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First Internet Bancorp Reports Fourth Quarter and Full Year 2019 Results

Highlights for the fourth quarter and full year 2019 include:

  • Record annual net income and diluted earnings per share of $25.2 million and $2.51, respectively

  • Record quarterly net income of $7.1 million, compared to $6.3 million for the third quarter of 2019 and $3.6 million for the fourth quarter of 2018

  • Record quarterly diluted earnings per share of $0.72, compared to $0.63 diluted earnings per share for the third quarter of 2019 and $0.35 diluted earnings per share for the fourth quarter of 2018

  • Total quarterly revenue of $20.8 million, consistent with the third quarter of 2019 and an 18.9% increase from the fourth quarter of 2018

First Internet Bancorp (the "Company") (Nasdaq: INBK), the parent company of First Internet Bank (the "Bank"), announced today financial and operational results for the fourth quarter and full year ended December 31, 2019. Net income for the fourth quarter of 2019 was a record $7.1 million, or $0.72 diluted earnings per share. This compares to net income of $6.3 million, or $0.63 diluted earnings per share, for the third quarter of 2019, and net income of $3.6 million, or $0.35 diluted earnings per share, for the fourth quarter of 2018. The fourth quarter of 2018 results included a $2.4 million pre-tax write-down of commercial other real estate owned ("OREO"). Excluding this charge, adjusted net income for the quarter was $5.5 million, or $0.53 adjusted diluted earnings per share.

For the twelve month period ended December 31, 2019, net income was a record $25.2 million and diluted earnings per share were a record $2.51 compared to net income of $21.9 million and diluted earnings per share of $2.30 for the twelve month period ended December 31, 2018. Excluding the OREO write-down described above, adjusted net income for the full year 2018 was $23.8 million, or $2.50 adjusted diluted earnings per share.

"First Internet Bancorp produced strong 2019 results, highlighted by record annual net income that was driven by full-year revenue growth of 12%, well-managed expenses and disciplined balance sheet management," said David Becker, Chairman, President and Chief Executive Officer. "We generated strong production in both commercial and consumer loans, particularly in a number of our specialty lending areas, including single-tenant lease financing, healthcare finance and horse trailer and recreational vehicle lending. Additionally, we capitalized on the lower interest rate environment to drive strong origination growth in our direct-to-consumer mortgage business.

"Looking to 2020, we continue to see opportunities for growth within our collection of lending franchises and to further implement strategies to diversify our revenue and enhance margins in a capital efficient manner," Becker added. "In 2019, we made significant progress with our expansion into small business banking, capitalizing on attractive opportunities on both sides of our balance sheet. During the fourth quarter, we completed our acquisition of the small business lending division of First Colorado National Bank. This transaction, combined with the experienced professionals we brought on board during the year, positions us to accelerate our efforts to build a nationwide platform that offers a full suite of services to small business entrepreneurs."

Mr. Becker concluded, "As always, I would like to thank the entire First Internet team for their very hard work to deliver record revenue and earnings performance again in 2019. Their dedication and efforts are the key to our ongoing growth and success."

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2019 was $15.4 million, compared to $15.2 million for the third quarter of 2019. On a fully-taxable equivalent basis, net interest income for the fourth quarter was $16.9 million, compared to $16.8 million for the third quarter. Net interest income on both a reported and fully-taxable equivalent basis, was consistent with the fourth quarter of 2018.

Total interest income for the fourth quarter of 2019 was $37.9 million, an increase of 0.5%, compared to the third quarter of 2019, and an increase of 18.9% compared to the fourth quarter of 2018. On a fully-taxable equivalent basis, total interest income for the fourth quarter was $39.4 million, an increase of 0.4% compared to the third quarter, and an increase of 18.4% compared to the fourth quarter of 2018. The slight increase in total interest income compared to the third quarter of 2019 was driven primarily by a $98.0 million, or 2.5%, increase in average interest-earning assets, partially offset by a 7 basis point ("bp") decrease in the yield on those assets. The yield on interest-earning assets for the fourth quarter of 2019 declined to 3.73% from 3.80% in the prior quarter due primarily to the decline in short term rates during the quarter following Federal Reserve rate cuts in September and October, which negatively impacted the yields earned on cash balances, securities and other earning assets. Additionally, cash balances remained elevated as time deposit renewal rates exceeded expectations, which also negatively affected the yield on earning assets. Partially offsetting this was a 2 bp increase in the yield earned on the loan portfolio, including loans held for sale, which benefitted from the acquisition of Small Business Administration ("SBA") loans and strong healthcare finance production during the quarter.

