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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): October 24, 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 October 24, 2018, First Internet Bancorp issued a press release announcing financial results for the quarter ended September 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:
October 24, 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
395464041_fibancorplogoa26.jpg

First Internet Bancorp Reports Third Quarter 2018 Results

Highlights for the third quarter include:

Net income of $6.3 million, an increase of 28.5% from the third quarter of 2017

Diluted earnings per share of $0.61

Total loans increased $625 million from September 30, 2017, or 33.5%, and $120 million from June 30, 2018, or 20.1% annualized

Net interest income of $16.0 million, an increase of 12.5% from the third quarter of 2017 and 3.3% from the second quarter of 2018

Fishers, Indiana, October 24, 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 third quarter of 2018. Net income for the third quarter of 2018 was $6.3 million, or $0.61 diluted earnings per share. This compares to net income of $6.0 million, or $0.67 diluted earnings per share, for the second quarter of 2018, and net income of $4.9 million, or $0.71 diluted earnings per share, for the third quarter of 2017.

David Becker, Chairman, President and Chief Executive Officer, commented, “We are pleased with our results in the third quarter, driven by solid loan growth, excellent credit quality and well-managed expenses. We continue to take a disciplined approach to capital deployment and execute on our lending strategies, including our specialized areas of focus in public finance, healthcare and single tenant lease financing.

“Looking to the fourth quarter and into 2019, we see tremendous potential in our current business lines, and we continue to explore new opportunities to diversify our revenue channels,” Becker added. “Our entrepreneurial culture provides us a competitive advantage in attracting and retaining top talent - and that is key to our ongoing growth and success.”

Net Interest Income and Net Interest Margin
Net interest income for the third quarter of 2018 was $16.0 million, an increase of 3.3% from $15.5 million for the second quarter of 2018. On a fully-taxable equivalent basis, net interest income for the third quarter was $17.3 million, an increase of 4.2% from $16.6 million for the second quarter. Relative to the third quarter of 2017, net interest income increased 12.5% from $14.2 million, and on a fully-taxable equivalent basis, increased 12.0% from $15.5 million.

Total interest income for the third quarter of 2018 was $30.2 million, an increase of 10.2% compared to the second quarter of 2018, and an increase of 33.2% compared to the third quarter of 2017. On a fully-taxable equivalent basis, total interest income for the third quarter was $31.6 million, an increase of 10.5% compared to the second quarter, and an increase of 31.7% compared to the third quarter of 2017. The increase in total interest income compared to the second quarter of 2018 was driven primarily by a $221.4 million increase in average interest-earning assets, combined with the effect of a 5 basis point increase in the yield earned on these assets.




Total interest expense for the third quarter of 2018 was $14.3 million, an increase of 19.2% compared to the second quarter of 2018, and an increase of 67.6% compared to the third quarter of 2017. The increase in total interest expense compared to the second quarter of 2018 was driven primarily by a $231.4 million increase in average interest-bearing deposit balances, combined with the effect of a 22 basis point increase in the cost of funds related to those deposits. The increase in deposit costs was partially offset by lower interest expenses related to advances from the Federal Home Loan Bank and subordinated debt.

Net interest margin (“NIM”) was 2.06% for the third quarter of 2018 compared to 2.17% for the second quarter of 2018 and 2.31% for the third quarter of 2017. On a fully-taxable equivalent basis, NIM decreased 10 basis points to 2.23% for the third quarter of 2018 from 2.33% for the second quarter of 2018 and was down from 2.52% for the third quarter of 2017. The decline in NIM was primarily due to the higher cost of funds during the quarter, partially offset by the higher yield on interest-earning assets as mentioned above.

Noninterest Income
Noninterest income for the third quarter of 2018 was $2.0 million compared to $2.2 million for the second quarter of 2018 and $3.1 million for the third quarter of 2017. The decrease of $0.2 million from the second quarter was primarily due to a decrease in revenue from mortgage banking activities as mandatory pipeline volumes were down compared to the second quarter of 2018.

