First Internet Bancorp Reports Third Quarter 2019 Results

Highlights for the third quarter include:

  • Diluted earnings per share of $0.63, an increase of 5.0% from the second quarter
  • Record quarterly net income of $6.3 million, an increase of 3.3% from the second quarter
  • Total revenue of $20.8 million, a 6.4% increase from the second quarter driven by increased mortgage banking activity
  • Completed the stock repurchase program purchasing 274,658 shares during the quarter at an average price of $20.57 per share

FISHERS, Ind.--()--First Internet Bancorp (the “Company”) (Nasdaq: INBK), the parent company of First Internet Bank (the “Bank”), announced today financial and operational results for the third quarter of 2019. Net income for the third quarter of 2019 was a record $6.3 million, or $0.63 diluted earnings per share. This compares to net income of $6.1 million, or $0.60 diluted earnings per share, for the second quarter of 2019, and net income of $6.3 million, or $0.61 diluted earnings per share, for the third quarter of 2018.

David Becker, Chairman, President and Chief Executive Officer, commented, “We are very pleased with our results in the third quarter, driven by continued revenue growth, well-managed expenses and strong balance sheet management. These balance sheet strategies, which included the sale of lower-yielding loans, reflect our disciplined approach to capital deployment. The loan sales enabled us to enhance our profitability through additional fee revenue, and support our loan origination teams as they redeployed capital into higher-yielding new production. Additionally, our direct-to-consumer mortgage business had a stellar quarter, posting a 62% increase in revenue compared to the second quarter.

“We continue to make progress with our expansion into small business banking with attractive opportunities on both sides of our balance sheet. During the third quarter, the pipeline of new lending opportunities grew again and our efforts on the deposit side continued to produce results as business money market and checking accounts increased over $41 million. We recently appointed new leadership to run our expanding national SBA program and we are also excited that our previously announced acquisition of the small business lending division of First Colorado National Bank is expected to close next month.

“While certain factors weighed on our net interest margin during the quarter, we expect to benefit from lower deposit costs in future quarters, particularly as higher cost CDs continue to mature and we work to build on our success in generating small business deposits.”

Mr. Becker concluded, “Our continued ability to win new business and grow existing relationships is the direct result of our employees’ dedication to the success of our customers and our Company. Our high level of employee engagement has contributed to our unique culture, which was recognized again by American Banker, naming us one of the “Best Banks to Work For” for the seventh consecutive year. As always, I would like to thank the entire First Internet team who have worked very hard to deliver our strong results and whose commitment and efforts remain the keys to our continued success.”

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2019 was $15.2 million, compared to $16.1 million for the second quarter of 2019, and $16.0 million for the third quarter of 2018. On a fully-taxable equivalent basis, net interest income for the third quarter of 2019 was $16.8 million, compared to $17.7 million for the second quarter of 2019, and $17.3 million for the third quarter of 2018.

Total interest income for the third quarter of 2019 was $37.7 million, an increase of 2.3%, compared to the second quarter of 2019, and an increase of 24.7% compared to the third quarter of 2018. On a fully-taxable equivalent basis, total interest income for the third quarter of 2019 was $39.3 million, an increase of 2.2% compared to the second quarter of 2019, and an increase of 24.4% compared to the third quarter of 2018. The increase in total interest income compared to the second quarter of 2019 was driven primarily by a $209.9 million, or 5.6%, increase in average interest-earning assets, partially offset by a 17 basis point (“bp”) decrease in the yield on those assets. The yield on interest-earning assets for the third quarter of 2019 declined to 3.80% from 3.97% in the prior quarter due primarily to the decline in short term rates during the quarter, which negatively impacted the yields earned on loans, securities and other earning assets. Additionally, the yield on interest-earning assets was negatively impacted by the mix of interest-earning assets as the Company carried higher cash balances during the quarter, which have lower yields than loans and securities.

Total interest expense for the third quarter of 2019 was $22.5 million, an increase of 8.3%, compared to the second quarter of 2019, and an increase of 57.5% compared to the third quarter of 2018. The increase in total interest expense compared to the second quarter of 2019 was driven primarily by a $152.1 million increase in average interest-bearing deposits and a full quarter’s impact of the $37.0 million 6.0% fixed-to-floating rate subordinated notes issued during the second quarter of 2019. The increase in average interest-bearing deposits was driven by growth in certificates of deposit (“CD” or “CDs”) and money market accounts. The cost of total interest-bearing deposits increased only 1 bp compared to the linked quarter as the cost of new CD production continued to decline during the third quarter of 2019 and was modestly above the cost of maturing CDs. By the end of the third quarter of 2019, new CD production rates had dropped below the rates on maturing CDs. Overall, the total cost of interest-bearing liabilities increased 3 bps from the second quarter of 2019, due primarily to the cost of the subordinated notes.

