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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8‑K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934


Date of report (Date of earliest event reported): July 19, 2018
First Internet Bancorp
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
 
 
Indiana
(State or Other Jurisdiction of Incorporation)
 
 
 
 
 
001-35750
 
20-3489991
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
 
 
11201 USA Parkway
 
46037
Fishers, Indiana
 
(Address of Principal Executive Offices)
 
(Zip Code)
 
 
 
 
 
(317) 532-7900
(Registrant's Telephone Number, Including Area Code)
 
 
 
 
 
 
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





Item 2.02
Results of Operations and Financial Condition

On July 19, 2018, First Internet Bancorp issued a press release announcing financial results for the quarter ended June 30, 2018. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

Item 9.01
Financial Statements and Exhibits

Number
 
Description
 
Method of filing
 
 
 
 
 
 
 
Furnished herewith









SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
Dated:
July 19, 2018
 
 
 
 
 
 
 
FIRST INTERNET BANCORP
 
 
 
 
 
 
 
By:
/s/ Kenneth J. Lovik
 
 
 
Kenneth J. Lovik, Executive Vice President & Chief Financial Officer



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
394288465_fibancorplogoa22.jpg

First Internet Bancorp Reports Annual Loan Growth of 40%
Quarterly net income up 50% year-over-year

Fishers, Indiana, July 19, 2018 - First Internet Bancorp (the “Company”) (Nasdaq: INBK), the parent company of First Internet Bank (the “Bank”) (www.firstib.com), announced today financial and operational results for the second quarter 2018.

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

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

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

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

Highlights for the second quarter include:

Net income increased $2.0 million, or 50.2%, compared to second quarter 2017

Diluted earnings per share increased $0.06, or 9.8%, compared to second quarter 2017

Total loan growth of $675.6 million, or 39.8%, compared to June 30, 2017

Net interest income of $15.5 million, increasing $2.5 million, or 19.2%, compared to second quarter 2017

Solid quarterly performance
Return on average assets of 0.82%
Return on average shareholders’ equity of 10.11%
Return on average tangible common equity of 10.31%




Strengthened capital levels and holding company liquidity following an equity offering

 
 
Company
 
Bank
 
 
 
 
 
Total shareholders’ equity to assets
 
9.05%
 
7.86%
Tangible common equity to tangible assets
 
8.92%
 
7.72%
Tier 1 leverage ratio
 
9.93%
 
8.66%
Common equity tier 1 capital ratio
 
13.54%
 
11.81%
Tier 1 capital ratio
 
13.54%
 
11.81%
Total risk-based capital ratio
 
15.85%
 
12.56%

Asset quality remained strong
Nonperforming loans to total loans declined to 0.01%
Nonperforming assets to total assets declined to 0.17%
Net charge-offs to average loans of 0.03%

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

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

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




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

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

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

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

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

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




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

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

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

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

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

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




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

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

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

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

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




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

Contact Information:
 
 
 
Investors/Analysts
 
Media
 
Paula Deemer
 
Nicole Lorch
 
Investor Relations
 
Executive Vice President & Chief Operating Officer
(317) 428-4628
 
(317) 532-7906
 
investors@firstib.com
 
nlorch@firstib.com
 




First Internet Bancorp
 
 
 
 
 
 
 
Summary Financial Information (unaudited)
 
 
 
 
 
 
Amounts in thousands, except per share data
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
2018
 
March 31,
2018
 
June 30,
2017
 
June 30,
2018
 
June 30,
2017
Net income
 
$
6,008

 
$
6,028

 
$
4,001

 
$
12,036

 
$
6,833

 
 
 
 
 
 
 
 
 
 
 
Per share and share information
 
 
 
 
 
 
 
 
 