Noninterest Expense
Noninterest expense for the third quarter of 2018 was $10.0 million, compared to $10.2 million for the second quarter of 2018 and $9.4 million for the third quarter of 2017. The decline from the second quarter was primarily due to lower salaries and employee benefits and other expenses. The decrease in salaries and employee benefits was driven by lower incentive compensation and medical claims experience. The decrease in other expenses was due mainly to lower costs related to other real estate owned properties.

Income Taxes
Income tax expense was $0.7 million for the third quarter of 2018, resulting in an effective tax rate of 10.6%, compared to $0.8 million and an effective tax rate of 11.5% for the second quarter of 2018 and $1.7 million and an effective tax rate of 25.7% for the third quarter of 2017. Income taxes continued to be 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 September 30, 2018 were $2.5 billion, an increase of $119.6 million, or 5.0%, compared to June 30, 2018 and $625.1 million, or 33.5%, compared to September 30, 2017. Total commercial loan balances were $1.8 billion as of September 30, 2018, an increase of $84.4 million, or 4.8%, compared to June 30, 2018 and $504.6 million, or 38.2%, compared to September 30, 2017. The growth in commercial loan balances was driven largely by production in public finance, healthcare finance and single tenant lease financing.

Total consumer loan balances were $661.9 million as of September 30, 2018, an increase of $35.7 million, or 5.7%, compared to June 30, 2018 and $118.3 million, or 21.8%, compared to September 30, 2017. The growth in consumer loan balances was primarily driven by increased draw-downs on residential construction loans and production in portfolio residential mortgages, trailers and recreational vehicles.

Credit quality remained solid as total delinquencies 30 days or more past due were 0.02% of total loans as of September 30, 2018, down from 0.03% as of June 30, 2018 and down from 0.05% as of September 30, 2017. Nonperforming loans to total loans was 0.01% as of September 30, 2018, flat from June 30, 2018 and down from 0.14% as of September 30, 2017.




The allowance for loan losses as a percentage of total loans was 0.67% as of September 30, 2018, compared to 0.68% as of June 30, 2018 and 0.75% as of September 30, 2017. The decline in the allowance as a percentage of total loans was primarily due to the continued growth in the public finance portfolio, as well as growth in the residential mortgage portfolio, as these loan categories generally have lower loss reserve factors than other loan types.

Net charge-offs of $0.2 million were recognized during the third quarter of 2018, resulting in net charge-offs to average loans of 0.04%, compared to 0.03% for the second quarter and 0.10% for the third quarter of 2017. The provision for loan losses in the third quarter was $0.9 million, compared to $0.7 million for the second quarter and $1.3 million for the third quarter of 2017. The increase in the provision for loan losses compared to the second quarter of 2018 was driven by the loan growth discussed above as well as slightly higher net charge-offs.

Balance Sheet Management
To increase asset sensitivity and reduce long term interest rate risk, the Company maintained its asset hedging strategy that was initiated in the fourth quarter of 2017. As of September 30, 2018, the Company had $338.2 million of notional value pay fixed / receive variable interest rate swaps in place to hedge public finance loans, representing 55.4% of total public finance loan balances outstanding. Additionally, the Company had $88.2 million of notional value pay fixed / receive variable interest rate swaps in place to hedge fixed rate investment securities, resulting in $426.4 million of notional value interest rate swaps in place at the end of the third quarter of 2018 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.

The Company also maintained its liability hedging strategy using pay fixed / receive variable interest rate swaps, extending the duration of certain funding sources to lessen the impact of future short term interest and deposit rate increases. Short term FHLB advances and brokered variable rate money market deposits were previously converted to longer term fixed rates using interest rate swaps with a total notional value of $130.0 million, of which $60.0 million were forward starting swaps that became effective on October 1, 2018. Similar to the asset hedging strategy, these swaps are intended to improve asset sensitivity and reduce long term interest rate risk.

