First Internet Bancorp Reports Strong Earnings Growth in Second Quarter, Record First Half Results

Business Wire

INDIANAPOLIS--(BUSINESS WIRE)--

First Internet Bancorp (INBK), parent company of First Internet Bank of Indiana (www.firstib.com), a premier nationwide provider of online retail banking services and commercial banking services, today announced unaudited financial results for the three months and six months ended June 30, 2013.

“We are reporting strong second quarter results,” said David Becker, Chairman and CEO. “Year over year, second quarter net income rose 34%, our commercial loan portfolio grew 66%, and non-interest income increased 76%.”

Highlights for the quarter ended June 30, 2013:

  • Net income was a record $1.71 million or $0.59 per diluted share in the second quarter 2013 compared with $1.28 million or $0.45 per diluted share in the second quarter 2012.
  • Return on average assets in second quarter 2013 increased to 1.07% from 0.83% in the prior year’s second quarter, and return on average equity rose to 10.86% compared with 8.92% in second quarter 2012.
  • Total assets were $656.77 million at June 30, 2013, the highest in the company’s history, compared with $623.95 million at June 30, 2012.
  • Mortgage originations grew 25% to $232.54 million in second quarter 2013 compared to $186.06 in the second quarter 2012.
  • The company’s second quarter dividend of $0.06, following the company’s 3-for-2 stock split in second quarter 2013, was the equivalent of a 50% increase of its quarterly cash dividend paid in first quarter 2013.
  • First Internet Bancorp common stock was added to the Russell Microcap Index, the MSCI USA Micro Cap Index and the ABA NASDAQ Community Bank Index.

Highlights for the six months ended June 30, 2013:

  • For the six months ended June 30, 2013, net income was $3.20 million or $1.11 per diluted share, a company record for first half earnings.
  • Commercial real estate and commercial & industrial loan activity was strong, with $45.54 million in commercial loans closed in first half 2013 compared with $26.21 million in first half 2012.
  • Total non-interest income, driven by gain on loans sold, rose to $6.89 million in first half 2013 compared with $4.14 million in first half 2012.

“First Internet’s second quarter and first half results reflect the continuing expansion of the bank and progress toward our goal of being a strong national presence in retail and commercial banking,” said David Becker, Chairman and CEO. “We have added experienced talent to our retail and commercial lending teams and have also strengthened our finance and support teams to enhance efficiency, risk management and regulatory compliance.”

Second Quarter Income Statement Reflects Year-Over-Year Growth in Interest and Non-Interest Income

For the quarter ended June 30, 2013, net income was $1.71 million or $0.59 per diluted share. Net interest income after provision for loan losses was $4.21 million in second quarter 2013, up 27% over second quarter 2012.

Total interest expense in second quarter 2013 declined to $1.92 million compared with $2.16 million in second quarter 2012. The company held interest rates on deposits steady as core deposits climbed, allowing the company to reduce its use of higher-cost Federal Home Loan Bank borrowings. The company’s average cost of funds was 1.35% in second quarter 2013, compared with 1.58% in second quarter 2012.

Net interest margin increased to 2.78% at June 30, 2013 compared with 2.63% at June 30, 2012. Loan growth, lower interest expense and management of the company’s investment portfolio contributed to the increase.

Total non-interest income in second quarter 2013 increased 76% to $3.82 million over second quarter 2012. Gains on loans sold and secondary market hedges contributed to the increase.

Total non-interest expense in second quarter 2013 was $5.62 million compared with $3.80 million in second quarter 2012. Increased salaries and benefits expense reflected continued investment in experienced talent, primarily in mortgage lending and commercial banking. To support mortgage lending growth, the company established a residential mortgage loan processing center in Tempe, Arizona, and expanded facilities in the Indianapolis area.

Becker stated: “While we remain committed to our efficient and highly scalable operating model with minimal reliance on brick and mortar facilities, supporting current and future growth requires investments in quality people and critical facilities.”