 
Earnings per share - basic
 
$
0.67

 
$
0.71

 
$
0.61

 
$
1.38

 
$
1.04

Earnings per share - diluted
 
                 0.67

 
0.71

 
0.61

 
                1.38

 
1.04

Dividends declared per share
 
0.06

 
0.06

 
0.06

 
0.12

 
0.12

Book value per common share
 
               27.71

 
26.60

 
25.15

 
             27.71

 
25.15

Tangible book value per common share
 
               27.25

 
26.05

 
24.43

 
             27.25

 
24.43

Common shares outstanding
 
10,181,675

 
8,450,925

 
6,513,577

 
10,181,675

 
6,513,577

Average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
8,909,913

 
8,499,196

 
6,583,515

 
8,705,689

 
6,565,760

Diluted
 
8,919,460

 
8,542,363

 
6,597,991

 
8,731,331

 
6,599,681

Performance ratios
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
0.82
%
 
0.87
%
 
0.73
%
 
0.84
%
 
0.67
%
Return on average shareholders' equity
 
10.11
%
 
10.96
%
 
9.95
%
 
10.51
%
 
8.72
%
Return on average tangible common equity
 
10.31
%
 
11.19
%
 
10.25
%
 
10.73
%
 
8.99
%
Net interest margin
 
2.17
%
 
2.26
%
 
2.43
%
 
2.22
%
 
2.46
%
Net interest margin - FTE 1
 
2.33
%
 
2.41
%
 
2.53
%
 
2.37
%
 
2.55
%
Capital ratios 2
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity to assets
 
9.05
%
 
7.85%

 
6.88
%
 
9.05
%
 
6.88
%
Tangible common equity to tangible assets
 
8.92
%
 
7.70%

 
6.70
%
 
8.92
%
 
6.70
%
Tier 1 leverage ratio
 
9.93
%
 
8.17
%
 
7.50
%
 
9.93
%
 
7.50
%
Common equity tier 1 capital ratio
 
13.54
%
 
11.42
%
 
9.74
%
 
13.54
%
 
9.74
%
Tier 1 capital ratio
 
13.54
%
 
11.42
%
 
9.74
%
 
13.54
%
 
9.74
%
Total risk-based capital ratio
 
15.85
%
 
14.01
%
 
12.68
%
 
15.85
%
 
12.68
%
Asset quality
 
 
 
 
 
 
 
 
 
 
Nonperforming loans
 
$
285

 
$
659

 
$
3,438

 
$
285

 
$
3,438

Nonperforming assets
 
5,335

 
5,710

 
7,952

 
5,335

 
7,952

Nonperforming loans to loans
 
0.01
%
 
0.03%

 
0.20
%
 
0.01
%
 
0.20
%
Nonperforming assets to total assets
 
0.17
%
 
0.20%

 
0.33
%
 
0.17
%
 
0.33
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
 
Loans
 
0.68
%
 
0.70%

 
0.78
%
 
0.68
%
 
0.78
%
Nonperforming loans
 
5,632.6
%
 
2,361.2%

 
383.8
%
 
5,632.6
%
 
383.8
%
Net charge-offs to average loans
 
0.03
%
 
0.05%

 
0.01
%
 
0.04
%
 
0.02
%
Average balance sheet information
 
 
 
 
 
 
 
 
 
 
Loans
 
$
2,278,415

 
$
2,154,876

 
$
1,552,456

 
$
2,216,987

 
$
1,436,903

Total securities
 
480,713

 
485,173

 
500,816

 
482,931

 
487,902

Other earning assets
 
79,346

 
104,685

 
67,989

 
91,946

 
56,753

Total interest-earning assets
 
2,856,029

 
2,762,620

 
2,139,040

 
2,809,583

 
1,999,759

Total assets
 
2,921,540

 
2,823,790

 
2,194,652

 
2,872,935

 
2,050,992

Noninterest-bearing deposits
 
44,524

 
43,976

 
32,897

 
44,252

 
32,184

Interest-bearing deposits
 
2,137,045

 
2,105,092

 
1,593,364

 
2,121,157

 
1,522,415

Total deposits
 
2,181,569

 
2,149,068

 
1,626,261

 
2,165,409

 
1,554,599

Shareholders' equity
 
238,465

 
223,131

 
161,228

 
230,840

 
158,030


1 On a fully-taxable equivalent (“FTE”) basis assuming a 21% tax rate in 2018 and a 35% tax rate in 2017
2 Regulatory capital ratios are preliminary pending filing of the Company's regulatory reports