Total interest expense for the fourth quarter of 2019 was $22.5 million, relatively consistent with the third quarter of 2019, and an increase of 37.0% compared to the fourth quarter of 2018. During the fourth quarter, average interest-bearing deposit balances increased by $79.4 million, compared to the third quarter, while the cost of funds related to those deposits declined 5 bps. The increase in average interest-bearing deposit balances was due primarily to a $113.8 million, or 17.8%, increase in average money market account balances but was partially offset by a $32.1 million, or 1.4%, decrease in the average balance of certificates and brokered deposits. The decrease in deposit costs reflects a decrease in the rates paid on money market accounts and certificates of deposit ("CDs") as well as a shift in the deposit mix from CDs to money market accounts. During the fourth quarter, the cost of money market deposits decreased by 10 bps and the cost of certificates and brokered deposits decreased 3 bps as rates paid on new CD production and renewals were below the rates paid on maturing CDs.

Net interest margin ("NIM") was 1.51% for the fourth quarter of 2019, compared to 1.54% for the third quarter of 2019 and 1.89% for the fourth quarter of 2018. On a fully-taxable equivalent basis, NIM decreased 3 basis points to 1.67% for the fourth quarter of 2019, from 1.70% for the third quarter of 2019, and was down from 2.07% for the fourth quarter of 2018. Compared to the linked quarter, deposit costs had a positive impact of 4 bps on NIM while loan yields provided a benefit of 2 bps. However, these benefits were offset by the lower yields earned on elevated cash balances, which had a negative impact of 7 bps, and on other interest-earning assets, which had a negative impact of 2 bps.

Noninterest Income

Noninterest income for the fourth quarter of 2019 was $5.4 million, down from $5.6 million for the third quarter of 2019, and up from $2.0 million for the fourth quarter of 2018. Compared to the linked quarter, a decline in mortgage banking revenue was essentially offset by higher gain on sale of loans and loan servicing revenue. Mortgage banking revenue decreased $1.4 million, or 31.4%, as mandatory pipeline volumes and margins declined due to seasonal factors following an extraordinarily strong third quarter. The increase of $1.2 million in gain on sale of loans was driven by sales of $53.7 million of single tenant lease financing and public finance loans and the Company’s first sales of SBA 7(a) guaranteed loans, which included $9.2 million of balances. The Company also began earning loan servicing revenue from the acquired SBA servicing portfolio, recognizing $0.2 million during the fourth quarter.

Noninterest Expense

Noninterest expense for the fourth quarter of 2019 was $12.6 million, compared to $11.2 million for the third quarter of 2019 and $12.7 million for the fourth quarter of 2018. The increase from the third quarter was due primarily to a $0.6 million increase in deposit insurance premium, a $0.5 million increase in consulting and professional fees and a $0.3 million increase in salaries and employee benefits. Deposit insurance premium expense resumed in the fourth quarter after not incurring any expense in the third quarter of 2019 as a result of the small bank assessment credit applied by the Federal Deposit Insurance Corporation. The increase in consulting and professional fees was due to higher recruiting fees and third party loan review fees while salaries and employee benefits expense increased due to the headcount growth in the Company’s SBA lending business.

Income Taxes

The Company reported an income tax expense of $0.6 million for the fourth quarter of 2019 and an effective tax rate of 7.8%, compared to income tax expense of $0.4 million and an effective tax rate of 6.6% for the third quarter of 2019 and an income tax benefit of $0.3 million for the fourth quarter of 2018. The income tax benefit reported in the fourth quarter of 2018 primarily related to the write-down of the OREO property and the continued growth in the public finance portfolio, which increased the proportion of tax-exempt income relative to overall total pre-tax income. When excluding the income tax benefit related to the OREO write-down, the Company’s adjusted effective income tax rate for the fourth quarter of 2018 was 3.1%.