Net interest margin (“NIM”) declined to 1.54% for the third quarter of 2019, from 1.73% for the second quarter of 2019 and 2.06% for the third quarter of 2018. On a fully-taxable equivalent basis, NIM declined to 1.70% for the third quarter of 2019, from 1.91% for the second quarter of 2019 and 2.23% for the third quarter of 2018. The decrease in NIM compared to the linked quarter was driven primarily by carrying higher cash balances, which had a negative impact of 7 bps, and the full quarter’s impact of the subordinated notes issued during the second quarter of 2019, which contributed 6 bps to the decline.

Noninterest Income

Noninterest income for the third quarter of 2019 was $5.6 million, compared to $3.5 million for the second quarter of 2019 and $2.0 million for the third quarter of 2018. The increase compared to the second quarter of 2019 was driven primarily by an increase in revenue from mortgage banking activities and the gain on sale of loans sold during the quarter. The increase in mortgage banking revenue of $1.6 million, or 61.7%, was due mainly to an increase in mandatory pipeline volumes as the decline in mortgage interest rates during the quarter drove increased interest rate lock commitment activity. Additionally, the Company sold single tenant lease financing and public finance loans with book values totaling $53.4 million during the third quarter of 2019, recognizing a net gain of $0.5 million as compared to the prior quarter when it sold $148.4 million of loans, including single tenant lease financing and lower-yielding adjustable rate residential mortgage and public finance loans, at a net loss of $66,000.

Noninterest Expense

Noninterest expense for the third quarter of 2019 was $11.2 million, compared to $11.7 million for the second quarter of 2019 and $10.0 million for the third quarter of 2018. The decrease from the second quarter of 2019 was due primarily to the Company not incurring deposit insurance premium expense during the third quarter of 2019 as a result of the small bank assessment credit applied by the Federal Deposit Insurance Corporation. The decline in deposit premium expense was partially offset by higher salaries and employee benefits expense due mainly to higher incentive compensation related to the increased mortgage production.

Income Taxes

The Company reported income tax expense of $0.4 million and an effective tax rate of 6.6% for the third quarter of 2019, compared to $0.3 million and an effective tax rate of 5.3% for the second quarter of 2019 and $0.7 million and an effective tax rate of 10.6% for the third quarter of 2018.

Loans and Credit Quality

Total loans as of September 30, 2019 were $2.9 billion, an increase of $20.1 million, or 0.7%, compared to June 30, 2019, and an increase of $387.7 million, or 15.6%, compared to September 30, 2018. Total commercial loan balances were $2.2 billion as of September 30, 2019, an increase of $11.0 million, or 0.5%, compared to June 30, 2019 and an increase of $367.2 million, or 20.1%, compared to September 30, 2018. Compared to the linked quarter, the growth in commercial loan balances was driven largely by production in healthcare finance and single tenant lease financing, partially offset by the sale of $53.4 million of single tenant lease financing and public finance loans. Additionally, commercial and industrial loan balances declined $15.1 million during the quarter due primarily to elevated prepayment activity.

Total consumer loan balances were $642.1 million as of September 30, 2019, an increase of $2.3 million, or 0.4%, compared to June 30, 2019, and a decrease of $19.8 million, or 3.0%, compared to September 30, 2018. Compared to the linked quarter, the slight increase in consumer loan balances was driven primarily by new originations in the recreational vehicles, residential mortgage and trailers portfolios.

Loans 30 days or more past due were 0.13% of total loans as of September 30, 2019, compared to 0.24% as of June 30, 2019 and 0.02% of total loans as of September 30, 2018. Nonperforming loans to total loans were 0.20% as of September 30, 2019, compared to 0.19% at June 30, 2019 and 0.01% at September 30, 2018. The reduction in delinquencies was driven primarily by a residential mortgage with an unpaid principal balance of $3.1 million that was brought current by the end of the quarter and was paid off in full early in the fourth quarter of 2019. Additionally, a commercial loan relationship that was placed on nonaccrual status in the second quarter of 2019 was partially paid down by the borrower during the third quarter of 2019, further reducing delinquencies. Related to nonperforming loans, this activity was offset by a single tenant lease financing relationship with a total unpaid principal balance of $4.7 million that was placed on nonaccrual status late in the quarter, resulting in the increase in nonperforming loans.

The allowance for loan losses as a percentage of total loans was 0.75% as of September 30, 2019, as compared to 0.70% as of June 30, 2019 and 0.67% as of September 30, 2018.

Net charge-offs of $1.1 million were recognized during the third quarter of 2019, resulting in net charge-offs to average loans of 0.15%, as compared to 0.04% in each of the second quarter of 2019 and the third quarter of 2018. The increase in net charge-offs was due primarily to a $0.8 million charge-off of a commercial loan relationship. The provision for loan losses in the third quarter of 2019 was $2.8 million, compared to $1.4 million for the second quarter of 2019 and $0.9 million for the third quarter of 2018. The increase in the provision for loan losses compared to the second quarter of 2019 was driven primarily by a specific reserve of $1.7 million recognized on the single tenant lease financing relationship discussed above as well as the $0.8 million commercial loan charge-off, partially offset by a $0.4 million reduction in the specific reserve associated with the commercial loan discussed above that was partially paid down during the quarter.

