19,575
Cash surrender value of bank-owned life insurance 35,579 35,342 34,602
Premises and equipment, net 10,169 10,110 9,667
Goodwill 4,687 4,687 4,687
Other real estate owned 5,041 5,041 4,488
Accrued income and other assets   22,668     17,883     11,978  
Total assets $ 3,115,773   $ 2,862,728   $ 2,381,271  
 
Liabilities
Noninterest-bearing deposits $ 44,671 $ 47,678 $ 36,636
Interest-bearing deposits   2,349,613     2,129,443     1,695,476  
Total deposits 2,394,284 2,177,121 1,732,112
Advances from Federal Home Loan Bank 390,167 413,173 435,183
Subordinated debt 33,800 36,763 36,652
Accrued interest payable 435 410 210
Accrued expenses and other liabilities   15,000     10,437     13,284  
Total liabilities   2,833,686     2,637,904     2,217,441  
Shareholders' equity
Voting common stock 227,099 172,421 119,883
Retained earnings 69,066 63,677 49,738
Accumulated other comprehensive loss   (14,078 )   (11,274 )   (5,791 )
Total shareholders' equity   282,087     224,824     163,830  
Total liabilities and shareholders' equity $ 3,115,773   $ 2,862,728   $ 2,381,271  
 
         
First Internet Bancorp
Condensed Consolidated Statements of Income (unaudited)
Amounts in thousands, except per share data
 
 
Three Months Ended Six Months Ended
 
June 30, March 31, June 30, June 30, June 30,
2018 2018 2017 2018 2017
 
Interest income
Loans $ 23,699 $ 22,115 $ 16,416 $ 45,814 $ 30,572
Securities - taxable 2,556 2,488 2,566 5,044 4,933
Securities - non-taxable 700 711 696 1,411 1,393
Other earning assets   461   665   297   1,126   467
Total interest income   27,416   25,979   19,975   53,395   37,365
Interest expense
Deposits 9,226 8,270 5,324 17,496 10,023
Other borrowed funds   2,729   2,294   1,677   5,023   2,911
Total interest expense   11,955   10,564   7,001   22,519   12,934
Net interest income 15,461 15,415 12,974 30,876 24,431
Provision for loan losses   667   850   1,322   1,517   2,357

Net interest income after provision for loan losses

  14,794   14,565   11,652   29,359   22,074
Noninterest income
Service charges and fees 231 230 220 461 431
Mortgage banking activities 1,597 1,578 2,155 3,175 3,771
Gain on sale of loans - 414 - 414 -
Other   349   320   361   669   665
Total noninterest income   2,177   2,542   2,736   4,719   4,867
Noninterest expense
Salaries and employee benefits 5,827 5,905 5,193 11,732 10,266
Marketing, advertising and promotion 608 716 544 1,324 1,062
Consulting and professional fees 633 851 764 1,484 1,577
Data processing 282 263 245 545 482
Loan expenses 260 237 248 497 462
Premises and equipment 1,231 1,214 1,025 2,445 1,978
Deposit insurance premium 480 465 300 945 615
Other   861   566   604   1,427   1,179
Total noninterest expense   10,182   10,217   8,923   20,399   17,621
Income before income taxes 6,789 6,890 5,465 13,679 9,320
Income tax provision   781   862   1,464   1,643   2,487
Net income $ 6,008 $ 6,028 $ 4,001 $ 12,036 $ 6,833
 
Per common share data
Earnings per share - basic $ 0.67 $ 0.71 $ 0.61 $ 1.38 $ 1.04
Earnings per share - diluted $ 0.67 $ 0.71 $ 0.61 $ 1.38 $ 1.04
Dividends declared per share $ 0.06 $ 0.06 $ 0.06 $ 0.12 $ 0.12
 
All periods presented have been reclassified to conform to the current period classification.
                 