Loans and Credit Quality

Total loans as of December 31, 2019 were $3.0 billion, an increase of $82.3 million, or 2.9%, compared to September 30, 2019 and an increase of $247.3 million, or 9.1%, compared to December 31, 2018. Total commercial loan balances were $2.3 billion as of December 31, 2019, an increase of $93.5 million, or 4.3%, compared to September 30, 2019 and an increase of $296.9 million, or 14.9%, compared to December 31, 2018. Compared to the linked quarter, the growth in commercial loan balances was driven largely by production in healthcare finance and the acquisition of the SBA loan portfolio. These increases were partially offset by the sale of $53.7 million of single tenant lease financing and public finance loans discussed above.

Total consumer loan balances were $633.5 million as of December 31, 2019, a decrease of $8.6 million, or 1.3%, compared to September 30, 2019 and a decrease of $74.9 million, or 10.6%, compared to December 31, 2018. The decline in consumer loan balances from September 30, 2019 was driven primarily by increased early payoffs on portfolio residential mortgage loans.

Total delinquencies 30 days or more past due increased to 0.24% of total loans as of December 31, 2019, up from 0.13% as of September 30, 2019 and 0.15% as of December 31, 2018. The increase in delinquencies compared to the linked and prior year quarters was due primarily to the single tenant lease financing relationship that was placed on nonaccrual status in the third quarter of 2019 becoming past due. Overall credit quality remained solid as nonperforming loans to total loans remained low at 0.23% as of December 31, 2019, compared to 0.20% at September 30, 2019 and 0.03% as of December 31, 2018.

The allowance for loan losses as a percentage of total loans was 0.74% as of December 31, 2019, compared to 0.75% as of September 30, 2019 and 0.66% as of December 31, 2018. The slight decline in the coverage ratio compared to the linked quarter was due primarily to lower specific reserves in the commercial and industrial portfolio.

Net charge-offs of $0.3 million were recognized during the fourth quarter of 2019, resulting in net charge-offs to average loans of 0.04%, compared to 0.15% for the third quarter and 0.05% for the fourth quarter of 2018. The provision for loan losses in the fourth quarter was $0.5 million, compared to $2.8 million for the third quarter and $1.5 million for the fourth quarter of 2018. The third quarter’s results included a specific reserve of $1.7 million recognized on the single tenant lease financing relationship mentioned above and a $0.8 million commercial loan charge-off. The provision for the fourth quarter was driven primarily by growth in the healthcare finance portfolio and net charge-offs, partially offset by the loan sale activity.

Capital

As of December 31, 2019, total shareholders’ equity was $304.9 million, an increase of $9.8 million, or 3.3%, compared to September 30, 2019, primarily due to the net income earned during the quarter and a decrease in accumulated other comprehensive loss. Book value per common share increased to $31.30 as of December 30, 2019, up from $30.30 as of September 30, 2019 and $28.39 as of December 31, 2018. Tangible book value per share increased to $30.82, up from $29.82 and $27.93, each as of the same reference dates.

The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of December 31, 2019.

As of December 31, 2019

Company

Bank

Total shareholders' equity to assets

7.44%

8.11%

Tangible common equity to tangible assets 1

7.33%

8.01%

Tier 1 leverage ratio 2

7.64%

8.32%

Common equity tier 1 capital ratio 2

10.84%

11.80%

Tier 1 capital ratio 2

10.84%

11.80%

Total risk-based capital ratio 2

14.00%

12.55%

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, January 23, 2020 to discuss its quarterly financial results. The call can be accessed via telephone at (888) 348-3664. A recorded replay can be accessed through February 23, 2020 by dialing (877) 344-7529; passcode: 10138147.

Additionally, interested parties can listen to a live webcast of the call on 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 December 31, 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 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, 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," "continue," "could," "estimate," "expect," "intend," "may," "pending," "plan," "position," "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, SBA 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 adjusted net income, adjusted diluted earnings per share, 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, net interest margin – FTE, adjusted income before income taxes, adjusted income tax provision, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity, adjusted return on average tangible common equity and adjusted effective income tax rate 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

Twelve Months Ended

December 31,

September 30,

December 30,

December 31,

December 30,

2019

2019

2018

2019

2018

Net income

$

7,096

$

6,326

$

3,576

$

25,239

$

21,900

Per share and share information

Earnings per share - basic

$

0.72

$

0.63

$

0.35

$

2.51

$

2.31

Earnings per share - diluted

0.72

0.63

0.35

2.51

2.30

Dividends declared per share

0.06

0.06

0.06

0.24

0.24

Book value per common share

31.30

30.30

28.39

31.30

28.39

Tangible book value per common share 1

30.82

29.82

27.93

30.82

27.93

Common shares outstanding

9,741,800

9,741,800

10,170,778

9,741,800

10,170,778

Average common shares outstanding:

Basic

9,825,784

9,979,603

10,263,086

10,041,581

9,490,506

Diluted

9,843,829

9,980,612

10,275,040

10,044,483

9,508,653

Performance ratios

Return on average assets

0.69

%

0.63

%

0.43

%

0.65

%

0.72

%

Return on average shareholders' equity

9.46

%

8.40

%

4.89

%

8.52

%

8.44

%

Return on average tangible common equity 1

9.61

%

8.53

%

4.98

%

8.65

%

8.60

%

Net interest margin

1.51

%

1.54

%

1.89

%

1.65

%

2.09

%

Net interest margin - FTE 1,2

1.67

%

1.70

%

2.07

%

1.82

%

2.25

%

Capital ratios 3

Total shareholders' equity to assets

7.44

%

7.21

%

8.15

%

7.44

%

8.15

%

Tangible common equity to tangible assets 1

7.33

%

7.10

%

8.03

%

7.33

%

8.03

%

Tier 1 leverage ratio

7.64

%

7.66

%

9.00

%

7.64

%

9.00

%

Common equity tier 1 capital ratio

10.84

%

10.93

%

12.39

%

10.84

%

12.39

%

Tier 1 capital ratio

10.84

%

10.93

%

12.39

%

10.84

%

12.39

%

Total risk-based capital ratio

14.00

%

14.17

%

14.53

%

14.00

%

14.53

%

Asset quality

Nonperforming loans

$

6,732

$

5,783

$

889

$

6,732

$

889

Nonperforming assets

8,872

8,497

3,508

8,872

3,508

Nonperforming loans to loans

0.23

%

0.20

%

0.03

%

0.23

%

0.03

%

Nonperforming assets to total assets

0.22

%

0.21

%

0.10

%

0.22

%

0.10

%

Allowance for loan losses to:

Loans

0.74

%

0.75

%

0.66

%

0.74

%

0.66

%

Nonperforming loans

324.4

%

374.9

%

2,013.1

%

324.4

%

2,013.1

%

Net charge-offs to average loans

0.04

%

0.15

%

0.05

%

0.07

%

0.04

%

Average balance sheet information

Loans

$

2,936,144

$

2,865,258

$

2,577,584

$

2,863,250

$

2,364,336

Total securities

597,049

561,780

494,256

560,317

486,030

Other earning assets

452,945

469,454

148,311

355,412

116,074

Total interest-earning assets

4,031,327

3,933,315

3,236,144

3,809,903

2,984,608

Total assets

4,108,216

4,015,433

3,320,850

3,890,708

3,055,224

Noninterest-bearing deposits

49,570

43,972

48,779

44,682

45,562

Interest-bearing deposits

3,110,501

3,031,095

2,472,443

2,938,622

2,272,037

Total deposits

3,160,071

3,075,067

2,521,222

2,983,304

2,317,599

Shareholders' equity

297,623

298,782

289,844

296,382

259,416

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, except for December 31, 2018)

Amounts in thousands

December 31,

September 30,

December 30,

2019

2019

2018

Assets

Cash and due from banks

$

5,061

$

6,283

$

7,080

Interest-bearing deposits

322,300

410,119

181,632

Securities available-for-sale, at fair value

540,852

544,742

481,345

Securities held-to-maturity, at amortized cost

61,878

46,807

22,750

Loans held-for-sale

56,097

41,119

18,328

Loans

2,963,547

2,881,272

2,716,228

Allowance for loan losses

(21,840

)

(21,683

)

(17,896

)