Capital
As of September 30, 2018, total shareholders’ equity was $287.7 million, increasing $5.7 million, or 2.0%, compared to June 30, 2018 primarily due to the net income earned during the quarter. Tangible book value per share increased to $27.80 as of September 30, 2018 from $27.25 as of June 30, 2018 and $25.70 as of September 30, 2017.

The following table presents the Company’s and the Banks’s regulatory and other capital ratios as of September 30, 2018.
 
 
As of September 30, 2018
 
 
Company
 
Bank
 
 
 
 
 
Total shareholders’ equity to assets 1
 
8.98%
 
8.02%
Tangible common equity to tangible assets 1
 
8.85%
 
7.88%
Tier 1 leverage ratio 2
 
9.40%
 
8.42%
Common equity tier 1 capital ratio 2
 
13.14%
 
11.78%
Tier 1 capital ratio 2
 
13.14%
 
11.78%
Total risk-based capital ratio 2
 
15.38%
 
12.52%
 
 
 
 
 
1 This information represents a non-GAAP financial measure. For a discussion of non-GAAP financial measures, see the section below entitled "Non-GAAP Financial Measures."
2 Regulatory capital ratios are preliminary pending filing of the Company's and the Bank's regulatory reports.



Conference Call and Webcast
The Company will host a conference call and webcast at 12:00 p.m. Eastern Time on Thursday, October 25, 2018 to discuss its quarterly financial results. The call can be accessed via telephone at (888) 317-6016. A recorded replay can be accessed through November 25, 2018 by dialing (877) 344-7529; passcode: 10125208.
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 $3.2 billion as of September 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
 
Nine Months Ended
 
 
September 30,
2018
 
June 30,
2018
 
September 30,
2017
 
September 30,
2018
 
September 30,
2017
Net income
 
$
6,288

 
$
6,008

 
$
4,895

 
$
18,324

 
$
11,728

 
 
 
 
 
 
 
 
 
 
 
Per share and share information
 
 
 
 
 
 
 
 
 
 
Earnings per share - basic
 
$
0.61

 
$
0.67

 
$
0.72

 
$
1.99

 
$
1.76

Earnings per share - diluted
 
0.61

 
0.67

 
0.71

 
1.98

 
1.75

Dividends declared per share
 
0.06

 
0.06

 
0.06

 
0.18

 
0.18

Book value per common share
 
28.26

 
27.71

 
26.26

 
28.26

 
26.26

Tangible book value per common share
 
27.80

 
27.25

 
25.70

 
27.80

 
25.70

Common shares outstanding
 
10,181,675

 
10,181,675

 
8,411,077

 
10,181,675

 
8,411,077

Average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
10,261,967

 
8,909,913

 
6,834,011

 
9,230,149

 
6,656,160

Diluted
 
10,273,766

 
8,919,460

 
6,854,614

 
9,250,839

 
6,683,379

Performance ratios
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
0.79
%
 
0.82
%
 
0.78
%
 
0.83
%
 
0.71
%
Return on average shareholders' equity
 
8.75
%
 
10.11
%
 
11.20
%
 
9.83
%
 
9.61
%
Return on average tangible common equity
 
8.89
%
 
10.31
%
 
11.51
%
 
10.02
%
 
9.89
%
Net interest margin
 
2.06
%
 
2.17
%
 
2.31
%
 
2.16
%
 
2.41
%
Net interest margin - FTE 1
 
2.23
%
 
2.33
%
 
2.52
%
 
2.32
%
 
2.57
%
Capital ratios 2
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity to assets
 
8.98
%
 
9.05
%
 
8.39
%
 
8.98
%
 
8.39
%
Tangible common equity to tangible assets
 
8.85
%
 
8.92
%
 
8.22
%
 
8.85
%
 
8.22
%
Tier 1 leverage ratio
 
9.40
%
 
9.93
%
 
8.86
%
 
9.40
%
 
8.86
%
Common equity tier 1 capital ratio
 
13.14
%
 
13.54
%
 
11.93
%
 
13.14
%
 
11.93
%
Tier 1 capital ratio
 
13.14
%
 
13.54
%
 
11.93
%
 
13.14
%
 
11.93
%
Total risk-based capital ratio
 
15.38
%
 
15.85
%
 
14.67
%
 
15.38
%
 
14.67
%
Asset quality
 
 
 
