First Internet Bancorp Reports Fourth Quarter and Full Year 2020 Results

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Highlights for the fourth quarter and full year 2020 include:

  • Record annual net income and diluted earnings per share of $29.5 million and $2.99, respectively

  • Record quarterly net income of $11.1 million, compared to $8.4 million for the third quarter of 2020 and $7.1 million for the fourth quarter of 2019

  • Record quarterly diluted earnings per share of $1.12, up 30.2% over the third quarter of 2020 and 55.6% over the fourth quarter of 2019

  • Total quarterly revenue of $31.5 million, a 9.7% increase from the third quarter of 2020 and a 51.7% increase from the fourth quarter of 2019

  • Net interest margin and fully-taxable equivalent net interest margin increased 25 and 24 basis points ("bps"), respectively, from the third quarter, driven by a 22 bp decrease in the cost of interest-bearing deposits

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, 2020. Net income for the fourth quarter of 2020 was a record $11.1 million, or $1.12 diluted earnings per share. This compares to net income of $8.4 million, or $0.86 diluted earnings per share, for the third quarter of 2020, and net income of $7.1 million, or $0.72 diluted earnings per share, for the fourth quarter of 2019.

For the full year ended December 31, 2020, net income was a record $29.5 million and diluted earnings per share were a record $2.99, compared to net income of $25.2 million and diluted earnings per share of $2.51 for the year ended December 31, 2019. The full year 2020 results included a $2.1 million pre-tax write-down of commercial other real estate owned ("OREO"). Excluding this charge, adjusted net income for the year was $31.1 million, or $3.16 adjusted diluted earnings per share.

"We generated record net income for the fourth quarter and for all of 2020, closing out our 21st year of operation with substantial momentum despite the challenges created by the pandemic," said David Becker, Chairman, President and Chief Executive Officer. "Over the course of the year, we produced robust revenue growth, with our direct-to-consumer mortgage business delivering its best year in our history. Our bankers met the surge in demand brought on by low interest rates, winning business with a demonstrated commitment to consistent, excellent service. Our expanding national SBA platform also steadily gained momentum and drove higher gain-on-sale revenue, increasingly contributing to our success throughout the year. Our pipelines in these key business lines remain solid heading into 2021.

"We also maintained strong credit quality even as we took extraordinary steps in the form of loan deferrals to help our clients weather the initial shocks of the public health crisis early in the year," Becker added. "Well before the year ended, nearly all of our borrowers who needed payment relief resumed making payments, and our continued low level of nonperforming loans reflects this. We deepened ties with our clients through this experience and remain optimistic in our customers’ collective ability to fully bounce back and succeed in the year ahead.

Mr. Becker concluded, "And of course, I want to thank the entire First Internet team for their exceptional work in an unforgettable year. Their unrelenting efforts allowed us to deliver our best-ever earnings results in a very difficult time for our country. Our employees are at the heart of our strong culture and workplace environment and are the reason First Internet was recognized by The Indianapolis Star for the seventh consecutive year as one of the ‘Top Workplaces in Central Indiana’."

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2020 was $18.9 million, compared to $16.2 million for the third quarter of 2020, and $15.4 million for the fourth quarter of 2019. On a fully-taxable equivalent basis, net interest income for the fourth quarter was $20.3 million, compared to $17.7 million for the third quarter, and $16.9 million for the fourth quarter of 2019.

Total interest income for the fourth quarter of 2020 was $33.6 million, an increase of 2.7%, compared to the third quarter of 2020, and a decrease of 11.2% compared to the fourth quarter of 2019. On a fully-taxable equivalent basis, total interest income for the fourth quarter of 2020 was $35.0 million, an increase of 2.5% compared to the third quarter of 2020, and a decrease of 11.2% compared to the fourth quarter of 2019. The increase in total interest income compared to the third quarter of 2020 was driven primarily by an 8 bp increase in the yield on average interest-earning assets as the average balance of those assets was relatively stable between quarters. The yield on interest-earning assets for the fourth quarter of 2020 increased to 3.17% from 3.09% in the prior quarter due primarily to a shift in the earning asset mix and an increase in loan fee income, mostly related to prepayments. Average loan balances increased $73.2 million, or 2.4%, while the average balance of securities and other earning assets decreased $51.1 million and $19.6 million, respectively.