Net loans

2,941,707

2,859,589

2,698,332

Accrued interest receivable

18,607

16,652

16,822

Federal Home Loan Bank of Indianapolis stock

25,650

25,650

23,625

Cash surrender value of bank-owned life insurance

37,002

36,764

36,059

Premises and equipment, net

14,630

14,512

10,697

Goodwill

4,687

4,687

4,687

Servicing asset

2,481

-

-

Other real estate owned

2,065

2,619

2,619

Accrued income and other assets

67,066

85,948

37,716

Total assets

$

4,100,083

$

4,095,491

$

3,541,692

Liabilities

Noninterest-bearing deposits

$

57,115

$

50,560

$

43,301

Interest-bearing deposits

3,096,848

3,097,682

2,628,050

Total deposits

3,153,963

3,148,242

2,671,351

Advances from Federal Home Loan Bank

514,910

514,908

525,153

Subordinated debt

69,528

69,452

33,875

Accrued interest payable

3,767

2,635

1,108

Accrued expenses and other liabilities

53,002

65,114

21,470

Total liabilities

3,795,170

3,800,351

3,252,957

Shareholders' equity

Voting common stock

219,423

219,013

227,587

Retained earnings

99,681

93,182

77,689

Accumulated other comprehensive loss

(14,191

)

(17,055

)

(16,541

)

Total shareholders' equity

304,913

295,140

288,735

Total liabilities and shareholders' equity

$

4,100,083

$

4,095,491

$

3,541,692

First Internet Bancorp

Condensed Consolidated Statements of Income (unaudited, except for the twelve months ended December 31, 2018)

Amounts in thousands, except per share data

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2019

2019

2018

2019

2018

Interest income

Loans

$

31,574

$

30,594

$

27,249

$

122,228

$

99,082

Securities - taxable

3,475

3,468

2,927

13,807

10,630

Securities - non-taxable

604

639

701

2,595

2,810

Other earning assets

2,224

2,993

972

8,784

2,945

Total interest income

37,877

37,694

31,849

147,414

115,467

Interest expense

Deposits

18,417

18,363

13,338

69,313

42,484

Other borrowed funds

4,086

4,087

3,090

15,134

10,716

Total interest expense

22,503

22,450

16,428

84,447

53,200

Net interest income

15,374

15,244

15,421

62,967

62,267

Provision for loan losses

468

2,824

1,487

5,966

3,892

Net interest income after provision for loan losses

14,906

12,420

13,934

57,001

58,375

Noninterest income

Service charges and fees

213

211

237

885

934

Loan servicing revenue

166

-

-

166

-

Mortgage banking activities

2,953

4,307

1,141

11,541

5,718

Gain on sale of loans

1,721

523

89

2,074

503

Loss on sale of securities

-

-

-

(458

)

-

Other

352

517

580

2,581

1,605

Total noninterest income

5,405

5,558

2,047

16,789

8,760

Noninterest expense

Salaries and employee benefits

7,168

6,883

5,738

27,014

23,174

Marketing, advertising and promotion

409

456

543

1,800

2,468

Consulting and professional fees

1,242

778

862

3,669

3,055

Data processing

312

381

320

1,338

1,233

Loan expenses

289

247

204

1,142

942

Premises and equipment

1,556

1,506

1,307

6,059

4,996

Deposit insurance premium

601

-

570

1,903

1,956

Write-down of other real estate owned

-

-

2,423

-

2,423

Other

1,036

952

772

3,709

2,936

Total noninterest expense

12,613

11,203

12,739

46,634

43,183

Income before income taxes

7,698

6,775

3,242

27,156

23,952

Income tax provision

602

449

(334

)

1,917

2,052

Net income

$

7,096

$

6,326

$

3,576

$

25,239

$

21,900

Per common share data

Earnings per share - basic

$

0.72

$

0.63

$

0.35

$

2.51

$

2.31

Earnings per share - diluted

$

0.72

$

0.63

$

0.35

$

2.51

$

2.30

Dividends declared per share

$

0.06

$

0.06

$

0.06

$

0.24

$

0.24

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

December 31, 2019

September 30, 2019

December 31, 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

$

2,981,333

$

31,574

4.20

%

$

2,902,081

$

30,594

4.18

%

$

2,593,577

$

27,249

4.17

%

Securities - taxable

497,739

3,475

2.77

%

462,490

3,468

2.97

%

402,179

2,927

2.89

%

Securities - non-taxable

99,310

604

2.41

%

99,290

639

2.55

%

92,077

701

3.02

%

Other earning assets

452,945

2,224

1.95

%

469,454

2,993

2.53

%

148,311

972

2.60

%

Total interest-earning assets

4,031,327

37,877

3.73

%

3,933,315

37,694

3.80

%

3,236,144

31,849

3.90

%

Allowance for loan losses

(21,967

)