Balance Sheet Management

In the fourth quarter of 2017, when interest rates were forecasted to increase, the Company initiated an asset hedging strategy intended to enhance asset sensitivity and reduce long term interest rate risk. As of September 30, 2019, the Company had a total notional value of $430.6 million of pay fixed / receive variable interest rate swaps in place to hedge public finance loans, representing 62.7% of the total public finance loan balances outstanding. Including $88.2 million of notional value interest rate swaps in place to hedge investment securities, the Company had swaps with a total notional value of $518.8 million in place at the end of the third quarter of 2019 to hedge long-term fixed rate assets.

The Company also implemented a liability hedging strategy during 2018 using pay fixed / receive variable interest rate swaps intended to extend the duration of short term FHLB advances and brokered variable rate money market deposits. As of September 30, 2019, the Company had $210.0 million of notional value interest rate swaps related to these funding sources.

Based on the declining interest rate environment during the first nine months of 2019, the Company did not execute any additional interest rate swaps to hedge either assets or liabilities. In future periods, the Company’s use of interest rate swaps as a tool to manage exposure to both short- and long-term interest rate risk will be determined based on multiple factors, including, but not limited to, the interest rate environment and forward rate expectations.

In conjunction with the decline in interest rates throughout 2019, the Company reduced rates offered on CDs in the institutional and public funds channels between 90 and 184 bps, based on the maturity, and between 30 and 107 bps for consumer CDs. To manage the negative impact of declining interest rates on the loan portfolio, the Company has implemented price floors throughout 2019 for new originations in most of its commercial lending areas.

The Company has historically used loan sales or repositioned the securities and wholesale funding portfolios to manage balance sheet growth and capital, provide liquidity and help improve NIM and profitability. As discussed above, during the third quarter, the Company sold $53.4 million of loans during the quarter, which included $23.6 million of seasoned lower-yielding public finance loans.

Capital

As of September 30, 2019, total shareholders’ equity was $295.1 million, a decrease of $1.0 million, or 0.3%, compared to June 30, 2019, due mainly to stock repurchase activity during the quarter and an increase in accumulated other comprehensive loss, partially offset by the net income earned during the quarter. Book value per common share increased to $30.30 as of September 30, 2019, up from $29.56 as of June 30, 2019 and $28.26 as of September 30, 2018. Tangible book value per common share increased to $29.82, up from $29.10 and $27.80, each as of the same reference dates.

In connection with its previously announced stock repurchase program, the Company repurchased 274,658 shares during the third quarter of 2019 at an average price of $20.57 per share. Since inception of the program in December 2018, share repurchases have totaled 482,970 at an average price of $20.70 per share, for a total of $10.0 million, thus achieving the maximum amount of stock to be repurchased under this program.

The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of September 30, 2019.

As of September 30, 2019

Company

 

Bank

 

Total shareholders' equity to assets

7.21%

 

7.83%

Tangible common equity to tangible assets 1

7.10%

 

7.72%

Tier 1 leverage ratio 2

7.66%

 

8.30%

Common equity tier 1 capital ratio 2

10.93%

 

11.84%

Tier 1 capital ratio 2

10.93%

 

11.84%

Total risk-based capital ratio 2

14.17%

 

12.62%

1

This information represents a non-GAAP financial measure. For a discussion of non-GAAP financial measures, see the section below entitled "Non-GAAP Financial Measures."

2

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

Conference Call and Webcast

The Company will host a conference call and webcast at 12:00 p.m. Eastern Time on Thursday, October 24, 2019 to discuss its quarterly financial results. The call can be accessed via telephone at (888) 348-3664. A recorded replay can be accessed through November 24, 2019 by dialing (877) 344-7529; passcode: 10135531.

Additionally, interested parties can listen to a live webcast of the call on the Company's website at www.firstinternetbancorp.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

About First Internet Bancorp

First Internet Bancorp is a bank holding company with assets of $4.1 billion as of September 30, 2019. 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 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, SBA financing and treasury management services. 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, timing of pending acquisitions, plans, objectives, future performance or business of the Company. Forward-looking statements are generally identifiable by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “pending,” “plan,” “preliminary,” “remain,” “should,” “will,” “would” 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; failure to close any pending acquisitions; failure to satisfy or waive closing condition; 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, average tangible common equity, 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)
Dollar amounts in thousands, except per share data
 

Three Months Ended

 

Nine Months Ended

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

2019

 

2019

 

2018

 

2019

 

2018

Net income

$

6,326

 

$

6,121

 

$

6,288

 

$

18,143

 

$

18,324

 

 
Per share and share information
Earnings per share - basic

$

0.63

 

$

0.60

 

$

0.61

 

$

1.79

 

$

1.99

 

Earnings per share - diluted

 