Total interest expense for the fourth quarter of 2020 was $14.8 million, a decrease of 10.5%, compared to the third quarter of 2020, and a decrease of 34.3% compared to the fourth quarter of 2019. The decrease in total interest expense compared to the linked quarter was due primarily to a 22 bp decline in the cost of interest-bearing deposits. The decrease in deposit costs reflects the continued decline in the rates paid on interest-bearing deposits as well as a shift in the deposit mix due to the growth in money market accounts and reduction in certificates and brokered deposits.

During the fourth quarter of 2020, the cost of money market deposits decreased by 27 bps while the average balance of these deposits grew $74.3 million, or 5.7%. Furthermore, the cost of certificates and brokered deposits decreased by 9 bps and average balances decreased $110.9 million, or 6.2%. During the fourth quarter, new certificates of deposit were originated at a weighted average cost of 50 bps while maturing deposits had a weighted average cost of 205 bps; a difference of 155 bps.

Net interest margin ("NIM") improved to 1.78% for the fourth quarter of 2020, up from 1.53% for the third quarter of 2020 and 1.51% in the fourth quarter of 2019. Fully-taxable equivalent NIM ("FTE NIM") increased by 24 bps to 1.91% for the fourth quarter of 2020, up from 1.67% for both the third quarter of 2020 and the fourth quarter of 2019. The increases in NIM and FTE NIM compared to the linked quarter were driven primarily by a combination of lower interest-bearing deposit costs and higher average loan yields, which more than offset the impact of lower yields on securities and the continued effect of elevated cash balances.

Noninterest Income

Noninterest income for the fourth quarter of 2020 was $12.7 million, compared to $12.5 million for the third quarter of 2020 and $5.4 million for the fourth quarter of 2019. The modest increase compared to the linked quarter was driven primarily by an increase in gain on sale of loans, partially offset by lower revenues from mortgage banking activities. Gain on sale of loans totaled $3.7 million for the quarter, increasing $1.7 million compared to the third quarter of 2020 driven by a higher amount of U.S. Small Business Administration ("SBA") 7(a) guaranteed loan sales in the quarter as well as a $0.2 million gain on the sale of $7.4 million of public finance loans. Mortgage banking revenue totaled $8.0 million for the fourth quarter of 2020, down $1.6 million from the record prior quarter due to a decrease in interest rate lock volume, which was partially offset by an increase in margins. On a historical basis, however, mortgage banking revenue remained strong as the low interest rate environment continued to drive purchase and refinance activity.

Noninterest Expense

Noninterest expense for the fourth quarter of 2020 was $14.5 million, compared to $16.4 million for the third quarter of 2020 and $12.6 million for the fourth quarter of 2019. The third quarter of 2020 included a $2.1 million write-down of two legacy commercial OREO properties. Excluding the impact of that write-down, noninterest expense increased slightly on a linked-quarter basis, driven primarily by a $0.2 million increase in loan expenses and a $0.2 million increase consulting and professional fees, but was partially offset by a $0.4 million decrease in salaries and employee benefits. The lower salaries and employee benefits expense was due mainly to the timing of incentive compensation in the Company’s small business lending division and lower incentive compensation in the mortgage banking division due to lower mortgage production quarter-over-quarter.

Income Taxes

The Company reported an income tax expense of $3.1 million for the fourth quarter of 2020 and an effective tax rate of 21.6%, compared to income tax expense of $1.4 million and an effective tax rate of 14.2% for the third quarter of 2020 and an income tax expense of $0.6 million and an effective tax rate of 7.8% for the fourth quarter of 2019. The increase in income taxes during the quarter was primarily due to the increase in pre-tax earnings driven by a higher proportion of taxable revenue and the timing of pre-tax earnings as performance significantly improved during the second half of 2020.

Loans and Credit Quality

Total loans as of December 31, 2020 were $3.1 billion, an increase of $46.3 million, or 1.5%, compared to September 30, 2020, and an increase of $95.7 million, or 3.2%, compared to December 31, 2019. Total commercial loan balances were $2.5 billion as of December 31, 2020, an increase of $73.1 million, or 3.0%, compared to September 30, 2020 and an increase of $229.1 million, or 10.0%, compared to December 31, 2019. Compared to the linked quarter, the growth in commercial loan balances was driven largely by production in healthcare finance and construction lending, which was partially offset by a decrease in single tenant lease financing balances.