First Internet Bancorp
 
 
 
 
 
 
Condensed Consolidated Balance Sheets (unaudited)
Amounts in thousands
 
 
 
 
 
 
 
 
June 30,
2018
 
March 31,
2018
 
June 30,
2017
Assets
 
 
 
 
 
 
Cash and due from banks
 
$
3,694

 
$
5,675

 
$
5,425

Interest-bearing deposits
 
138,666

 
58,072

 
60,818

Securities available-for-sale, at fair value
 
460,822

 
463,652

 
489,775

Securities held-to-maturity, at amortized cost
 
19,203

 
19,206

 
19,215

Loans held-for-sale
 
20,672

 
17,067

 
27,335

Loans
 
2,374,035

 
2,209,405

 
1,698,421

Allowance for loan losses
 
(16,053
)
 
(15,560
)
 
(13,194
)
Net loans
 
2,357,982

 
2,193,845

 
1,685,227

Accrued interest receivable
 
14,540

 
11,898

 
8,479

Federal Home Loan Bank of Indianapolis stock
 
22,050

 
20,250

 
19,575

Cash surrender value of bank-owned life insurance
 
35,579

 
35,342

 
34,602

Premises and equipment, net
 
10,169

 
10,110

 
9,667

Goodwill
 
4,687

 
4,687

 
4,687

Other real estate owned
 
5,041

 
5,041

 
4,488

Accrued income and other assets
 
22,668

 
17,883

 
11,978

Total assets
 
$
3,115,773

 
$
2,862,728

 
$
2,381,271

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
44,671

 
$
47,678

 
$
36,636

Interest-bearing deposits
 
2,349,613

 
2,129,443

 
1,695,476

Total deposits
 
2,394,284

 
2,177,121

 
1,732,112

Advances from Federal Home Loan Bank
 
390,167

 
413,173

 
435,183

Subordinated debt
 
33,800

 
36,763

 
36,652

Accrued interest payable
 
435

 
410

 
210

Accrued expenses and other liabilities
 
15,000

 
10,437

 
13,284

Total liabilities
 
2,833,686

 
2,637,904

 
2,217,441

Shareholders' equity
 
 
 
 
 
 
Voting common stock
 
227,099

 
172,421

 
119,883

Retained earnings
 
69,066

 
63,677

 
49,738

Accumulated other comprehensive loss
 
(14,078
)
 
(11,274
)
 
(5,791
)
Total shareholders' equity
 
282,087

 
224,824

 
163,830

Total liabilities and shareholders' equity
 
$
3,115,773

 
$
2,862,728

 
$
2,381,271




First Internet Bancorp
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Income (unaudited)
Amounts in thousands, except per share data
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
2018
 
March 31,
2018
 
June 30,
2017
 
June 30,
2018
 
June 30,
2017
Interest income
 
 
 
 
 
 
 
 
 
Loans
$
23,699

 
$
22,115

 
$
16,416

 
$
45,814

 
$
30,572

Securities - taxable
2,556

 
2,488

 
2,566

 
5,044

 
4,933

Securities - non-taxable
700

 
711

 
696

 
1,411

 
1,393

Other earning assets
461

 
665

 
297

 
1,126

 
467

Total interest income
27,416

 
25,979

 
19,975

 
53,395

 
37,365

Interest expense
 
 
 
 
 
 
 
 
 