0.63

 

 

0.60

 

 

0.61

 

 

1.79

 

 

1.98

 

Dividends declared per share

 

0.06

 

 

0.06

 

 

0.06

 

 

0.18

 

 

0.18

 

Book value per common share

 

30.30

 

 

29.56

 

 

28.26

 

 

30.30

 

 

28.26

 

Tangible book value per common share 1

 

29.82

 

 

29.10

 

 

27.80

 

 

29.82

 

 

27.80

 

Common shares outstanding

 

9,741,800

 

 

10,016,458

 

 

10,181,675

 

 

9,741,800

 

 

10,181,675

 

Average common shares outstanding:
Basic

 

9,979,603

 

 

10,148,285

 

 

10,261,967

 

 

10,114,303

 

 

9,230,149

 

Diluted

 

9,980,612

 

 

10,148,285

 

 

10,273,766

 

 

10,116,507

 

 

9,250,839

 

Performance ratios
Return on average assets

 

0.63

%

 

0.65

%

 

0.79

%

 

0.64

%

 

0.83

%

Return on average shareholders' equity

 

8.40

%

 

8.26

%

 

8.75

%

 

8.20

%

 

9.83

%

Return on average tangible common equity 1

 

8.53

%

 

8.39

%

 

8.89

%

 

8.33

%

 

10.02

%

Net interest margin

 

1.54

%

 

1.73

%

 

2.06

%

 

1.70

%

 

2.16

%

Net interest margin - FTE 1,2

 

1.70

%

 

1.91

%

 

2.23

%

 

1.87

%

 

2.32

%

Capital ratios 3
Total shareholders' equity to assets

 

7.21

%

 

7.48

%

 

8.98

%

 

7.21

%

 

8.98

%

Tangible common equity to tangible assets 1

 

7.10

%

 

7.37

%

 

8.85

%

 

7.10

%

 

8.85

%

Tier 1 leverage ratio

 

7.66

%

 

8.06

%

 

9.40

%

 

7.66

%

 

9.40

%

Common equity tier 1 capital ratio

 

10.93

%

 

11.08

%

 

13.14

%

 

10.93

%

 

13.14

%

Tier 1 capital ratio

 

10.93

%

 

11.08

%

 

13.14

%

 

10.93

%

 

13.14

%

Total risk-based capital ratio

 

14.17

%

 

14.31

%

 

15.38

%

 

14.17

%

 

15.38

%

Asset quality
Nonperforming loans

$

5,783

 

$

5,386

 

$

256

 

$

5,783

 

$

256

 

Nonperforming assets

 

8,497

 

 

8,041

 

 

5,304

 

 

8,497

 

 

5,304

 

Nonperforming loans to loans

 

0.20

%

 

0.19

%

 

0.01

%

 

0.20

%

 

0.01

%

Nonperforming assets to total assets

 

0.21

%

 

0.20

%

 

0.17

%

 

0.21

%

 

0.17

%

Allowance for loan losses to:
Loans

 

0.75

%

 

0.70

%

 

0.67

%

 

0.75

%

 

0.67

%

Nonperforming loans

 

374.9

%

 

370.9

%

 

6,525.0

%

 

374.9

%

 

6,525.0

%

Net charge-offs to average loans

 

0.15

%

 

0.04

%

 

0.04

%

 

0.08

%

 

0.04

%

Average balance sheet information
Loans

$

2,865,258

 

$

2,889,478

 

$

2,440,982

 

$

2,838,685

 

$

2,292,472

 

Total securities

 

561,780

 

 

558,352

 

 

483,900

 

 

547,940

 

 

483,257

 

Other earning assets

 

469,454

 

 

248,996

 

 

131,306

 

 

322,544

 

 

105,210

 

Total interest-earning assets

 

3,933,315

 

 

3,723,424

 

 

3,077,415

 

 

3,735,286

 

 

2,899,841

 

Total assets

 

4,015,433

 

 

3,805,021

 

 

3,148,230

 

 

3,817,408

 

 

2,965,709

 

Noninterest-bearing deposits

 

43,972

 

 

42,566

 

 

44,921

 

 

43,035

 

 

44,477

 

Interest-bearing deposits

 

3,031,095

 

 

2,879,007

 

 

2,368,472

 

 

2,880,701

 

 

2,204,501

 

Total deposits

 

3,075,067

 

 

2,921,573

 

 

2,413,393

 

 

2,923,736

 

 

2,248,978

 

Shareholders' equity

 

298,782

 

 

297,148

 

 

285,207

 

 

295,963

 

 

249,162

 

1 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below
2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate
3 Regulatory capital ratios are preliminary pending filing of the Company's regulatory reports
 
First Internet Bancorp
Condensed Consolidated Balance Sheets (unaudited)
Amounts in thousands
 

September 30,

 

June 30,

 

September 30,

2019

 

2019

 

2018

Assets
Cash and due from banks

$

6,283

 

$

5,638

 