Total consumer loan balances were $482.3 million as of December 31, 2020, a decrease of $25.4 million, or 5.0%, compared to September 30, 2020 and a decrease of $151.2 million, or 23.9%, compared to December 31, 2019. The decline in consumer loan balances from September 30, 2020 was due primarily to increased prepayment activity in the residential mortgage portfolio and seasonally lower production in the RV and trailer portfolios.

Total delinquencies 30 days or more past due decreased to 0.17% of total loans as of December 31, 2020, down from 0.22% as of September 30, 2020 and down from 0.24% as of December 31, 2019. Overall credit quality remained relatively stable as nonperforming loans to total loans was 0.33% as of December 31, 2020, compared to 0.32% at September 30, 2020 and 0.23% as of December 31, 2019.

The allowance for loan losses as a percentage of total loans was 0.96% as of December 31, 2020, or 0.98% when excluding SBA Paycheck Protection Program ("PPP") loans, compared to 0.89% and 0.91%, respectively, as of September 30, 2020 and 0.74% as of December 31, 2019. During the quarter, the Company continued to make additional adjustments to qualitative factors in its allowance model to reflect the continued economic uncertainty resulting from the COVID-19 pandemic as well as increased the specific reserve by $1.1 million on an existing nonperforming single tenant lease financing relationship. As a result, both the amount of the allowance for loan losses and the allowance as a percentage of total loans increased compared to September 30, 2020.

Net charge-offs of $0.3 million were recognized during the fourth quarter of 2020, resulting in net charge-offs to average loans of 0.04%, compared to 0.01% for the third quarter and 0.04% for the fourth quarter of 2019. The provision for loan losses in the fourth quarter was $2.9 million, compared to $2.5 million for the third quarter and $0.5 million for the fourth quarter of 2019.

Capital

As of December 31, 2020, total shareholders’ equity was $330.9 million, an increase of $12.8 million, or 4.0%, compared to September 30, 2020, due primarily to the net income earned during the quarter and a decrease in accumulated other comprehensive loss. Book value per common share increased to $33.77 as of December 30, 2020, up from $32.46 as of September 30, 2020 and $31.30 as of December 31, 2019. Tangible book value per share increased to $33.29, up from $31.98 and $30.82, 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, 2020.

As of December 31, 2020

Company

Bank

Total shareholders' equity to assets

7.79%

8.64%

Tangible common equity to tangible assets 1

7.69%

8.54%

Tier 1 leverage ratio 2

7.95%

8.78%

Common equity tier 1 capital ratio 2

11.31%

12.49%

Tier 1 capital ratio 2

11.31%

12.49%

Total risk-based capital ratio 2

14.91%

13.47%

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 21, 2021 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 21, 2021 by dialing (877) 344-7529; passcode: 10151053.

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 $4.2 billion as of December 31, 2020. 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, 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," "optimistic," "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. The COVID-19 pandemic continues to impact general business and economic conditions as well as our customers, counterparties, employees, and third-party service providers. Continued uncertainty in market conditions could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. The ultimate magnitude and duration of the pandemic is still unknown at this time, therefore, the extent of the impact on our business, financial position, results of operations, liquidity and prospects remains uncertain. Other 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; 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, net interest margin – FTE, allowance for loan losses to loans, excluding PPP loans, 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 31,

December 31,

December 31,

2020

2020

2019

2020

2019

Net income

$

11,090

$

8,411

$

7,096

$

29,453

$

25,239

Per share and share information

Earnings per share - basic

$

1.12

$

0.86

$

0.72

$

2.99

$

2.51

Earnings per share - diluted

1.12

0.86

0.72

2.99

2.51

Dividends declared per share

0.06

0.06

0.06

0.24

0.24

Book value per common share

33.77

32.46

31.30

33.77

31.30

Tangible book value per common share 1

33.29

31.98

30.82

33.29

30.82

Common shares outstanding

9,800,569

9,800,569

9,741,800

9,800,569

9,741,800

Average common shares outstanding:

Basic

9,883,609

9,773,175

9,825,784

9,840,205

10,041,581

Diluted

9,914,022

9,773,224

9,843,829

9,842,425

10,044,483

Performance ratios

Return on average assets

1.02

%

0.78

%

0.69

%

0.69

%

0.65

%

Return on average shareholders' equity

13.64

%

10.67

%

9.46

%

9.39

%

8.52

%

Return on average tangible common equity 1

13.84

%

10.83

%

9.61

%

9.53

%

8.65

%

Net interest margin

1.78

%

1.53

%

1.51

%

1.55

%

1.65

%

Net interest margin - FTE 1,2

1.91

%

1.67

%

1.67

%

1.68

%

1.82

%

Capital ratios 3

Total shareholders' equity to assets

7.79

%

7.34

%

7.44

%

7.79

%

7.44

%

Tangible common equity to tangible assets 1

7.69

%

7.24

%

7.33

%

7.69

%

7.33

%

Tier 1 leverage ratio

7.95

%

7.72

%

7.64

%

7.95

%

7.64

%

Common equity tier 1 capital ratio

11.31

%

11.13

%

10.84

%

11.31

%

10.84

%

Tier 1 capital ratio

11.31

%

11.13

%

10.84

%

11.31

%

10.84

%

Total risk-based capital ratio

14.91

%

14.38

%

13.99

%

14.91

%

13.99

%

Asset quality

Nonperforming loans

$

10,183

$

9,774

$

6,732

$

10,183

$

6,732

Nonperforming assets

10,218

9,782

8,872

10,218

8,872

Nonperforming loans to loans

0.33

%

0.32

%

0.23

%

0.33

%

0.23

%

Nonperforming assets to total assets

0.24

%

0.23

%

0.22

%

0.24

%

0.22

%

Allowance for loan losses to:

Loans

0.96

%

0.89

%

0.74

%

0.96

%

0.74

%

Loans, excluding PPP loans 1

0.98

%

0.91

%

0.74

%

0.98

%

0.74

%

Nonperforming loans

289.5

%

275.4

%

324.4

%

289.5

%

324.4

%

Net charge-offs to average loans

0.04

%

0.01

%

0.04

%

0.06

%

0.07

%

Average balance sheet information

Loans

$

3,070,476

$

2,996,641

$

2,936,144

$

2,985,611

$

2,863,250

Total securities

582,425

633,552

597,049

626,022

560,317

Other earning assets

532,466

552,058

452,945

523,788

355,412

Total interest-earning assets

4,219,142

4,216,634

4,031,327

4,175,799

3,809,903

Total assets

4,316,207

4,307,819

4,108,216

4,263,798

3,890,708

Noninterest-bearing deposits

86,836

75,901

49,570

74,277

44,682

Interest-bearing deposits

3,258,269

3,279,621

3,110,501

3,224,657

2,938,622

Total deposits

3,345,105

3,355,522

3,160,071

3,298,934

2,983,304

Shareholders' equity

323,464

313,611

297,623

313,763

296,382

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, 2019)

Dollar amounts in thousands

December 31,

September 30,

December 31,

2020

2020

2019

Assets

Cash and due from banks

$

7,367

$

5,804

$

5,061

Interest-bearing deposits

412,439

482,649

322,300

Securities available-for-sale, at fair value

497,628

528,311

540,852

Securities held-to-maturity, at amortized cost

68,223

68,254

61,878

Loans held-for-sale

39,584

76,208

56,097

Loans

3,059,231

3,012,914

2,963,547

Allowance for loan losses

(29,484

)

(26,917

)

(21,840

)

Net loans

3,029,747

2,985,997

2,941,707

Accrued interest receivable

17,416

17,768

18,607

Federal Home Loan Bank of Indianapolis stock

25,650

25,650

25,650

Cash surrender value of bank-owned life insurance

37,952

37,714

37,002

Premises and equipment, net

37,590

31,262

14,630

Goodwill

4,687

4,687

4,687

Servicing asset

3,569

2,818

2,481

Other real estate owned

-

-

2,065

Accrued income and other assets

64,304

66,502

67,066

Total assets

$

4,246,156

$

4,333,624

$

4,100,083

Liabilities

Noninterest-bearing deposits

$

96,753

$

86,088

$

57,115

Interest-bearing deposits

3,174,132

3,286,303

3,096,848

Total deposits

3,270,885

3,372,391

3,153,963

Advances from Federal Home Loan Bank

514,916

514,914

514,910

Subordinated debt

79,603

69,758

69,528

Accrued interest payable

1,439

1,249

3,767

Accrued expenses and other liabilities

48,369

57,210

53,002

Total liabilities

3,915,212

4,015,522

3,795,170

Shareholders' equity

...