Deposits
9,226

 
8,270

 
5,324

 
17,496

 
10,023

Other borrowed funds
2,729

 
2,294

 
1,677

 
5,023

 
2,911

Total interest expense
11,955

 
10,564

 
7,001

 
22,519

 
12,934

Net interest income
15,461

 
15,415

 
12,974

 
30,876

 
24,431

Provision for loan losses
667

 
850

 
1,322

 
1,517

 
2,357

Net interest income after provision
for loan losses
14,794

 
14,565

 
11,652

 
29,359

 
22,074

Noninterest income
 
 
 
 
 
 
 
 
 
Service charges and fees
231

 
230

 
220

 
461

 
431

Mortgage banking activities
1,597

 
1,578

 
2,155

 
3,175

 
3,771

Gain on sale of loans

 
414

 

 
414

 

Other
349

 
320

 
361

 
669

 
665

Total noninterest income
2,177

 
2,542

 
2,736

 
4,719

 
4,867

Noninterest expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
5,827

 
5,905

 
5,193

 
11,732

 
10,266

Marketing, advertising and promotion
608

 
716

 
544

 
1,324

 
1,062

Consulting and professional fees
633

 
851

 
764

 
1,484

 
1,577

Data processing
282

 
263

 
245

 
545

 
482

Loan expenses
260

 
237

 
248

 
497

 
462

Premises and equipment
1,231

 
1,214

 
1,025

 
2,445

 
1,978

Deposit insurance premium
480

 
465

 
300

 
945

 
615

Other
861

 
566

 
604

 
1,427

 
1,179

Total noninterest expense
10,182

 
10,217

 
8,923

 
20,399

 
17,621

Income before income taxes
6,789

 
6,890

 
5,465

 
13,679

 
9,320

Income tax provision
781

 
862

 
1,464

 
1,643

 
2,487

Net income
$
6,008

 
$
6,028

 
$
4,001

 
$
12,036

 
$
6,833

 
 
 
 
 
 
 
 
 
 
Per common share data
 
 
 
 
 
 
 
 
 
Earnings per share - basic
$
0.67

 
$
0.71

 
$
0.61

 
$
1.38

 
$
1.04

Earnings per share - diluted
$
0.67

 
$
0.71

 
$
0.61

 
$
1.38

 
$
1.04

Dividends declared per share
$
0.06

 
$
0.06

 
$
0.06

 
$
0.12

 
$
0.12


All periods presented have been reclassified to conform to the current period classification



First Internet Bancorp
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Balances and Rates (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts in thousands
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended

June 30, 2018
 
March 31, 2018
 
June 30, 2017
 
Average Balance
 
Interest / Dividends
 
Yield / Cost
 
Average Balance
 
Interest / Dividends
 
Yield / Cost
 
Average Balance
 
Interest / Dividends
 
Yield / Cost
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans, including loans held-for-sale 1
$
2,295,970

 
$
23,699

 
4.14
%
 
$
2,172,762

 
$
22,115

 
4.13
%
 
$
1,570,235

 
$
16,416

 
4.19
%
Securities - taxable
386,207

 
2,556

 
2.65
%
 
389,447

 
2,488

 
2.59
%
 
405,380

 
2,566

 
2.54
%
Securities - non-taxable
94,506

 
700

 
2.97
%
 
95,726

 
711

 
3.01
%
 
95,436

 
696

 
2.93
%
Other earning assets
79,346

 
461

 
2.33
%
 
104,685

 
665

 
2.58
%
 
67,989

 
297

 
1.75
%
Total interest-earning assets
2,856,029

 
27,416

 
3.85
%
 
2,762,620

 
25,979

 
3.81
%
 
2,139,040

 
19,975

 
3.75
%
Allowance for loan losses
(15,782
)
 
 
 
 
 
(15,206
)
 
 
 
 
 
(12,372
)
 
 
 
 
Noninterest-earning assets
81,293

 
 
 
 
 
76,376

 
 
 
 
 
67,984

 
 
 
 
Total assets
$
2,921,540

 
 
 
 