$

3,517

 

Interest-bearing deposits

 

410,119

 

 

342,660

 

 

82,273

 

Securities available-for-sale, at fair value

 

544,742

 

 

522,334

 

 

468,997

 

Securities held-to-maturity, at amortized cost

 

46,807

 

 

35,826

 

 

20,200

 

Loans held-for-sale

 

41,119

 

 

30,642

 

 

23,493

 

Loans

 

2,881,272

 

 

2,861,156

 

 

2,493,622

 

Allowance for loan losses

 

(21,683

)

 

(19,976

)

 

(16,704

)

Net loans

 

2,859,589

 

 

2,841,180

 

 

2,476,918

 

Accrued interest receivable

 

16,652

 

 

18,887

 

 

14,472

 

Federal Home Loan Bank of Indianapolis stock

 

25,650

 

 

25,650

 

 

22,050

 

Cash surrender value of bank-owned life insurance

 

36,764

 

 

36,527

 

 

35,819

 

Premises and equipment, net

 

14,512

 

 

14,405

 

 

10,041

 

Goodwill

 

4,687

 

 

4,687

 

 

4,687

 

Other real estate owned

 

2,619

 

 

2,619

 

 

5,041

 

Accrued income and other assets

 

85,948

 

 

77,774

 

 

35,410

 

Total assets

$

4,095,491

 

$

3,958,829

 

$

3,202,918

 

 
Liabilities
Noninterest-bearing deposits

$

50,560

 

$

44,040

 

$

42,750

 

Interest-bearing deposits

 

3,097,682

 

 

2,962,223

 

 

2,403,814

 

Total deposits

 

3,148,242

 

 

3,006,263

 

 

2,446,564

 

Advances from Federal Home Loan Bank

 

514,908

 

 

514,906

 

 

425,160

 

Subordinated debt

 

69,452

 

 

69,375

 

 

33,837

 

Accrued interest payable

 

2,635

 

 

2,930

 

 

887

 

Accrued expenses and other liabilities

 

65,114

 

 

69,235

 

 

8,730

 

Total liabilities

 

3,800,351

 

 

3,662,709

 

 

2,915,178

 

Shareholders' equity
Voting common stock

 

219,013

 

 

224,244

 

 

227,454

 

Retained earnings

 

93,182

 

 

87,454

 

 

74,733

 

Accumulated other comprehensive loss

 

(17,055

)

 

(15,578

)

 

(14,447

)

Total shareholders' equity

 

295,140

 

 

296,120

 

 

287,740

 

Total liabilities and shareholders' equity

$

4,095,491

 

$

3,958,829

 

$

3,202,918

 

 
First Internet Bancorp
Condensed Consolidated Statements of Income (unaudited)
Amounts in thousands, except per share data
 

Three Months Ended

 

Nine Months Ended

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

2019

 

2019

 

2018

 

2019

 

2018

Interest income
Loans

$

30,594

$

30,842

 

$

26,019

$

90,654

 

$

71,833

Securities - taxable

 

3,468

 

3,540

 

 

2,659

 

10,332

 

 

7,703

Securities - non-taxable

 

639

 

668

 

 

698

 

1,991

 

 

2,109

Other earning assets

 

2,993

 

1,794

 

 

847

 

6,560

 

 

1,973

Total interest income

 

37,694

 

36,844

 

 

30,223

 

109,537

 

 

83,618

Interest expense
Deposits

 

18,363

 

17,147

 

 

11,650

 

50,896

 

 

29,146

Other borrowed funds

 

4,087

 

3,592

 

 

2,603

 

11,048

 

 

7,626

Total interest expense

 

22,450

 

20,739

 

 

14,253

 

61,944

 

 

36,772

Net interest income

 

15,244

 

16,105

 

 

15,970

 

47,593

 

 

46,846

Provision for loan losses

 

2,824

 

1,389

 

 

888

 

5,498

 

 

2,405

Net interest income after provision
for loan losses

 

12,420

 

14,716

 

 

15,082

 

42,095

 

 

44,441

Noninterest income
Service charges and fees

 

211

 

225

 

 

236

 

672

 

 

697

Mortgage banking activities

 

4,307

 

2,664

 

 

1,402

 

8,588

 

 

4,577

Gain (loss) on sale of loans

 

523

 

(66

)

 

-

 

353

 

 

414

Loss on sale of securities

 

-

 

(458

)

 

-

 

(458

)

 

-

Other

 

517

 

1,089

 

 

356

 

2,229

 

 

1,025

Total noninterest income

 

5,558

 

3,454

 

 

1,994

 

11,384

 

 

6,713

Noninterest expense
Salaries and employee benefits

 

6,883

 

6,642

 

 

5,704

 

19,846

 

 

17,436

Marketing, advertising and promotion

 

456

 

466

 

 

601

 

1,391

 

 

1,925

Consulting and professional fees

 

778

 

835

 

 

709

 

2,427

 

 