 
 
 
 
 
 
 
Nonperforming loans
 
$
256

 
$
285

 
$
2,662

 
$
256

 
$
2,662

Nonperforming assets
 
5,304

 
5,335

 
7,855

 
5,304

 
7,855

Nonperforming loans to loans
 
0.01
%
 
0.01
%
 
0.14
%
 
0.01
%
 
0.14
%
Nonperforming assets to total assets
 
0.17
%
 
0.17
%
 
0.30
%
 
0.17
%
 
0.30
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
 
Loans
 
0.67
%
 
0.68
%
 
0.75
%
 
0.67
%
 
0.75
%
Nonperforming loans
 
6,525.0
%
 
5,632.6
%
 
529.2
%
 
6,525.0
%
 
529.2
%
Net charge-offs to average loans
 
0.04
%
 
0.03
%
 
0.10
%
 
0.04
%
 
0.05
%
Average balance sheet information
 
 
 
 
 
 
 
 
 
 
Loans
 
$
2,440,982

 
$
2,278,415

 
$
1,795,118

 
$
2,292,472

 
$
1,557,620

Total securities
 
483,900

 
480,713

 
507,873

 
483,257

 
494,632

Other earning assets
 
131,306

 
79,346

 
108,547

 
105,210

 
74,208

Total interest-earning assets
 
3,077,415

 
2,856,029

 
2,434,799

 
2,899,841

 
2,146,366

Total assets
 
3,148,230

 
2,921,540

 
2,492,751

 
2,965,709

 
2,199,864

Noninterest-bearing deposits
 
44,921

 
44,524

 
35,094

 
44,477

 
33,164

Interest-bearing deposits
 
2,368,472

 
2,137,045

 
1,839,943

 
2,204,501

 
1,629,421

Total deposits
 
2,413,393

 
2,181,569

 
1,875,037

 
2,248,978

 
1,662,585

Shareholders' equity
 
285,207

 
238,465

 
173,459

 
249,162

 
163,230


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
 
 
 
 
 
 
 
 
September 30,
2018
 
June 30,
2018
 
September 30,
2017
Assets
 
 
 
 
 
 
Cash and due from banks
 
$
3,517

 
$
3,694

 
$
4,509

Interest-bearing deposits
 
82,273

 
138,666

 
121,195

Securities available-for-sale, at fair value
 
468,997

 
460,822

 
492,468

Securities held-to-maturity, at amortized cost
 
20,200

 
19,203

 
19,212

Loans held-for-sale
 
23,493

 
20,672

 
45,487

Loans
 
2,493,622

 
2,374,035

 
1,868,487

Allowance for loan losses
 
(16,704
)
 
(16,053
)
 
(14,087
)
Net loans
 
2,476,918

 
2,357,982

 
1,854,400

Accrued interest receivable
 
14,472

 
14,540

 
9,366

Federal Home Loan Bank of Indianapolis stock
 
22,050

 
22,050

 
19,575

Cash surrender value of bank-owned life insurance
 
35,819

 
35,579

 
34,856

Premises and equipment, net
 
20,207

 
10,169

 
9,739

Goodwill
 
4,687

 
4,687

 
4,687

Other real estate owned
 
5,041

 
5,041

 
5,136

Accrued income and other assets
 
25,244

 
22,668

 
12,792

Total assets
 
$
3,202,918

 
$
3,115,773

 
$
2,633,422

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
42,750

 
$
44,671

 
$
33,734

Interest-bearing deposits
 
2,403,814

 
2,349,613

 
1,963,294

Total deposits
 
2,446,564

 
2,394,284

 
1,997,028

Advances from Federal Home Loan Bank
 
425,160

 
390,167

 
365,180

Subordinated debt
 
33,837

 
33,800

 
36,689

Accrued interest payable
 
887

 
435

 
237

Accrued expenses and other liabilities
 
8,730

 
15,000

 
13,421

Total liabilities
 
2,915,178

 
2,833,686

 
2,412,555

Shareholders' equity
 
 
 