Balance Sheet, Deposit Growth, Loan Activity and Asset Quality Highlights

The company’s total assets of $656.77 million at June 30, 2013 demonstrated steady year-over-year growth, up from $623.95 million at June 30, 2012. Total deposits at June 30, 2013 were up 7.5%, to $561.16 million over the same quarter in the prior year.

Net loans after allowance for loan losses were $360.80 million at June 30, 2013 compared with $341.57 million at June 30, 2012, with the portfolio showing strong growth in commercial loans. Commercial loans comprised 35% of the company’s total loan portfolio at June 30, 2013 compared with 22% at June 30, 2012. Commercial real estate loans increased 64% to $112.68 million at June 30, 2013, compared with $68.90 million at June 30, 2012. Commercial & industrial lending grew to $15.13 million at June 30, 2013, compared with $8.12 million at June 30, 2012. The company’s commercial banking business, which in the first half was augmented with cash management services and a business credit card, continued to demonstrate gains.

Residential mortgage originations demonstrated positive year-over-year and consecutive quarter trends. The total value of mortgages originated grew to $232.54 million in second quarter 2013 compared with $186.06 million in the second quarter 2012. Purchase mortgages accounted for 24% of the company’s residential loan originations.

The company’s loan and asset quality remained strong, with non-performing loans at June 30, 2013 declining to $2.89 million from $8.37 million at June 30, 2012. The ratio of non-performing loans to total assets was 0.71% in second quarter 2013 compared with 2.19% in second quarter 2012.

Capital Position

The bank and holding company continue to exceed all regulatory capital requirements, with a Tier 1 leverage ratio of 9.00% at the bank and 9.13% at the holding company.

Outlook

Becker commented: “We have a robust pipeline for commercial loans. Somewhat improved economic conditions seem to be having a positive impact on commercial real estate lending opportunities, with higher levels of activity in construction and income properties. First Internet’s C&I business is performing well, and while we face considerable competition, we are committed to making quality loans.”

About First Internet Bancorp

First Internet Bancorp (INBK) is the parent company of First Internet Bank of Indiana. First Internet Bank opened for business in 1999. The Bancorp became the parent of the Bank effective March 21, 2006.

About First Internet Bank

First Internet Bank of Indiana is the first state-chartered, FDIC-insured institution to operate solely via the Internet and has customers in all 50 states. Deposit services include checking accounts, regular and money market savings accounts with industry-leading interest rates, CDs and IRAs. First Internet Bank also offers consumer loans, conforming mortgages, jumbo mortgages, home equity loans and lines of credit, and commercial loans. The bank is a wholly owned subsidiary of First Internet Bancorp.

Safe Harbor Statement

This press release may contain forward-looking statements with respect to the financial condition, results of operations, 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: changes in interest rates; risks associated with the regulation of financial institutions and holding companies, including capital requirements and the costs of regulatory compliance; failures or interruptions in communications and information systems; general economic conditions and conditions in the lending markets; competition; the plans to grow commercial lending; the loss of key members of management and other matters discussed in the press release. For a further list and description of such risks and uncertainties, see our periodic reports filed with the U.S. Securities and Exchange Commission. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be set forth in our periodic reports.

 
First Internet Bancorp
Consolidated Balance Sheets (unaudited)
(in thousands)
             
June 30, 2013 June 30, 2012
 
Cash and due from banks 1,355 1,344
Interest-bearing demand deposits 14,093 34,658
Total cash and cash equivalents 15,448 36,002
 
Interest bearing time deposits 2,500 -
Securities - AFS 193,934 182,671
Loans held for sale 42,271 34,960
 
Gross loans 362,983 343,340
Net deferred expenses 3,344 3,954
Allowance for loan losses (5,527) (5,727)
Net loans 360,800 341,567
 