2,193

Data processing

 

381

 

328

 

 

368

 

1,026

 

 

913

Loan expenses

 

247

 

292

 

 

241

 

853

 

 

738

Premises and equipment

 

1,506

 

1,497

 

 

1,244

 

4,503

 

 

3,689

Deposit insurance premium

 

-

 

747

 

 

441

 

1,302

 

 

1,386

Other

 

952

 

902

 

 

737

 

2,673

 

 

2,164

Total noninterest expense

 

11,203

 

11,709

 

 

10,045

 

34,021

 

 

30,444

Income before income taxes

 

6,775

 

6,461

 

 

7,031

 

19,458

 

 

20,710

Income tax provision

 

449

 

340

 

 

743

 

1,315

 

 

2,386

Net income

$

6,326

$

6,121

 

$

6,288

$

18,143

 

$

18,324

 
Per common share data
Earnings per share - basic

$

0.63

$

0.60

 

$

0.61

$

1.79

 

$

1.99

Earnings per share - diluted

$

0.63

$

0.60

 

$

0.61

$

1.79

 

$

1.98

Dividends declared per share

$

0.06

$

0.06

 

$

0.06

$

0.18

 

$

0.18

 
All periods presented have been reclassified to conform to the current period classification.
 
First Internet Bancorp
Average Balances and Rates (unaudited)
Dollar amounts in thousands
 

Three Months Ended

September 30, 2019

 

June 30, 2019

 

September 30, 2018

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

$

2,902,081

 

$

30,594

4.18

%

$

2,916,076

 

$

30,842

4.24

%

$

2,462,209

 

$

26,019

4.19

%

Securities - taxable

 

462,490

 

 

3,468

2.97

%

 

460,816

 

 

3,540

3.08

%

 

389,880

 

 

2,659

2.71

%

Securities - non-taxable

 

99,290

 

 

639

2.55

%

 

97,536

 

 

668

2.75

%

 

94,020

 

 

698

2.95

%

Other earning assets

 

469,454

 

 

2,993

2.53

%

 

248,996

 

 

1,794

2.89

%

 

131,306

 

 

847

2.56

%

Total interest-earning assets

 

3,933,315

 

 

37,694

3.80

%

 

3,723,424

 

 

36,844

3.97

%

 

3,077,415

 

 

30,223

3.90

%

 
Allowance for loan losses

 

(20,050

)

 

(19,275

)

 

(16,312

)

Noninterest-earning assets

 

102,168

 

 

100,872

 

 

87,127

 

Total assets

$

4,015,433

 

$

3,805,021

 

$

3,148,230

 

 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits

$

126,130

 

$

233

0.73

%

$

117,665

 

$

214

0.73

%

$

87,102

 

$

133

0.61

%

Savings accounts

 

32,434

 

 

91

1.11

%

 

37,507

 

 

106

1.13

%

 

51,557

 

 

147

1.13

%

Money market accounts

 

639,181

 

 

3,261

2.02

%

 

592,106

 

 

2,995

2.03

%

 

527,715

 

 

2,206

1.66

%

Certificates and brokered deposits

 

2,233,350

 

 

14,778

2.63

%

 

2,131,729

 

 

13,832

2.60

%

 

1,702,098

 

 

9,164

2.14

%

Total interest-bearing deposits

 

3,031,095

 

 

18,363

2.40

%

 

2,879,007

 

 

17,147

2.39

%

 

2,368,472

 

 

11,650

1.95

%

Other borrowed funds

 

584,308

 

 

4,087

2.78

%

 

548,932

 

 

3,592

2.62

%

 

439,412

 

 

2,603

2.35

%

Total interest-bearing liabilities

 

3,615,403

 

 

22,450

2.46

%

 

3,427,939

 

 

20,739

2.43

%

 

2,807,884

 

 

14,253

2.01

%

 
Noninterest-bearing deposits

 

43,972

 

 

42,566

 

 

44,921

 

Other noninterest-bearing liabilities

 

57,276

 

 

37,368

 

 

10,218

 

Total liabilities

 

3,716,651

 

 

3,507,873

 

 

2,863,023

 

 
Shareholders' equity

 

298,782

 

 

297,148

 

 

285,207

 

Total liabilities and shareholders' equity

$

4,015,433

 

$

3,805,021

 

$

3,148,230

 

 
Net interest income

$

15,244

$

16,105

$

15,970

 
Interest rate spread

1.34

%

1.54

%

1.89

%

 
Net interest margin

1.54

%

1.73

%

2.06

%

 
Net interest margin - FTE 2,3

1.70

%

1.91

%

2.23

%

1 Includes nonaccrual loans
2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate
3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below
 
First Internet Bancorp
Average Balances and Rates (unaudited)
Dollar amounts in thousands
 

Nine Months Ended

September 30, 2019

 

September 30, 2018

Average

 

Interest /

 

Yield /

 

Average

 

Interest /

 

Yield /

Balance

 

Dividends

 