 
 
 
Voting common stock
 
227,454

 
227,099

 
171,783

Retained earnings
 
74,733

 
69,066

 
54,119

Accumulated other comprehensive loss
 
(14,447
)
 
(14,078
)
 
(5,035
)
Total shareholders' equity
 
287,740

 
282,087

 
220,867

Total liabilities and shareholders' equity
 
$
3,202,918

 
$
3,115,773

 
$
2,633,422




First Internet Bancorp
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Income (unaudited)
Amounts in thousands, except per share data
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
2018
 
June 30,
2018
 
September 30,
2017
 
September 30,
2018
 
September 30,
2017
Interest income
 
 
 
 
 
 
 
 
 
Loans
$
26,019

 
$
23,699

 
$
18,922

 
$
71,833

 
$
49,494

Securities - taxable
2,659

 
2,556

 
2,582

 
7,703

 
7,515

Securities - non-taxable
698

 
700

 
697

 
2,109

 
2,090

Other earning assets
847

 
461

 
493

 
1,973

 
960

Total interest income
30,223

 
27,416

 
22,694

 
83,618

 
60,059

Interest expense
 
 
 
 
 
 
 
 
 
Deposits
11,650

 
9,226

 
6,594

 
29,146

 
16,617

Other borrowed funds
2,603

 
2,729

 
1,909

 
7,626

 
4,820

Total interest expense
14,253

 
11,955

 
8,503

 
36,772

 
21,437

Net interest income
15,970

 
15,461

 
14,191

 
46,846

 
38,622

Provision for loan losses
888

 
667

 
1,336

 
2,405

 
3,693

Net interest income after provision
for loan losses
15,082

 
14,794

 
12,855

 
44,441

 
34,929

Noninterest income
 
 
 
 
 
 
 
 
 
Service charges and fees
236

 
231

 
226

 
697

 
657

Mortgage banking activities
1,402

 
1,597

 
2,535

 
4,577

 
6,306

Gain on sale of loans

 

 

 
414

 

Other
356

 
349

 
374

 
1,025

 
1,039

Total noninterest income
1,994

 
2,177

 
3,135

 
6,713

 
8,002

Noninterest expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
5,704

 
5,827

 
5,197

 
17,436

 
15,463

Marketing, advertising and promotion
601

 
608

 
741

 
1,925

 
1,803

Consulting and professional fees
709

 
633

 
897

 
2,193

 
2,474

Data processing
368

 
282

 
247

 
913

 
729

Loan expenses
241

 
260

 
262

 
738

 
724

Premises and equipment
1,244

 
1,231

 
1,080

 
3,689

 
3,058

Deposit insurance premium
441

 
480

 
375

 
1,386

 
990

Other
737

 
861

 
602

 
2,164

 
1,781

Total noninterest expense
10,045

 
10,182

 
9,401

 
30,444

 
27,022

Income before income taxes
7,031

 
6,789

 
6,589

 
20,710

 
15,909

Income tax provision
743

 
781

 
1,694

 
2,386

 
4,181

Net income
$
6,288

 
$
6,008

 
$
4,895

 
$
18,324

 
$
11,728

 
 
 
 
 
 
 
 
 
 
Per common share data
 
 
 
 
 
 
 
 
 