Voting common stock

221,408

220,951

219,423

Retained earnings

126,732

116,241

99,681

Accumulated other comprehensive loss

(17,196

)

(19,090

)

(14,191

)

Total shareholders' equity

330,944

318,102

304,913

Total liabilities and shareholders' equity

$

4,246,156

$

4,333,624

$

4,100,083

First Internet Bancorp

Condensed Consolidated Statements of Income (unaudited, except for the twelve months ended December 31, 2019)

Dollar amounts in thousands, except per share data

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

2019

Interest income

Loans

$

30,930

$

29,560

$

31,574

$

120,628

$

122,228

Securities - taxable

1,988

2,240

3,475

11,123

13,807

Securities - non-taxable

318

381

604

1,728

2,595

Other earning assets

407

569

2,224

3,380

8,784

Total interest income

33,643

32,750

37,877

136,859

147,414

Interest expense

Deposits

10,577

12,428

18,417

55,976

69,313

Other borrowed funds

4,201

4,090

4,086

16,342

15,134

Total interest expense

14,778

16,518

22,503

72,318

84,447

Net interest income

18,865

16,232

15,374

64,541

62,967

Provision for loan losses

2,864

2,509

468

9,325

5,966

Net interest income after provision for loan losses

16,001

13,723

14,906

55,216

57,001

Noninterest income

Service charges and fees

206

224

213

824

885

Loan servicing revenue

379

274

166

1,159

166

Loan servicing asset revaluation

(60

)

(103

)

-

(432

)

-

Mortgage banking activities

7,987

9,630

2,953

24,693

11,541

Gain on sale of loans

3,702

2,033

1,721

8,298

2,074

Gain (loss) on sale of securities

-

98

-

139

(458

)

Other

443

339

352

1,655

2,581

Total noninterest income

12,657

12,495

5,405

36,336

16,789

Noninterest expense

Salaries and employee benefits

9,135

9,533

7,168

34,231

27,014

Marketing, advertising and promotion

443

426

409

1,654

1,800

Consulting and professional fees

788

614

1,242

3,511

3,669

Data processing

426

388

312

1,528

1,338

Loan expenses

630

408

289

2,036

1,142

Premises and equipment

1,601

1,568

1,556

6,396

6,059

Deposit insurance premium

450

440

601

1,810

1,903

Write-down of other real estate owned

-

2,065

-

2,065

-

Other

1,040

970

1,036

4,423

3,709

Total noninterest expense

14,513

16,412

12,613

57,654

46,634

Income before income taxes

14,145

9,806

7,698

33,898

27,156

Income tax provision

3,055

1,395

602

4,445

1,917

Net income

$

11,090

$

8,411

$

7,096

$

29,453

$

25,239

Per common share data

Earnings per share - basic

$

1.12

$

0.86

$

0.72

$

2.99

$

2.51

Earnings per share - diluted

$

1.12

$

0.86

$

0.72

$

2.99

$

2.51

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, 2020

September 30, 2020

December 31, 2019

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

$

3,104,251

$

30,930

3.96

%

$

3,031,024

$

29,560

3.88

%

$

2,981,333

$

31,574

4.20

%

Securities - taxable

492,573

1,988

1.61

%

539,154

2,240

1.65

%

497,739

$

3,475

2.77

%

Securities - non-taxable

89,852

318

1.41

%

94,398

381

1.61

%

99,310

$

604

2.41

%

Other earning assets

532,466

407

0.30

%

552,058

569

0.41

%

452,945

$

2,224

1.95

%

Total interest-earning assets

4,219,142

33,643

3.17

%

4,216,634

32,750

3.09

%

4,031,327

37,877

3.73

%

Allowance for loan losses

(27,805

)

(25,347

)

(21,967

)