 
$
2,823,790

 
 
 
 
 
$
2,194,652

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
93,599

 
$
145

 
0.62
%
 
$
91,034

 
$
122

 
0.54
%
 
$
92,676

 
$
127

 
0.55
%
Savings accounts
55,273

 
158

 
1.15
%
 
55,952

 
158

 
1.15
%
 
34,545

 
67

 
0.78
%
Money market accounts
571,398

 
2,130

 
1.50
%
 
562,345

 
1,893

 
1.37
%
 
394,735

 
915

 
0.93
%
Certificates and brokered deposits
1,416,775

 
6,793

 
1.92
%
 
1,395,761

 
6,097

 
1.77
%
 
1,071,408

 
4,215

 
1.58
%
Total interest-bearing deposits
2,137,045

 
9,226

 
1.73
%
 
2,105,092

 
8,270

 
1.59
%
 
1,593,364

 
5,324

 
1.34
%
Other borrowed funds
492,068

 
2,729

 
2.22
%
 
441,970

 
2,294

 
2.10
%
 
398,044

 
1,677

 
1.69
%
Total interest-bearing liabilities
2,629,113

 
11,955

 
1.82
%
 
2,547,062

 
10,564

 
1.68
%
 
1,991,408

 
7,001

 
1.41
%
Noninterest-bearing deposits
44,524

 
 
 
 
 
43,976

 
 
 
 
 
32,897

 
 
 
 
Other noninterest-bearing liabilities
9,438

 
 
 
 
 
9,621

 
 
 
 
 
9,119

 
 
 
 
Total liabilities
2,683,075

 
 
 
 
 
2,600,659

 
 
 
 
 
2,033,424

 
 
 
 
Shareholders' equity
238,465

 
 
 
 
 
223,131

 
 
 
 
 
161,228

 
 
 
 
Total liabilities and shareholders' equity
$
2,921,540

 
 
 
 
 
$
2,823,790

 
 
 
 
 
$
2,194,652

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
15,461

 
 
 
 
 
$
15,415

 
 
 
 
 
$
12,974

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
 
2.03
%
 
 
 
 
 
2.13
%
 
 
 
 
 
2.34
%
Net interest margin
 
 
 
 
2.17
%
 
 
 
 
 
2.26
%
 
 
 
 
 
2.43
%
Net interest margin - FTE 2
 
 
 
 
2.33
%
 
 
 
 
 
2.41
%
 
 
 
 
 
2.53
%

1 Includes nonaccrual loans
2 On a fully-taxable equivalent (“FTE”) basis assuming a 21% tax rate in 2018 and a 35% tax rate in 2017




First Internet Bancorp
 
 
 
 
 
 
 
 
 
 
 
Average Balances and Rates (unaudited)
 
 
 
 
 
 
 
 
 
 
Amounts in thousands
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
June 30, 2018
 
June 30, 2017
 
Average Balance
 
Interest / Dividends
 
Yield / Cost
 
Average Balance
 
Interest / Dividends
 
Yield / Cost
Assets
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets
 
 
 
 
 
 
 
 
 
 
 
Loans, including loans held-for-sale 1
$
2,234,706

 
$
45,814

 
4.13
%
 
$
1,455,104

 
$
30,572

 
4.24
%
Securities - taxable
387,818

 
5,044

 
2.62
%
 
393,517

 
4,933

 
2.53
%
Securities - non-taxable
95,113

 
1,411

 
2.99
%
 
94,385

 
1,393

 
2.98
%
Other earning assets
91,946

 
1,126

 
2.47
%
 
56,753

 
467

 
1.66
%
Total interest-earning assets
2,809,583

 
53,395

 
3.83
%
 
1,999,759

 
37,365

 
3.77
%
Allowance for loan losses
(15,495
)
 
 
 
 
 
(11,839
)
 
 
 
 
Noninterest-earning assets
78,847

 
 
 
 
 
63,072

 
 