(20,050

)

(17,065

)

Noninterest-earning assets

98,856

102,168

101,771

Total assets

$

4,108,216

$

4,015,433

$

3,320,850

Liabilities

Interest-bearing liabilities

Interest-bearing demand deposits

$

122,031

$

223

0.73

%

$

126,130

$

233

0.73

%

$

89,234

$

182

0.81

%

Savings accounts

34,298

94

1.09

%

32,434

91

1.11

%

42,694

123

1.14

%

Money market accounts

752,941

3,653

1.92

%

639,181

3,261

2.02

%

518,421

2,575

1.97

%

Certificates and brokered deposits

2,201,231

14,447

2.60

%

2,233,350

14,778

2.63

%

1,822,094

10,458

2.28

%

Total interest-bearing deposits

3,110,501

18,417

2.35

%

3,031,095

18,363

2.40

%

2,472,443

13,338

2.14

%

Other borrowed funds

584,386

4,086

2.77

%

584,308

4,087

2.78

%

499,877

3,090

2.45

%

Total interest-bearing liabilities

3,694,887

22,503

2.42

%

3,615,403

22,450

2.46

%

2,972,320

16,428

2.19

%

Noninterest-bearing deposits

49,570

43,972

48,779

Other noninterest-bearing liabilities

66,136

57,276

9,907

Total liabilities

3,810,593

3,716,651

3,031,006

Shareholders' equity

297,623

298,782

289,844

Total liabilities and shareholders' equity

$

4,108,216

$

4,015,433

$

3,320,850

Net interest income

$

15,374

$

15,244

$

15,421

Interest rate spread

1.31

%

1.34

%

1.71

%

Net interest margin

1.51

%

1.54

%

1.89

%

Net interest margin - FTE 2,3

1.67

%

1.70

%

2.07

%

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

Twelve Months Ended

December 31, 2019

December 31, 2018

Average

Interest /

Yield /

Average

Interest /

Yield /

Balance

Dividends

Cost

Balance

Dividends

Cost

Assets

Interest-earning assets

Loans, including loans held-for-sale 1

$

2,894,174

$

122,228

4.22

%

$

2,382,504

$

99,082

4.16

%

Securities - taxable

462,704

13,807

2.98

%

391,958

10,630

2.71

%

Securities - non-taxable

97,613

2,595

2.66

%

94,072

2,810

2.99

%

Other earning assets

355,412

8,784

2.47

%

116,074

2,945

2.54

%

Total interest-earning assets

3,809,903

147,414

3.87

%

2,984,608

115,467

3.87

%

Allowance for loan losses

(19,891

)

(16,097

)