Earnings per share - basic
$
0.61

 
$
0.67

 
$
0.72

 
$
1.99

 
$
1.76

Earnings per share - diluted
$
0.61

 
$
0.67

 
$
0.71

 
$
1.98

 
$
1.75

Dividends declared per share
$
0.06

 
$
0.06

 
$
0.06

 
$
0.18

 
$
0.18


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



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

September 30, 2018
 
June 30, 2018
 
September 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
$
2,462,209

 
$
26,019

 
4.19
%
 
$
2,295,970

 
$
23,699

 
4.14
%
 
$
1,818,379

 
$
18,922

 
4.13
%
Securities - taxable
389,880

 
2,659

 
2.71
%
 
386,207

 
2,556

 
2.65
%
 
410,630

 
2,582

 
2.49
%
Securities - non-taxable
94,020

 
698

 
2.95
%
 
94,506

 
700

 
2.97
%
 
97,243

 
697

 
2.84
%
Other earning assets
131,306

 
847

 
2.56
%
 
79,346

 
461

 
2.33
%
 
108,547

 
493

 
1.80
%
Total interest-earning assets
3,077,415

 
30,223

 
3.90
%
 
2,856,029

 
27,416

 
3.85
%
 
2,434,799

 
22,694

 
3.70
%
Allowance for loan losses
(16,312
)
 
 
 
 
 
(15,782
)
 
 
 
 
 
(13,657
)
 
 
 
 
Noninterest-earning assets
87,127

 
 
 
 
 
81,293

 
 
 
 
 
71,609

 
 
 
 
Total assets
$
3,148,230

 
 
 
 
 
$
2,921,540

 
 
 
 
 
$
2,492,751

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
87,102

 
$
133

 
0.61
%
 
$
93,599

 
$
145

 
0.62
%
 
$
88,633

 
$
122

 
0.55
%
Savings accounts
51,557

 
147

 
1.13
%
 
55,273

 
158

 
1.15
%
 
42,308

 
97

 
0.91
%
Money market accounts
527,715

 
2,206

 
1.66
%
 
571,398

 
2,130

 
1.50
%
 
440,293

 
1,187

 
1.07
%
Certificates and brokered deposits
1,702,098

 
9,164

 
2.14
%
 
1,416,775

 
6,793

 
1.92
%
 
1,268,709

 
5,188

 
1.62
%
Total interest-bearing deposits
2,368,472

 
11,650

 
1.95
%
 
2,137,045

 
9,226

 
1.73
%
 
1,839,943

 
6,594

 
1.42
%
Other borrowed funds
439,412

 
2,603

 
2.35
%
 
492,068

 
2,729

 
2.22
%
 
431,738

 
1,909

 
1.75
%
Total interest-bearing liabilities
2,807,884

 
14,253

 
2.01
%
 
2,629,113

 
11,955

 
1.82
%
 
2,271,681

 
8,503

 
1.49
%
Noninterest-bearing deposits
44,921

 
 
 
 
 
44,524

 
 
 
 
 
35,094

 
 
 
 
Other noninterest-bearing liabilities
10,218

 
 
 
 
 
9,438

 
 
 
 
 
12,517

 
 
 
 
Total liabilities
2,863,023

 
 
 
 
 
2,683,075

 
 
 
 
 
2,319,292

 
 
 
 
Shareholders' equity
285,207

 
 
 
 
 
238,465

 
 
 
 
 
173,459

 
 
 
 
Total liabilities and shareholders' equity
$
3,148,230

 
 
 
 
 
$
2,921,540

 
 
 
 
 
$
2,492,751

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
15,970

 
 
 
 
 
$
15,461

 
 
 
 
 
$
14,191

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
 
1.89
%
 
 
 
 
 
2.03
%
 
 
 
 
 
2.21
%
Net interest margin
 
 
 
 
2.06
%
 
 
 
 
 
2.17
%
 
 
 
 
 
2.31
%
Net interest margin - FTE 2
 
 
 
 
2.23
%
 
 
 
 
 
2.33
%
 
 
 
 
 
2.52
%

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
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
September 30, 2018
 