First Internet Bancorp
Average Balances and Rates (unaudited)
Amounts in thousands
   
 
Three Months Ended
 
June 30, 2018 March 31, 2018 June 30, 2017
 
Average Interest / Yield / Average Interest / Yield / Average Interest / Yield /
Balance Dividends Cost Balance Dividends Cost Balance Dividends Cost
 
Assets
Interest-earning assets
Loans, including loans held-for-sale 1 $ 2,295,970 $ 23,699 4.14 % $ 2,172,762 $ 22,115 4.13 % $ 1,570,235 $ 16,416 4.19 %
Securities - taxable 386,207 2,556 2.65 % 389,447 2,488 2.59 % 405,380 2,566 2.54 %
Securities - non-taxable 94,506 700 2.97 % 95,726 711 3.01 % 95,436 696 2.93 %
Other earning assets   79,346     461 2.33 %   104,685     665 2.58 %   67,989     297 1.75 %
Total interest-earning assets 2,856,029 27,416 3.85 % 2,762,620 25,979 3.81 % 2,139,040 19,975 3.75 %
 
Allowance for loan losses (15,782 ) (15,206 ) (12,372 )
Noninterest-earning assets   81,293     76,376     67,984  
Total assets $ 2,921,540   $ 2,823,790   $ 2,194,652  
 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 93,599 $ 145 0.62 % $ 91,034 $ 122 0.54 % $ 92,676 $ 127 0.55 %
Savings accounts 55,273 158 1.15 % 55,952 158 1.15 % 34,545 67 0.78 %
Money market accounts 571,398 2,130 1.50 % 562,345 1,893 1.37 % 394,735 915 0.93 %
Certificates and brokered deposits   1,416,775     6,793 1.92 %   1,395,761     6,097 1.77 %   1,071,408     4,215 1.58 %
Total interest-bearing deposits 2,137,045 9,226 1.73 % 2,105,092 8,270 1.59 % 1,593,364 5,324 1.34 %
Other borrowed funds   492,068     2,729 2.22 %   441,970     2,294 2.10 %   398,044     1,677 1.69 %
Total interest-bearing liabilities 2,629,113 11,955 1.82 % 2,547,062 10,564 1.68 % 1,991,408 7,001 1.41 %
 
Noninterest-bearing deposits 44,524 43,976 32,897
Other noninterest-bearing liabilities   9,438     9,621     9,119  
Total liabilities 2,683,075 2,600,659 2,033,424
 
Shareholders' equity   238,465     223,131     161,228  
Total liabilities and shareholders' equity $ 2,921,540   $ 2,823,790   $ 2,194,652  
     
Net interest income $ 15,461 $ 15,415 $ 12,974
 
Interest rate spread 2.03 % 2.13 % 2.34 %
 
Net interest margin 2.17 % 2.26 % 2.43 %
 
Net interest margin - FTE 2 2.33 % 2.41 % 2.53 %
 

1

 

Includes nonaccrual loans

2

On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate in 2018 and a 35% tax rate in 2017

 
First Internet Bancorp
Average Balances and Rates (unaudited)
Amounts in thousands
               
 
Six Months Ended
 
June 30, 2018 June 30, 2017
 
Average Interest / Yield / Average Interest / Yield /
Balance Dividends Cost Balance Dividends Cost
 
Assets
Interest-earning assets
Loans, including loans held-for-sale 1 $ 2,234,706 $ 45,814 4.13 % $ 1,455,104 $ 30,572 4.24 %
Securities - taxable 387,818 5,044 2.62 % 393,517 4,933 2.53 %
Securities - non-taxable 95,113 1,411 2.99 % 94,385 1,393 2.98 %
Other earning assets   91,946     1,126 2.47 %   56,753     467 1.66 %
Total interest-earning assets 2,809,583 53,395 3.83 % 1,999,759 37,365 3.77 %
 