 
 
Total assets
$
2,872,935

 
 
 
 
 
$
2,050,992

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
92,323

 
$
268

 
0.59
%
 
$
90,498

 
$
246

 
0.55
%
Savings accounts
55,611

 
316

 
1.15
%
 
31,456

 
114

 
0.73
%
Money market accounts
566,897

 
4,022

 
1.43
%
 
371,346

 
1,611

 
0.87
%
Certificates and brokered deposits
1,406,326

 
12,890

 
1.85
%
 
1,029,115

 
8,052

 
1.58
%
Total interest-bearing deposits
2,121,157

 
17,496

 
1.66
%
 
1,522,415

 
10,023

 
1.33
%
Other borrowed funds
467,157

 
5,023

 
2.17
%
 
330,683

 
2,911

 
1.78
%
Total interest-bearing liabilities
2,588,314

 
22,519

 
1.75
%
 
1,853,098

 
12,934

 
1.41
%
Noninterest-bearing deposits
44,252

 
 
 
 
 
32,184

 
 
 
 
Other noninterest-bearing liabilities
9,529

 
 
 
 
 
7,680

 
 
 
 
Total liabilities
2,642,095

 
 
 
 
 
1,892,962

 
 
 
 
Shareholders' equity
230,840

 
 
 
 
 
158,030

 
 
 
 
Total liabilities and shareholders' equity
$
2,872,935

 
 
 
 
 
$
2,050,992

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
30,876

 
 
 
 
 
$
24,431

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
 
2.08
%
 
 
 
 
 
2.36
%
Net interest margin
 
 
 
 
2.22
%
 
 
 
 
 
2.46
%
Net interest margin - FTE 2
 
 
 
 
2.37
%
 
 
 
 
 
2.55
%

1 Includes nonaccrual loans
2 On a fully-taxable equivalent (“FTE”) basis assuming a 21% tax rate in 2018 and a 35% tax rate in 2017




First Internet Bancorp
 
 
 
 
 
 
 
 
 
 
 
 
Loans and Deposits (unaudited)
 
 
 
 
 
 
 
 
 
 
 
Amounts in thousands
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2018
 
March 31, 2018
 
June 30, 2017
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
Commercial loans
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
107,394

 
4.5
%
 
$
119,893

 
5.4
%
 
$
110,379

 
6.5
%
Owner-occupied commercial real estate
 
86,068

 
3.6
%
 
81,998

 
3.7
%
 
66,952

 
4.0
%
Investor commercial real estate
 
6,185

 
0.3
%
 
6,273

 
0.3
%
 
10,062

 
0.6
%
Construction
 
46,769

 
2.0
%
 
47,013

 
2.1
%
 
45,931

 
2.7
%
Single tenant lease financing
 
863,981

 
36.4
%
 
834,335

 
37.8
%
 
747,790

 
44.0
%
Public finance
 
566,184

 
23.8
%
 
481,923

 
21.8
%
 
179,873

 
10.6
%
Healthcare finance
 
65,605

 
2.8
%
 
48,891

 
2.2
%
 

 
0.0
%
Total commercial loans
 
1,742,186

 
73.4
%
 
1,620,326

 
73.3
%
 
1,160,987

 
68.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer loans
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
 
337,143

 
14.2
%
 
318,298

 
14.4
%
 
292,997

 
17.3
%
Home equity
 
28,826

 
1.2
%
 
29,296

 
1.3
%
 
33,312

 
2.0
%
Trailers
 
120,957

 
5.1
%
 
107,714

 
4.9
%
 
94,036

 
5.5
%
Recreational vehicles
 
79,946

 
3.4
%
 
73,005

 
3.3
%
 
63,514

 
3.7
%
Other consumer loans
 
59,261

 
2.5
%
 
55,466

 
2.5
%
 
51,052

 
3.0
%
Total consumer loans
 
626,133

 
26.4
%
 
583,779

 
26.4
%
 
534,911

 
31.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net deferred loan fees, premiums and discounts
 