September 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
$
2,311,374

 
$
71,833

 
4.16
%
 
$
1,577,526

 
$
49,494

 
4.19
%
Securities - taxable
388,513

 
7,703

 
2.65
%
 
399,284

 
7,515

 
2.52
%
Securities - non-taxable
94,744

 
2,109

 
2.98
%
 
95,348

 
2,090

 
2.93
%
Other earning assets
105,210

 
1,973

 
2.51
%
 
74,208

 
960

 
1.73
%
Total interest-earning assets
2,899,841

 
83,618

 
3.86
%
 
2,146,366

 
60,059

 
3.74
%
Allowance for loan losses
(15,770
)
 
 
 
 
 
(12,451
)
 
 
 
 
Noninterest-earning assets
81,638

 
 
 
 
 
65,949

 
 
 
 
Total assets
$
2,965,709

 
 
 
 
 
$
2,199,864

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
90,564

 
$
401

 
0.59
%
 
$
89,869

 
$
368

 
0.55
%
Savings accounts
54,245

 
462

 
1.14
%
 
35,113

 
210

 
0.80
%
Money market accounts
553,692

 
6,228

 
1.50
%
 
394,581

 
2,799

 
0.95
%
Certificates and brokered deposits
1,506,000

 
22,055

 
1.96
%
 
1,109,858

 
13,240

 
1.59
%
Total interest-bearing deposits
2,204,501

 
29,146

 
1.77
%
 
1,629,421

 
16,617

 
1.36
%
Other borrowed funds
457,807

 
7,626

 
2.23
%
 
364,738

 
4,820

 
1.77
%
Total interest-bearing liabilities
2,662,308

 
36,772

 
1.85
%
 
1,994,159

 
21,437

 
1.44
%
Noninterest-bearing deposits
44,477

 
 
 
 
 
33,164

 
 
 
 
Other noninterest-bearing liabilities
9,762

 
 
 
 
 
9,311

 
 
 
 
Total liabilities
2,716,547

 
 
 
 
 
2,036,634

 
 
 
 
Shareholders' equity
249,162

 
 
 
 
 
163,230

 
 
 
 
Total liabilities and shareholders' equity
$
2,965,709

 
 
 
 
 
$
2,199,864

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
46,846

 
 
 
 
 
$
38,622

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
 
2.01
%
 
 
 
 
 
2.30
%
Net interest margin
 
 
 
 
2.16
%
 
 
 
 
 
2.41
%
Net interest margin - FTE 2
 
 
 
 
2.32
%
 
 
 
 
 
2.57
%

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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2018
 
June 30, 2018
 
September 30, 2017
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
Commercial loans
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
105,489

 
4.2
%
 
$
107,394

 
4.5
%
 
$
122,587

 
6.5
%
Owner-occupied commercial real estate
 
93,568

 
3.8
%
 
86,068

 
3.6
%
 
75,986

 
4.1
%
Investor commercial real estate
 
5,595

 
0.2
%
 
6,185

 
0.3
%
 
7,430

 
0.4
%
Construction
 
38,228

 
1.5
%
 
46,769

 
2.0
%
 
50,367

 
2.7
%
Single tenant lease financing
 
883,372

 
35.4
%
 
863,981

 
36.4
%
 
783,918

 
41.9
%
Public finance
 
610,858

 
24.5
%
 
566,184

 
23.8
%
 
269,347

 
14.4
%
Healthcare finance
 
89,525

 
3.7
%
 
65,605

 
2.8
%
 
12,363

 
0.7
%
Total commercial loans
 
1,826,635

 
73.3
%
 
1,742,186

 
73.4
%
 
1,321,998

 
70.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer loans
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
 
362,574

 
14.5
%
 
337,143

 
14.2
%
 
291,382

 
15.6
%
Home equity
 
28,713

 
1.2
%
 
28,826

 
1.2
%
 
31,236

 
1.7
%
Trailers
 
129,571

 
5.2
%
 
120,957

 
5.1
%
 
97,811

 
5.2
%
Recreational vehicles
 
85,821

 
3.4
%
 
79,946

 
3.4
%
 
66,619

 
3.6
%
Other consumer loans
 
55,175

 
2.2
%
 
59,261

 
2.5
%
 
56,490

 
3.0
%
Total consumer loans
 
661,854

 
26.5
%
 
626,133

 
26.4
%
 
543,538

 
29.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net deferred loan fees, premiums and discounts
 