Allowance for loan losses (15,495 ) (11,839 )
Noninterest-earning assets   78,847     63,072  
Total assets $ 2,872,935   $ 2,050,992  
 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 92,323 $ 268 0.59 % $ 90,498 $ 246 0.55 %
Savings accounts 55,611 316 1.15 % 31,456 114 0.73 %
Money market accounts 566,897 4,022 1.43 % 371,346 1,611 0.87 %
Certificates and brokered deposits   1,406,326     12,890 1.85 %   1,029,115     8,052 1.58 %
Total interest-bearing deposits 2,121,157 17,496 1.66 % 1,522,415 10,023 1.33 %
Other borrowed funds   467,157     5,023 2.17 %   330,683     2,911 1.78 %
Total interest-bearing liabilities 2,588,314 22,519 1.75 % 1,853,098 12,934 1.41 %
 
Noninterest-bearing deposits 44,252 32,184
Other noninterest-bearing liabilities   9,529     7,680  
Total liabilities 2,642,095 1,892,962
 
Shareholders' equity   230,840     158,030  
Total liabilities and shareholders' equity $ 2,872,935   $ 2,050,992  
   
Net interest income $ 30,876 $ 24,431
 
Interest rate spread 2.08 % 2.36 %
 
Net interest margin 2.22 % 2.46 %
 
Net interest margin - FTE 2 2.37 % 2.55 %
 

1

  Includes nonaccrual loans

2

On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate in 2018 and a 35% tax rate in 2017
         
First Internet Bancorp
Loans and Deposits (unaudited)
Amounts in thousands
 
 
June 30, 2018 March 31, 2018 June 30, 2017
 
Amount Percent Amount Percent Amount Percent
 
Commercial loans
Commercial and industrial $ 107,394 4.5 % $ 119,893 5.4 % $ 110,379 6.5 %
Owner-occupied commercial real estate 86,068 3.6 % 81,998 3.7 % 66,952 4.0 %
Investor commercial real estate 6,185 0.3 % 6,273 0.3 % 10,062 0.6 %
Construction 46,769 2.0 % 47,013 2.1 % 45,931 2.7 %
Single tenant lease financing 863,981 36.4 % 834,335 37.8 % 747,790 44.0 %
Public finance 566,184 23.8 % 481,923 21.8 % 179,873 10.6 %
Healthcare finance   65,605 2.8 %   48,891 2.2 %   - 0.0 %
Total commercial loans 1,742,186 73.4 % 1,620,326 73.3 % 1,160,987 68.4 %
 
Consumer loans
Residential mortgage 337,143 14.2 % 318,298 14.4 % 292,997 17.3 %
Home equity 28,826 1.2 % 29,296 1.3 % 33,312 2.0 %
Trailers 120,957 5.1 % 107,714 4.9 % 94,036 5.5 %
Recreational vehicles 79,946 3.4 % 73,005 3.3 % 63,514 3.7 %
Other consumer loans   59,261 2.5 %   55,466 2.5 %   51,052 3.0 %
Total consumer loans 626,133 26.4 % 583,779 26.4 % 534,911 31.5 %
 
Net deferred loan fees, premiums and discounts 5,716 0.2 % 5,300 0.3 % 2,523 0.1 %
           
Total loans $ 2,374,035 100.0 % $ 2,209,405 100.0 % $ 1,698,421 100.0 %
 
 
June 30, 2018 March 31, 2018 June 30, 2017
 
Amount Percent Amount Percent Amount Percent
 
Deposits
Noninterest-bearing deposits $ 44,671 1.9 % $ 47,678 2.2 % $ 36,636 2.1 %
Interest-bearing demand deposits 91,748 3.8 % 99,006 4.5 % 94,726 5.5 %
Savings accounts 48,897 2.1 % 60,176 2.8 % 35,764 2.1 %
Money market accounts 582,565 24.3 % 592,113 27.2 % 386,224 22.3 %
Certificates of deposits 1,231,438 51.4 % 1,185,176 54.4 % 1,176,230 67.9 %
Brokered deposits 1 394,965 16.5 % 192,972 8.9 % 2,532 0.1 %
           
Total deposits $ 2,394,284 100.0 % $ 2,177,121 100.0 % $ 1,732,112 100.0 %
 

1

 

As of March 31, 2018, $116.3 million of public fund deposits originated through an investment advisor who manages fixed income portfolios for municipalities were reclassified from certificates of deposit to brokered deposits per regulatory guidance.