Noninterest-earning assets

100,696

86,713

Total assets

$

3,890,708

$

3,055,224

Liabilities

Interest-bearing liabilities

Interest-bearing demand deposits

$

118,874

$

882

0.74

%

$

90,229

$

583

0.65

%

Savings accounts

35,751

398

1.11

%

51,333

585

1.14

%

Money market accounts

637,360

12,661

1.99

%

544,802

8,803

1.62

%

Certificates and brokered deposits

2,146,637

55,372

2.58

%

1,585,673

32,513

2.05

%

Total interest-bearing deposits

2,938,622

69,313

2.36

%

2,272,037

42,484

1.87

%

Other borrowed funds

564,757

15,134

2.68

%

468,411

10,716

2.29

%

Total interest-bearing liabilities

3,503,379

84,447

2.41

%

2,740,448

53,200

1.94

%

Noninterest-bearing deposits

44,682

45,562

Other noninterest-bearing liabilities

46,265

9,798

Total liabilities

3,594,326

2,795,808

Shareholders' equity

296,382

259,416

Total liabilities and shareholders' equity

$

3,890,708

$

3,055,224

Net interest income

$

62,967

$

62,267

Interest rate spread

1.46

%

1.93

%

Net interest margin

1.65

%

2.09

%

Net interest margin - FTE 2,3

1.82

%

2.25

%

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

December 31, 2019

September 30, 2019

December 31, 2018

Amount

Percent

Amount

Percent

Amount

Percent

Commercial loans

Commercial and industrial

$

96,420

3.3

%

$

82,791

2.9

%

$

107,405

4.0

%

Owner-occupied commercial real estate

73,392

2.5

%

76,197

2.6

%

77,569

2.9

%

Investor commercial real estate

12,567

0.4

%

11,852

0.4

%

5,391

0.2

%

Construction

60,274

2.0

%

54,131

1.9

%

39,916

1.5

%

Single tenant lease financing

995,879

33.6

%

1,008,247

35.0

%

919,440

33.8

%

Public finance

687,094

23.2

%

686,622

23.8

%

706,342

26.0

%

Healthcare finance

300,612

10.1

%

251,530

8.6

%

117,007

4.4

%

Small business lending

61,121

2.1

%

22,447

0.8

%

17,370

0.5

%

Total commercial loans

2,287,359

77.2

%

2,193,817

76.0

%

1,990,440

73.3

%

Consumer loans

Residential mortgage

313,849

10.6

%

320,451

11.1

%

399,898

14.7

%

Home equity

24,306

0.8

%

25,042

0.9

%

28,735

1.1

%

Trailers

146,734

5.0

%

145,600

5.1

%

136,620

5.0

%

Recreational vehicles

102,702

3.5

%

102,698

3.6

%

91,912

3.4

%

Other consumer loans

45,873

1.5

%

48,275

1.7

%

51,239

1.9

%

Total consumer loans

633,464

21.4

%

642,066

22.4

%

708,404

26.1

%

Net deferred loan fees, premiums, discounts and other 1

42,724

1.4

%

45,389

1.6

%

17,384

0.6

%

Total loans

$

2,963,547

100.0

%

$

2,881,272

100.0

%

$

2,716,228

100.0

%

December 31, 2019

September 30, 2019

December 31, 2018

Amount

Percent

Amount

Percent

Amount

Percent

Deposits

Noninterest-bearing deposits

$

57,115

1.8

%

$

50,560

1.6

%

$

43,301

1.6

%

Interest-bearing demand deposits

129,020

4.1

%

122,551

3.9

%

121,055

4.5

%

Savings accounts

29,616

0.9

%

34,886

1.1

%

38,489

1.4

%

Money market accounts

786,390

24.9

%

698,077

22.2

%

528,533

19.9

%

Certificates of deposits

1,613,453

51.2

%

1,681,377

53.4

%

1,292,883

48.4

%

Brokered deposits

538,369

17.1

%

560,791

17.8

%

647,090

24.2

%

Total deposits

$

3,153,963

100.0

%

$

3,148,242

100.0

%

$

2,671,351

100.0

%

1 Includes carrying value adjustments of $21.4 million, $27.6 million and $5.0 million as of December 31, 2019, September 30, 2019 and December 31, 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

Twelve Months Ended

December 31,

September 30,

December 30,

December 31,

December 30,

2019

2019

2018

2019

2018

Total equity - GAAP

$

304,913

$

295,140

$

288,735

$

304,913

$

288,735

Adjustments:

Goodwill

(4,687

)

(4,687

)

(4,687

)

(4,687

)

(4,687

)

Tangible common equity

$

300,226

$

290,453

$

284,048

$

300,226

$

284,048

Total assets - GAAP

$

4,100,083

$

4,095,491

$

3,541,692

$

4,100,083

$

3,541,692

Adjustments:

Goodwill

(4,687

)

(4,687

)

(4,687

)

(4,687

)

(4,687

)

Tangible assets

$

4,095,396

$

4,090,804

$

3,537,005

$

4,095,396

$

3,537,005

Common shares outstanding

9,741,800

9,741,800

10,170,778

9,741,800

10,170,778

Book value per common share

$

31.30

$

30.30

$

28.39

$

31.30

$

28.39

Effect of goodwill

(0.48

)

(0.48

)

(0.46

)

(0.48

)

(0.46

)

Tangible book value per common share

$

30.82

$

29.82

$

27.93

$

30.82

$

27.93

Total shareholders' equity to assets

7.44

%

7.21

%

8.15

%

7.44

%

8.15

%

Effect of goodwill

(0.11

%)

(0.11

%)

(0.12

%)

(0.11

%)

(0.12

%)

Tangible common equity to tangible assets

7.33

%

7.10

%

8.03

%

7.33

%

8.03

%

Total average equity - GAAP

$

297,623

$

298,782

$

289,844

$

296,382

$

259,416

Adjustments:

Average goodwill

(4,687

)

(4,687

)

(4,687

)

(4,687

)

(4,687

)

Average tangible common equity

$

292,936

$

294,095

$

285,157

$

291,695

$

254,729

Return on average shareholders' equity

9.46

%

8.40

%

4.89

%

8.52

%

8.44

%

Effect of goodwill

0.15

%

0.13

%

0.09

%

0.13

%

0.16

%

Return on average tangible common equity

9.61

%

8.53

%

4.98

%

8.65

%

8.60

%

Total interest income

$

37,877

$

37,694

$

31,849

$

147,414

$

115,467

Adjustments:

Fully-taxable equivalent adjustments 1

1,570

1,595

1,477

6,334

5,010

Total interest income - FTE

$

39,447

$

39,289

$

33,326

$

153,748

$

120,477

Net interest income

$

15,374

$

15,244

$

15,421

$

62,967

$

62,267

Adjustments:

Fully-taxable equivalent adjustments 1

1,570

1,595

1,477

6,334

5,010

Net interest income - FTE

$

16,944

$

16,839

$

16,898

$

69,301

$

67,277

Net interest margin

1.51

%

1.54

%

1.89

%

1.65

%

2.09

%

Effect of fully-taxable equivalent adjustments 1

0.16

%

0.16

%

0.18

%

0.17

%

0.16

%

Net interest margin - FTE

1.67

%

1.70

%

2.07

%

1.82

%

2.25

%

1 Assuming a 21% tax rate

First Internet Bancorp

Reconciliation of Non-GAAP Financial Measures

Amounts in thousands, except per share data

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 30,

December 31,

December 30,

2019

2019

2018

2019

2018

Income before income taxes - GAAP

$

7,698

$

6,775

$

3,242

$

27,156

$

23,952

Adjustments:

Write-down of other real estate owned

-

-

2,423

-

2,423

Adjusted income before income taxes

$

7,698

$

6,775

$

5,665

$

27,156

$

26,375

Income tax provision (benefit) - GAAP

$

602

$

449

$

(334

)

$

1,917

$

2,052

Adjustments:

Write-down of other real estate owned

-

-

509

-

509

Adjusted income tax provision

$

602

$

449

$

175

$

1,917

$

2,561

Net income - GAAP

$

7,096

$

6,326

$

3,576

$

25,239

$

21,900

Adjustments:

Write-down of other real estate owned

-

-

1,914

-

1,914

Adjusted net income

$

7,096

$

6,326

$

5,490

$

25,239

$

23,814

Diluted average common shares outstanding

9,843,829

9,980,612

10,275,040

10,044,483

9,508,653

Diluted earnings per share - GAAP

$

0.72

$

0.63

$

0.35

$

2.51

$

2.30

Adjustments:

Effect of write-down of other real estate owned

-

-

0.18

-

0.20

Adjusted diluted earnings per share

$

0.72

$

0.63

$

0.53

$

2.51

$

2.50

Return on average assets

0.69

%

0.63

%

0.43

%

0.65

%

0.72

%

Effect of write-down of other real estate owned

0.00

%

0.00

%

0.23

%

0.00

%

0.06

%

Adjusted return on average assets

0.69

%

0.63

%

0.66

%

0.65

%

0.78

%

Return on average shareholders' equity

9.46

%

8.40

%

4.89

%

8.52

%

8.44

%

Effect of write-down of other real estate owned

0.00

%

0.00

%

2.62

%

0.00

%

0.74

%

Adjusted return on average shareholders' equity

9.46

%

8.40

%

7.51

%

8.52

%

9.18

%

Return on average tangible common equity

9.61

%

8.53

%

4.98

%

8.65

%

8.60

%

Effect of write-down of other real estate owned

0.00

%

0.00

%

2.66

%

0.00

%

0.75

%

Adjusted return on average tangible common equity

9.61

%

8.53

%

7.64

%

8.65

%

9.35

%

Effective income tax rate

7.8

%

6.6

%

(10.3

%)

7.1

%

8.6

%

Effect of write-down of other real estate owned

0.0

%

0.0

%

13.4

%

0.0

%

1.1

%

Adjusted effective income tax rate

7.8

%

6.6

%

3.1

%

7.1

%

9.7

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20200122005816/en/

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