5,133

 
0.2
%
 
5,716

 
0.2
%
 
2,951

 
0.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
 
$
2,493,622

 
100.0
%
 
$
2,374,035

 
100.0
%
 
$
1,868,487

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2018
 
June 30, 2018
 
September 30, 2017
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
Deposits
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
42,750

 
1.7
%
 
$
44,671

 
1.9
%
 
$
33,734

 
1.7
%
Interest-bearing demand deposits
 
94,681

 
3.9
%
 
91,748

 
3.8
%
 
89,748

 
4.5
%
Savings accounts
 
47,033

 
1.9
%
 
48,897

 
2.1
%
 
49,913

 
2.5
%
Money market accounts
 
478,548

 
19.6
%
 
582,565

 
24.3
%
 
499,160

 
25.0
%
Certificates of deposits
 
1,252,690

 
51.2
%
 
1,231,438

 
51.4
%
 
1,300,952

 
65.1
%
Brokered deposits 1
 
530,862

 
21.7
%
 
394,965

 
16.5
%
 
23,521

 
1.2
%
Total deposits
 
$
2,446,564

 
100.0
%
 
$
2,394,284

 
100.0
%
 
$
1,997,028

 
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
 
Nine Months Ended
 
 
September 30,
2018
 
June 30,
2018
 
September 30,
2017
 
September 30,
2018
 
September 30,
2017
Total equity - GAAP
 
$
287,740

 
$
282,087

 
$
220,867

 
$
287,740

 
$
220,867

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Tangible common equity
 
$
283,053

 
$
277,400

 
$
216,180

 
$
283,053

 
$
216,180

 
 
 
 
 
 
 
 
 
 
 
Total assets - GAAP
 
$
3,202,918

 
$
3,115,773

 
$
2,633,422

 
$
3,202,918

 
$
2,633,422

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Tangible assets
 
$
3,198,231

 
$
3,111,086

 
$
2,628,735

 
$
3,198,231

 
$
2,628,735

 
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
 
10,181,675

 
10,181,675

 
8,411,077

 
10,181,675

 
8,411,077

 
 
 
 
 
 
 
 
 
 
 
Book value per common share
 
$
28.26

 
$
27.71

 
$
26.26

 
$
28.26

 
$
26.26

Effect of goodwill
 
(0.46
)
 
(0.46
)
 
(0.56
)
 
(0.46
)
 
(0.56
)
Tangible book value per common share
 
$
27.80

 
$
27.25

 
$
25.70

 
$
27.80

 
$
25.70

 
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity to assets ratio
 
8.98
 %
 
9.05
 %
 
8.39
 %
 
8.98
 %
 
8.39
 %
Effect of goodwill
 
(0.13
%)
 
(0.13
%)
 
(0.17
%)
 
(0.13
)%
 
(0.17
)%
Tangible common equity to tangible assets ratio
 
8.85
 %
 
8.92
 %
 
8.22
 %
 
8.85
 %
 
8.22
 %
 
 
 
 
 
 
 
 
 
 
 
Total average equity - GAAP
 
$
285,207

 
$
238,465

 
$
173,459

 
$
249,162

 
$
163,230

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Average goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Average tangible common equity
 
$
280,520

 
$
233,778

 
$
168,772

 
$
244,475

 
$
158,543

 
 
 
 
 
 
 
 
 
 
 
Return on average shareholders' equity
 
8.75
 %
 
10.11
 %
 
11.20
 %
 
9.83
 %
 
9.61
 %
Effect of goodwill
 
0.14
 %
 
0.20
 %
 
0.31
 %
 
0.19
 %
 
0.28
 %
Return on average tangible common equity
 
8.89
 %
 
10.31
 %
 
11.51
 %
 
10.02
 %
 
9.89
 %