First Internet Bancorp          
Reconciliation of Non-GAAP Financial Measures
Amounts in thousands, except per share data                    
 
 
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2018 2018 2017 2018 2017
 
Total equity - GAAP $ 282,087 $ 224,824 $ 163,830 $ 282,087 $ 163,830
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Tangible common equity $ 277,400   $ 220,137   $ 159,143   $ 277,400   $ 159,143  
 
Total assets - GAAP $ 3,115,773 $ 2,862,728 $ 2,381,271 $ 3,115,773 $ 2,381,271
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Tangible assets $ 3,111,086   $ 2,858,041   $ 2,376,584   $ 3,111,086   $ 2,376,584  
 
Common shares outstanding 10,181,675 8,450,925 6,513,577 10,181,675 6,513,577
 
Book value per common share $ 27.71 $ 26.60 $ 25.15 $ 27.71 $ 25.15
Effect of goodwill   (0.46 )   (0.55 )   (0.72 )   (0.46 )   (0.72 )
Tangible book value per common share $ 27.25   $ 26.05   $ 24.43   $ 27.25   $ 24.43  
 
Total shareholders' equity to assets ratio 9.05 % 7.85 % 6.88 % 9.05 % 6.88 %
Effect of goodwill   (0.13 %)   (0.15 %)   (0.18 %)   (0.13 %)   (0.18 %)
Tangible common equity to tangible assets ratio   8.92 %   7.70 %   6.70 %   8.92 %   6.70 %

 

Total average equity - GAAP $ 238,465 $ 223,131 $ 161,228 $ 230,840 $ 158,030
Adjustments:
Average goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Average tangible common equity

$

233,778   $ 218,444   $ 156,541   $ 226,153   $ 153,343  
 
Return on average shareholders' equity 10.11 % 10.96 % 9.95 % 10.51 % 8.72 %
Effect of goodwill   0.20 %   0.23 %   0.30 %   0.22 %   0.27 %
Return on average tangible common equity   10.31 %   11.19 %   10.25 %   10.73 %   8.99 %
 

Total interest income

$

 27,416

$

25,979

$

19,975

$

53,395

$

37,365

Adjustments:

Fully-taxable equivalent adjustments 1

 

1,164

   

 1,018

   

543

   

2,182

   

849

 

Total interest income - FTE

$

 28,580

 

$

 26,997

 

$

 20,518

 

$

55,577

 

$

38,214

 
 
Net interest income $ 15,461 $ 15,415 $ 12,974 $ 30,876 $ 24,431
Adjustments:

Fully-taxable equivalent adjustments 1

 

1,164

 

 

1,018

 

 

543

 

 

2,182

   

849

 
Net interest income - FTE $ 16,625   $ 16,433   $ 13,517   $ 33,058   $ 25,280  
 
Net interest margin 2.17 % 2.26 %

2.43

% 2.22 % 2.46 %
Effect of fully-taxable equivalent adjustments 1   0.16 %   0.15 %   0.10 %   0.15 %   0.09 %
Net interest margin - FTE   2.33 %   2.41 %   2.53 %   2.37 %   2.55 %

1

  Assuming a 21% tax rate in 2018 and a 35% tax rate in 2017

Contacts

First Internet Bancorp
Investors/Analysts
Paula Deemer, 317-428-4628
Investor Relations
investors@firstib.com
or
Media
Nicole Lorch, 317-532-7906
Executive Vice President & Chief Operating Officer
nlorch@firstib.com

Contacts

First Internet Bancorp
Investors/Analysts
Paula Deemer, 317-428-4628
Investor Relations
investors@firstib.com
or
Media
Nicole Lorch, 317-532-7906
Executive Vice President & Chief Operating Officer
nlorch@firstib.com