Cost

 

Balance

 

Dividends

 

Cost

Assets
Interest-earning assets
Loans, including loans held-for-sale 1

$

2,864,802

 

$

90,654

4.23

%

$

2,311,374

 

$

71,833

4.16

%

Securities - taxable

 

450,898

 

 

10,332

3.06

%

 

388,513

 

 

7,703

2.65

%

Securities - non-taxable

 

97,042

 

 

1,991

2.74

%

 

94,744

 

 

2,109

2.98

%

Other earning assets

 

322,544

 

 

6,560

2.72

%

 

105,210

 

 

1,973

2.51

%

Total interest-earning assets

 

3,735,286

 

 

109,537

3.92

%

 

2,899,841

 

 

83,618

3.86

%

 
Allowance for loan losses

 

(19,191

)

 

(15,770

)

Noninterest-earning assets

 

101,313

 

 

81,638

 

Total assets

$

3,817,408

 

$

2,965,709

 

 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits

$

117,811

 

$

659

0.75

%

$

90,564

 

$

401

0.59

%

Savings accounts

 

36,241

 

 

304

1.12

%

 

54,245

 

 

462

1.14

%

Money market accounts

 

598,410

 

 

9,009

2.01

%

 

553,692

 

 

6,228

1.50

%

Certificates and brokered deposits

 

2,128,239

 

 

40,924

2.57

%

 

1,506,000

 

 

22,055

1.96

%

Total interest-bearing deposits

 

2,880,701

 

 

50,896

2.36

%

 

2,204,501

 

 

29,146

1.77

%

Other borrowed funds

 

558,141

 

 

11,048

2.65

%

 

457,807

 

 

7,626

2.23

%

Total interest-bearing liabilities

 

3,438,842

 

 

61,944

2.41

%

 

2,662,308

 

 

36,772

1.85

%

 
Noninterest-bearing deposits

 

43,035

 

 

44,477

 

Other noninterest-bearing liabilities

 

39,568

 

 

9,762

 

Total liabilities

 

3,521,445

 

 

2,716,547

 

 
Shareholders' equity

 

295,963

 

 

249,162

 

Total liabilities and shareholders' equity

$

3,817,408

 

$

2,965,709

 

 
Net interest income

$

47,593

$

46,846

 
Interest rate spread

1.51

%

2.01

%

 
Net interest margin

1.70

%

2.16

%

 
Net interest margin - FTE 2,3

1.87

%

2.32

%

1 Includes nonaccrual loans
2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate
3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below
 
First Internet Bancorp
Loans and Deposits (unaudited)
Dollar amounts in thousands
 

September 30, 2019

 

June 30, 2019

 

September 30, 2018

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

Commercial loans
Commercial and industrial

$

95,078

3.3

%

$

110,143

3.8

%

$

105,489

4.2

%

Owner-occupied commercial real estate

 

86,357

3.0

%

 

83,979

2.9

%

 

93,568

3.8

%

Investor commercial real estate

 

11,852

0.4

%

 

21,179

0.7

%

 

5,595

0.2

%

Construction

 

54,131

1.9

%

 

47,849

1.7

%

 

38,228

1.5

%

Single tenant lease financing

 

1,008,247

35.0

%

 

1,001,196

35.1

%

 

883,372

35.4

%

Public finance

 

686,622

23.8

%

 

706,161

24.7

%

 

610,858

24.5

%

Healthcare finance

 

251,530

8.6

%

 

212,351

7.4

%

 

89,525

3.7

%

Total commercial loans

 

2,193,817

76.0

%

 

2,182,858

76.3

%

 

1,826,635

73.3

%

 
Consumer loans
Residential mortgage

 

320,451

11.1

%

 

318,678

11.1

%

 

362,574

14.5

%

Home equity

 

25,042

0.9

%

 

26,825

0.9

%

 

28,713

1.2

%

Trailers

 

145,600

5.1

%

 

144,704

5.1

%

 

129,571

5.2

%

Recreational vehicles

 

102,698

3.6

%

 

100,518

3.6

%

 

85,821

3.4

%

Other consumer loans

 

48,275

1.7

%

 

49,029

1.7

%

 

55,175

2.2

%

Total consumer loans

 

642,066

22.4

%

 

639,754

22.4

%

 

661,854

26.5

%

 
Net deferred loan fees, premiums, discounts and other 1

 

45,389

1.6

%

 

38,544

1.3

%

 

5,133

0.2

%

 
Total loans

$

2,881,272

100.0

%

$

2,861,156

100.0

%

$

2,493,622

100.0

%

 
 

September 30, 2019

 

June 30, 2019

 

September 30, 2018

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

Deposits
Noninterest-bearing deposits

$

50,560

1.6

%

$

44,040

1.5

%

$

42,750

1.7

%

Interest-bearing demand deposits

 

122,551

3.9

%

 

126,669

4.2

%

 

94,681

3.9

%

Savings accounts

 