5,716

 
0.2
%
 
5,300

 
0.3
%
 
2,523

 
0.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
 
$
2,374,035

 
100.0
%
 
$
2,209,405

 
100.0
%
 
$
1,698,421

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2018
 
March 31, 2018
 
June 30, 2017
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
Deposits
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
44,671

 
1.9
%
 
$
47,678

 
2.2
%
 
$
36,636

 
2.1
%
Interest-bearing demand deposits
 
91,748

 
3.8
%
 
99,006

 
4.5
%
 
94,726

 
5.5
%
Savings accounts
 
48,897

 
2.1
%
 
60,176

 
2.8
%
 
35,764

 
2.1
%
Money market accounts
 
582,565

 
24.3
%
 
592,113

 
27.2
%
 
386,224

 
22.3
%
Certificates of deposits
 
1,231,438

 
51.4
%
 
1,185,176

 
54.4
%
 
1,176,230

 
67.9
%
Brokered deposits 1
 
394,965

 
16.5
%
 
192,972

 
8.9
%
 
2,532

 
0.1
%
Total deposits
 
$
2,394,284

 
100.0
%
 
$
2,177,121

 
100.0
%
 
$
1,732,112

 
100.0
%

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







First Internet Bancorp
 
 
 
 
 
 
 
 
 
 
Reconciliation of Non-GAAP Financial Measures
 
 
 
 
 
 
Amounts in thousands, except per share data
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
2018
 
March 31,
2018
 
June 30,
2017
 
June 30,
2018
 
June 30,
2017
Total equity - GAAP
 
$
282,087

 
$
224,824

 
$
163,830

 
$
282,087

 
$
163,830

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Tangible common equity
 
$
277,400

 
$
220,137

 
$
159,143

 
$
277,400

 
$
159,143

 
 
 
 
 
 
 
 
 
 
 
Total assets - GAAP
 
$
3,115,773

 
$
2,862,728

 
$
2,381,271

 
$
3,115,773

 
$
2,381,271

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Tangible assets
 
$
3,111,086

 
$
2,858,041

 
$
2,376,584

 
$
3,111,086

 
$
2,376,584

 
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
 
10,181,675

 
8,450,925

 
6,513,577

 
10,181,675

 
6,513,577

 
 
 
 
 
 
 
 
 
 
 
Book value per common share
 
 $ 27.71

 
 $ 26.60

 
 $ 25.15

 
$
27.71

 
$
25.15

Effect of goodwill
 
             (0.46)

 
             (0.55)

 
             (0.72)

 
(0.46
)
 
(0.72
)
Tangible book value per common share
 
 $ 27.25

 
 $ 26.05

 
 $ 24.43

 
$
27.25

 
$
24.43

 
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity to assets ratio
 
9.05
 %
 
7.85%

 
6.88
 %
 
9.05
 %
 
6.88
 %
Effect of goodwill
 
(0.13
%)
 
 (0.15%)

 
(0.18
%)
 
(0.13
)%
 
(0.18
)%
Tangible common equity to tangible assets ratio
 
8.92
 %
 
7.70%

 
6.70
 %
 
8.92
 %
 
6.70
 %
 
 
 
 
 
 
 
 
 
 
 
Total average equity - GAAP
 
$
238,465

 
$
223,131

 
$
161,228

 
$
230,840

 
$
158,030

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Average goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Average tangible common equity
 
$
233,778

 
$
218,444

 
$
156,541

 
$
226,153

 
$
153,343

 
 
 
 
 
 
 
 
 
 
 
Return on average shareholders' equity
 
10.11
 %
 
10.96%

 
9.95
 %
 
10.51
 %
 
8.72
 %
Effect of goodwill
 
0.20
 %
 
0.23%

 
0.30
 %
 
0.22
 %
 
0.27
 %
Return on average tangible common equity
 
10.31