Noninterest-earning assets

124,870

116,532

98,856

Total assets

$

4,316,207

$

4,307,819

$

4,108,216

Liabilities

Interest-bearing liabilities

Interest-bearing demand deposits

$

165,815

$

156

0.37

%

$

154,275

$

228

0.59

%

$

122,031

$

223

0.73

%

Savings accounts

49,209

54

0.44

%

45,466

79

0.69

%

34,298

94

1.09

%

Money market accounts

1,369,543

1,655

0.48

%

1,295,249

2,442

0.75

%

752,941

3,653

1.92

%

Certificates and brokered deposits

1,673,702

8,712

2.07

%

1,784,631

9,679

2.16

%

2,201,231

14,447

2.60

%

Total interest-bearing deposits

3,258,269

10,577

1.29

%

3,279,621

12,428

1.51

%

3,110,501

18,417

2.35

%

Other borrowed funds

591,806

4,201

2.82

%

584,634

4,090

2.78

%

584,386

4,086

2.77

%

Total interest-bearing liabilities

3,850,075

14,778

1.53

%

3,864,255

16,518

1.70

%

3,694,887

22,503

2.42

%

Noninterest-bearing deposits

86,836

75,901

49,570

Other noninterest-bearing liabilities

55,832

54,052

66,136

Total liabilities

3,992,743

3,994,208

3,810,593

Shareholders' equity

323,464

313,611

297,623

Total liabilities and shareholders' equity

$

4,316,207

$

4,307,819

$

4,108,216

Net interest income

$

18,865

$

16,232

$

15,374

Interest rate spread

1.64

%

1.39

%

1.31

%

Net interest margin

1.78

%

1.53

%

1.51

%

Net interest margin - FTE 2,3

1.91

%

1.67

%

1.67

%

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, 2020

December 31, 2019

Average

Interest /

Yield /

Average

Interest /

Yield /

Balance

Dividends

Cost

Balance

Dividends

Cost

Assets

Interest-earning assets

Loans, including loans held-for-sale 1

$

3,025,989

$

120,628

3.99

%

$

2,894,174

$

122,228

4.22

%

Securities - taxable

530,849

11,123

2.10

%

462,704

13,807

2.98

%

Securities - non-taxable

95,173

1,728

1.82

%

97,613

2,595

2.66

%

Other earning assets

523,788

3,380

0.65

%

355,412

8,784

2.47

%

Total interest-earning assets

4,175,799

136,859

3.28

%

3,809,903

147,414

3.87

%

Allowance for loan losses

(24,660

)

(19,891

)