34,886

1.1

%

 

31,445

1.0

%

 

47,033

1.9

%

Money market accounts

 

698,077

22.2

%

 

607,849

20.3

%

 

478,548

19.6

%

Certificates of deposits

 

1,681,377

53.4

%

 

1,629,886

54.2

%

 

1,252,690

51.2

%

Brokered deposits

 

560,791

17.8

%

 

566,374

18.8

%

 

530,862

21.7

%

 

 

 

Total deposits

$

3,148,242

100.0

%

$

3,006,263

100.0

%

$

2,446,564

100.0

%

1 Includes carrying value adjustments of $27.6 million, $22.2 million and ($5.2) million as of September 30, 2019, June 30, 2019 and September 30, 2018, respectively, related to interest rate swaps associated with public finance loans.
 
First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Dollar amounts in thousands, except per share data
 

Three Months Ended

 

Nine Months Ended

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

2019

 

2019

 

2018

 

2019

 

2018

Total equity - GAAP

$

295,140

 

$

296,120

 

$

287,740

 

$

295,140

 

$

287,740

 

Adjustments:
Goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

Tangible common equity

$

290,453

 

$

291,433

 

$

283,053

 

$

290,453

 

$

283,053

 

 
Total assets - GAAP

$

4,095,491

 

$

3,958,829

 

$

3,202,918

 

$

4,095,491

 

$

3,202,918

 

Adjustments:
Goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

Tangible assets

$

4,090,804

 

$

3,954,142

 

$

3,198,231

 

$

4,090,804

 

$

3,198,231

 

 
Common shares outstanding

 

9,741,800

 

 

10,016,458

 

 

10,181,675

 

 

9,741,800

 

 

10,181,675

 

 
Book value per common share

$

30.30

 

$

29.56

 

$

28.26

 

$

30.30

 

$

28.26

 

Effect of goodwill

 

(0.48

)

 

(0.46

)

 

(0.46

)

 

(0.48

)

 

(0.46

)

Tangible book value per common share

$

29.82

 

$

29.10

 

$

27.80

 

$

29.82

 

$

27.80

 

 
Total shareholders' equity to assets

 

7.21

%

 

7.48

%

 

8.98

%

 

7.21

%

 

8.98

%

Effect of goodwill

 

(0.11

%)

 

(0.11

%)

 

(0.13

%)

 

(0.11

%)

 

(0.13

%)

Tangible common equity to tangible assets

 

7.10

%

 

7.37

%

 

8.85

%

 

7.10

%

 

8.85

%

 
Total average equity - GAAP

$

298,782

 

$

297,148

 

$

285,207

 

$

295,963

 

$

249,162

 

Adjustments:
Average goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

Average tangible common equity

$

294,095

 

$

292,461

 

$

280,520

 

$

291,276

 

$

244,475

 

 
Return on average shareholders' equity

 

8.40

%

 

8.26

%

 

8.75

%

 

8.20

%

 

9.83

%

Effect of goodwill

 

0.13

%

 

0.13

%

 

0.14

%

 

0.13

%

 

0.19

%

Return on average tangible common equity

 

8.53

%

 

8.39

%

 

8.89

%

 

8.33

%

 

10.02

%

 
Total interest income

$

37,694

 

$

36,844

 

$

30,223

 

$

109,537

 

$

83,618

 

Adjustments:
Fully-taxable equivalent adjustments 1

 

1,595

 

 

1,612

 

 

1,351

 

 

4,764

 

 

3,533

 

Total interest income - FTE

$

39,289

 

$

38,456

 

$

31,574

 

$

114,301

 

$

87,151

 

 
Net interest income

$

15,244

 

$

16,105

 

$

15,970

 

$

47,593

 

$

46,846

 

Adjustments:
Fully-taxable equivalent adjustments 1

 

1,595

 

 

1,612

 

 

1,351

 

 

4,764

 

 

3,533

 

Net interest income - FTE

$

16,839

 

$

17,717

 

$

17,321

 

$

52,357

 

$

50,379

 

 
Net interest margin

 

1.54

%

 

1.73

%

 

2.06

%

 

1.70

%

 

2.16

%

Effect of fully-taxable equivalent adjustments 1

 

0.16

%

 

0.18

%

 

0.17

%

 

0.17

%

 

0.16

%

Net interest margin - FTE

 

1.70

%

 

1.91

%

 

2.23

%

 

1.87

%

 

2.32

%

 
 
1 Assuming a 21% tax rate

 

Contacts

Investors/Analysts
Paula Deemer
Investor Relations
(317) 428-4628
investors@firstib.com

Media
Nicole Lorch
Executive Vice President & Chief Operating Officer
(317) 532-7906
nlorch@firstib.com

Contacts

Investors/Analysts
Paula Deemer
Investor Relations
(317) 428-4628
investors@firstib.com

Media
Nicole Lorch
Executive Vice President & Chief Operating Officer
(317) 532-7906
nlorch@firstib.com