Accrued interest receivable 2,271 2,264
FHLB stock 2,943 2,943
Bank owned life insurance 11,735 11,346
Goodwill 4,687 4,687
Other real estate owned 5,156 750
Premises and equipment 6,740 894
Other assets 8,280 5,861
 
Total assets 656,765 623,945
 
 
Non-interest bearing demand deposits 16,915 13,588
Interest bearing demand deposits 73,321 64,458
Savings and money market deposits 230,977 200,287
Time deposits 239,949 243,692
Total deposits 561,162 522,025
 
FHLB advances 23,740 40,629
Subordinated debt 2,745 -
Accrued interest payable 100 115
Accrued payroll and related expenses 1,469 1,140
Other liabilities 6,371 1,786
Total liabilities 595,587 565,695
 
 
Common stock 41,826 41,346
Retained earnings 20,938 15,323
Accumulated other comprehensive

(1,586)

1,581

income / (loss)

 

 

Shareholders’ equity 61,178 58,250
 
Total liabilities & equity 656,765 623,945
 
 
First Internet Bancorp
Consolidated Statements of Income (unaudited)
(in thousands, except share data)
             
Quarter Ended
June 30, 2013 June 30, 2012
 
Securities income 1,277 1,320
Loan income 4,861 4,716
Other interest income 21       19
Total interest income 6,159 6,055
 
Deposit interest expense 1,656 1,826
Other interest expense 267       338
Total interest expense 1,923 2,164
 
Net interest income 4,236 3,891
 
Provision for loan losses 24 564
 
Net interest income after provision 4,212 3,327
 
Service charges and fees 179 166
Gain on loans sold 2,249 2,034
Gain on secondary marketing hedge 1,208 -
Other-than-temporary impairment loss - (92)
Loss on asset disposals (4) (31)
Other non-interest income 186       98
Total non-interest income 3,818 2,175
 
Salaries and employee benefits 2,846 1,929
Marketing, advertising and promotion 455 341
Consulting and professional fees 561 272
Data processing 232 238
Loan expenses 285 303
Premises and equipment 715 350
Deposit insurance premiums 115 121
Other non-interest expense 415       241
Total non-interest expense 5,624 3,795
 
Income before taxes 2,406 1,707
 
Tax provision 694       428
 
Net Income 1,712       1,279
 
Diluted weighted average shares 2,888,260 2,867,763
 
Diluted EPS 0.59 0.45
 
 
First Internet Bancorp
Consolidated Statements of Income (unaudited)
(in thousands, except share data)
             
Six Months Ended
June 30, 2013 June 30, 2012
 
Securities income 2,046 2,666
Loan income 9,903 9,513
Other interest income 39       37
Total interest income 11,988 12,216
 
Deposit interest expense 3,284 3,646
Other interest expense 575       677
Total interest expense 3,859 4,323
 
Net interest income 8,129 7,893
 
Provision for loan losses 158 1,134
 
Net interest income after provision 7,971 6,759
 
Service charges and fees 338 361
Gain on loans sold 5,260 3,785
Gain on secondary marketing hedge 1,208 -
Other-than-temporary impairment loss (34) (92)
Loss on asset disposals (268) (101)
Other non-interest income 384       190
Total non-interest income 6,888 4,143
 
Salaries and employee benefits 5,225 3,920
Marketing, advertising and promotion 827 732
Consulting and professional fees 1,214 599
Data processing 446 468
Loan expenses 365 488
Premises and equipment 1,116 762
Deposit insurance premiums 227 219
Other non-interest expense 850       489
Total non-interest expense 10,270 7,677
 
Income before taxes 4,589       3,225
 
Tax provision 1,389 800
 
Net Income 3,200       2,425
 
Diluted weighted average shares 2,887,207 2,866,174
 
Diluted EPS 1.11 0.85

Contact:
First Internet Bancorp
Nicole Lorch, 317-532-7906
investors@firstib.com

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