Noninterest-earning assets

112,659

100,696

Total assets

$

4,263,798

$

3,890,708

Liabilities

Interest-bearing liabilities

Interest-bearing demand deposits

$

145,207

$

840

0.58

%

$

118,874

$

882

0.74

%

Savings accounts

40,593

303

0.75

%

35,751

398

1.11

%

Money market accounts

1,156,084

11,381

0.98

%

637,360

12,661

1.99

%

Certificates and brokered deposits

1,882,773

43,452

2.31

%

2,146,637

55,372

2.58

%

Total interest-bearing deposits

3,224,657

55,976

1.74

%

2,938,622

69,313

2.36

%

Other borrowed funds

586,372

16,342

2.79

%

564,757

15,134

2.68

%

Total interest-bearing liabilities

3,811,029

72,318

1.90

%

3,503,379

84,447

2.41

%

Noninterest-bearing deposits

74,277

44,682

Other noninterest-bearing liabilities

64,729

46,265

Total liabilities

3,950,035

3,594,326

Shareholders' equity

313,763

296,382

Total liabilities and shareholders' equity

$

4,263,798

$

3,890,708

Net interest income

$

64,541

$

62,967

Interest rate spread

1.38

%

1.46

%

Net interest margin

1.55

%

1.65

%

Net interest margin - FTE 2,3

1.68

%

1.82

%

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, 2020

September 30, 2020

December 31, 2019

Amount

Percent

Amount

Percent

Amount

Percent

Commercial loans

Commercial and industrial

$

75,387

2.5

%

$

77,116

2.6

%

$

96,420

3.3

%

Owner-occupied commercial real estate

89,785

2.9

%

89,095

3.0

%

86,726

2.9

%

Investor commercial real estate

13,902

0.5

%

13,084

0.4

%

12,567

0.4

%

Construction

110,385

3.6

%

92,154

3.1

%

60,274

2.0

%

Single tenant lease financing

950,172

31.1

%

960,505

31.9

%

995,879

33.6

%

Public finance

622,257

20.3

%

625,638

20.8

%

687,094

23.2

%

Healthcare finance

528,154

17.3

%

461,740

15.3

%

300,612

10.1

%

Small business lending

125,589

4.1

%

123,168

4.1

%

46,945

1.6

%

Total commercial loans

2,515,631

82.3

%

2,442,500

81.2

%

2,286,517

77.1

%

Consumer loans

Residential mortgage

186,787

6.1

%

203,041

6.7

%

313,849

10.6

%

Home equity

19,857

0.6

%

22,169

0.7

%

24,306

0.8

%

Trailers

144,493

4.7

%

145,775

4.8

%

146,734

5.0

%

Recreational vehicles

94,405

3.1

%

96,910

3.2

%

102,702

3.5

%

Other consumer loans

36,794

1.2

%

39,765

1.3

%

45,873

1.5

%

Total consumer loans

482,336

15.7

%

507,660

16.7

%

633,464

21.4

%

Net deferred loan fees, premiums, discounts and other 1

61,264

2.0

%

62,754

2.1

%

43,566

1.5

%

Total loans

$

3,059,231

100.0

%

$

3,012,914

100.0

%

$

2,963,547

100.0

%

December 31, 2020

September 30, 2020

December 31, 2019

Amount

Percent

Amount

Percent

Amount

Percent

Deposits

Noninterest-bearing deposits

$

96,753

3.0

%

$

86,088

2.6

%

$

57,115

1.8

%

Interest-bearing demand deposits

188,645

5.8

%

155,054

4.6

%

129,020

4.1

%

Savings accounts

43,200

1.3

%

49,890

1.5

%

29,616

0.9

%

Money market accounts

1,350,566

41.3

%

1,359,178

40.3

%

786,390

24.9

%

Certificates of deposits

1,289,319

39.4

%

1,360,575

40.3

%

1,613,453

51.2

%

Brokered deposits

302,402

9.2

%

361,606

10.7

%

538,369

17.1

%

Total deposits

$

3,270,885

100.0

%

$

3,372,391

100.0

%

$

3,153,963

100.0

%

1 Includes carrying value adjustments of $42.7 million and $44.3 million related to terminated interest rate swaps associated with public finance loans as of December 31, 2020 and September 30, 2020, respectively, and $21.4 million as of December 31, 2019 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 31,

December 31,

December 31,

2020

2020

2019

2020

2019

Total equity - GAAP

$

330,944

$

318,102

$

304,913

$

330,944

$

304,913

Adjustments:

Goodwill

(4,687

)

(4,687

)

(4,687

)

(4,687

)

(4,687

)

Tangible common equity

$

326,257

$

313,415

$

300,226

$

326,257

$

300,226

Total assets - GAAP

$

4,246,156

$

4,333,624

$

4,100,083

$

4,246,156

$

4,100,083

Adjustments:

Goodwill

(4,687

)

(4,687

)

(4,687

)

(4,687

)

(4,687

)

Tangible assets

$

4,241,469

$

4,328,937

$

4,095,396

$

4,241,469

$

4,095,396

Common shares outstanding

9,800,569

9,800,569

9,741,800

9,800,569

9,741,800

Book value per common share

$

33.77

$

32.46

$

31.30

$

33.77

$

31.30

Effect of goodwill

(0.48

)

(0.48

)

(0.48

)

(0.48

)

(0.48

)

Tangible book value per common share

$

33.29

$

31.98

$

30.82

$

33.29

$

30.82

Total shareholders' equity to assets

7.79

%

7.34

%

7.44

%

7.79

%

7.44

%

Effect of goodwill

(0.10

%)

(0.10

%)

(0.11

%)

(0.10

%)

(0.11

%)

Tangible common equity to tangible assets

7.69

%

7.24

%

7.33

%

7.69

%

7.33

%

Total average equity - GAAP

$

323,464

$

313,611

$

297,623

$

313,763

$

296,382

Adjustments:

Average goodwill

(4,687

)

(4,687

)

(4,687

)

(4,687

)

(4,687

)

Average tangible common equity

$

318,777

$

308,924

$

292,936

$

309,076

$

291,695

Return on average shareholders' equity

13.64

%

10.67

%

9.46

%

9.39

%

8.52

%

Effect of goodwill

0.20

%

0.16

%

0.15

%

0.14

%

0.13

%

Return on average tangible common equity

13.84

%

10.83

%

9.61

%

9.53

%

8.65

%

Total interest income

$

33,643

$

32,750

$

37,877

$

136,859

$

147,414

Adjustments:

Fully-taxable equivalent adjustments 1

1,400

1,424

1,570

5,796

6,334

Total interest income - FTE

$

35,043

$

34,174

$

39,447

$

142,655

$

153,748

Net interest income

$

18,865

$

16,232

$

15,374

$

64,541

$

62,967

Adjustments:

Fully-taxable equivalent adjustments 1

1,400

1,424

1,570

5,796

6,334

Net interest income - FTE

$

20,265

$

17,656

$

16,944

$

70,337

$

69,301

Net interest margin

1.78

%

1.53

%

1.51

%

1.55

%

1.65

%

Effect of fully-taxable equivalent adjustments 1

0.13

%

0.14

%

0.16

%

0.13

%

0.17

%

Net interest margin - FTE

1.91

%

1.67

%

1.67

%

1.68

%

1.82

%

Allowance for loan losses

$

29,484

$

26,917

$

21,840

$

29,484

$

21,840

Loans

$

3,059,231

$

3,012,914

$

2,963,547

$

3,059,231

$

2,963,547

Adjustments:

PPP loans

(50,554

)

(58,337

)

-

(50,554

)

-

Loans, excluding PPP loans

$

3,008,677

$

2,954,577

$

2,963,547

$

3,008,677

$

2,963,547

Allowance for loan losses to loans

0.96

%

0.89

%

0.74

%

0.96

%

0.74

%

Effect of PPP loans

0.02

%

0.02

%

0.00

%

0.02

%

0.00

%

Allowance for loan losses to loans, excluding PPP loans

0.98

%

0.91

%

0.74

%

0.98

%

0.74

%

1 Assuming a 21% tax rate

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 31,

December 31,

December 31,

2020

2020

2019

2020

2019

Income before income taxes - GAAP

$

14,145

$

9,806

$

7,698

$

33,898

$

27,156

Adjustments:

Write-down of other real estate owned

-

2,065

-

2,065

-

Adjusted income before income taxes

$

14,145

$

11,871

$

7,698

$

35,963

$

27,156

Income tax provision - GAAP

$

3,055

$

1,395

$

602

$

4,445

$

1,917

Adjustments:

Write-down of other real estate owned

-

434

-

434

-

Adjusted income tax provision

$

3,055

$

1,829

$

602

$

4,879

$

1,917

Net income - GAAP

$

11,090

$

8,411

$

7,096

$

29,453

$

25,239

Adjustments:

Write-down of other real estate owned

-

1,631

-

1,631

-

Adjusted net income

$

11,090

$

10,042

$

7,096

$

31,084

$

25,239

Diluted average common shares outstanding

9,914,022

9,773,224

9,843,829

9,842,425

10,044,483

Diluted earnings per share - GAAP

$

1.12

$

0.86

$

0.72

$

2.99

$

2.51

Adjustments:

Effect of write-down of other real estate owned

-

0.17

-

0.17

-

Adjusted diluted earnings per share

$

1.12

$

1.03

$

0.72

$

3.16

$

2.51

Return on average assets

1.02

%

0.78

%

0.69

%

0.69

%

0.65

%

Effect of write-down of other real estate owned

0.00

%

0.15

%

0.00

%

0.04

%

0.00

%

Adjusted return on average assets

1.02

%

0.93

%

0.69

%

0.73

%

0.65

%

Return on average shareholders' equity

13.64

%

10.67

%

9.46

%

9.39

%

8.52

%

Effect of write-down of other real estate owned

0.00

%

2.07

%

0.00

%

0.52

%

0.00

%

Adjusted return on average shareholders' equity

13.64

%

12.74

%

9.46

%

9.91

%

8.52

%

Return on average tangible common equity

13.84

%

10.83

%

9.61

%

9.53

%

8.65

%

Effect of write-down of other real estate owned

0.00

%

2.10

%

0.00

%

0.53

%

0.00

%

Adjusted return on average tangible common equity

13.84

%

12.93

%

9.61

%

10.06

%

8.65

%

Effective income tax rate

21.6

%

14.2

%

7.8

%

13.1

%

7.1

%

Effect of write-down of other real estate owned

0.0

%

1.2

%

0.0

%

0.5

%

0.0

%

Adjusted effective income tax rate

21.6

%

15.4

%

7.8

%

13.6

%

7.1

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210120005715/en/

Contacts

Investors/Analysts
Paula Deemer
Director of Corporate Administration
(317) 428-4628
investors@firstib.com

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