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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): January 23, 2019
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 January 23, 2019, First Internet Bancorp issued a press release announcing financial results for the quarter and year ended December 31, 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:
January 23, 2019
 
 
 
 
 
 
 
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
396457724_fibancorplogoa27.jpg

First Internet Bancorp Reports Fourth Quarter and Full Year 2018 Results

Highlights for the fourth quarter include:

Net income of $3.6 million, including a $2.4 million pre-tax write-down of legacy OREO, compared to $3.5 million in the fourth quarter of 2017

Diluted earnings per share of $0.35, or adjusted diluted earnings per share of $0.53 excluding the OREO write-down

Total loans increased $625 million from December 31, 2017, or 29.9%, and $223 million from September 30, 2018, or 8.9%

Fishers, Indiana, January 23, 2019 - 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, 2018. Net income for the fourth quarter of 2018 was $3.6 million, or $0.35 diluted earnings per share. This compares to net income of $6.3 million, or $0.61 diluted earnings per share, for the third quarter of 2018, and net income of $3.5 million, or $0.41 diluted earnings per share, for the fourth quarter of 2017.

The fourth quarter’s results included a $2.4 million pre-tax write-down of commercial other real estate owned (“OREO”). Excluding this charge, adjusted net income for the quarter was $5.5 million and adjusted diluted earnings per share was $0.53.

For the twelve month period ended December 31, 2018, net income was a record $21.9 million and diluted earnings per share were $2.30 compared to net income of $15.2 million and diluted earnings per share of $2.13 for the twelve month period ended December 31, 2017.

“First Internet Bancorp had another successful year during 2018 as we reported record annual net income, driven by full year loan growth of 30%, excellent credit quality and well-managed expenses,” said David Becker, Chairman, President and Chief Executive Officer. “We generated strong growth in both commercial and consumer loans, particularly in a number of our specialty lending areas, including single tenant lease financing, public finance, healthcare finance and horse trailer and recreational vehicle lending.

“Looking to 2019, we continue to see opportunities to expand our market share across our collection of specialty lending franchises, as well as adding new areas of lending to further diversify and improve our revenue mix. We continue to take a disciplined approach to capital deployment and will actively manage the balance sheet to drive profitable growth,” Becker added. “As always, I would like to thank the entire First Internet team who worked very hard to deliver these record 2018 results. Their dedication and efforts will continue to be the key to our ongoing growth and success.”

Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2018 was $15.4 million, compared to $16.0 million for the third quarter of 2018. On a fully-taxable equivalent basis, net interest income for the fourth quarter was $16.9 million, compared to $17.3 million for the third quarter. Net interest income was flat on a reported and fully-taxable equivalent basis, when compared to the fourth quarter of 2017.




Total interest income for the fourth quarter of 2018 was $31.8 million, an increase of 5.4%, compared to the third quarter of 2018, and an increase of 29.3% compared to the fourth quarter of 2017. On a fully-taxable equivalent basis, total interest income for the fourth quarter was $33.3 million, an increase of 5.5% compared to the third quarter, and an increase of 27.2% compared to the fourth quarter of 2017. The increase in total interest income compared to the third quarter of 2018 was driven primarily by a $158.7 million, or 5.2%, increase in average interest-earning assets. Compared to the linked quarter, the yield on interest-earning assets for the fourth quarter was flat at 3.90% as increases in the yields earned on securities and other earning assets were offset by a decline in the yield earned on the loan portfolio, including loans held for sale. The decline in the yield earned on the loan portfolio was due primarily to significantly lower prepayment fees.

Total interest expense for the fourth quarter of 2018 was $16.4 million, an increase of 15.3%, compared to the third quarter of 2018, and an increase of 77.1% compared to the fourth quarter of 2017. The increase in total interest expense compared to the third quarter of 2018 was driven primarily by a $104.0 million increase in average interest-bearing deposit balances, combined with the effect of a 19 basis point increase in the cost of funds related to those deposits. Deposit costs were impacted during the quarter by the continued rise in short term interest rates as well as the use of longer duration structures to mitigate long term interest rate risk. In addition, the average balance of Federal Home Loan Bank advances increased by $60.4 million and the interest rate on those advances increased by 16 basis points compared to the third quarter of 2018.

Net interest margin (“NIM”) was 1.89% for the fourth quarter of 2018, compared to 2.06% for the third quarter of 2018 and 2.35% for the fourth quarter of 2017. On a fully-taxable equivalent basis, NIM decreased 16 basis points to 2.07% for the fourth quarter of 2018, from 2.23% for the third quarter of 2018, and was down from 2.59% for the fourth quarter of 2017. Compared to the linked quarter, the decline in NIM was due primarily to the higher cost of funds during the quarter and the decline in loan prepayment fees.

Noninterest Income
Noninterest income for the fourth quarter of 2018 was $2.0 million which was essentially flat when compared to the third quarter of 2018, and down from $2.5 million for the fourth quarter of 2017. During the fourth quarter, the Company had seasonally lower revenue from mortgage banking activities as mandatory pipeline volumes were down compared to the third quarter of 2018, which was offset by increases in gain on sale of loans and other noninterest income. The increase in gain on sale of loans was due to the Company selling $15.4 million of seasoned single tenant lease financing loans at a slight premium to par.

Noninterest Expense
Noninterest expense for the fourth quarter of 2018 was $12.7 million, compared to $10.0 million for the third quarter of 2018 and $9.7 million for the fourth quarter of 2017. The increase from the third quarter was due primarily to a $2.4 million write-down of two commercial OREO properties. The revaluation of the OREO was driven by deteriorating conditions in the market where the properties are located and the commencement of a marketing strategy to move the properties off the Company’s balance sheet.

Income Taxes
The Company reported an income tax benefit of $0.3 million for the fourth quarter of 2018, compared to income tax expense of $0.7 million and an effective tax rate of 10.6% for the third quarter of 2018 and $3.5 million and an effective tax rate of 50.2% for the fourth quarter of 2017. The income tax benefit reported in the fourth quarter of 2018 is primarily related to the write-down of the OREO properties. When excluding the income tax benefit related to the OREO write-down, the Company’s adjusted effective income tax rate was 3.1%, reflecting the continued growth in the public finance portfolio and the proportion of tax-exempt income relative to overall total pre-tax income.





Loans and Credit Quality
Total loans as of December 31, 2018 were $2.7 billion, an increase of $222.6 million, or 8.9%, compared to September 30, 2018 and $625.0 million, or 29.9%, compared to December 31, 2017. Total commercial loan balances were $2.0 billion as of December 31, 2018, an increase of $163.8 million, or 9.0%, compared to September 30, 2018 and $462.0 million, or 30.2%, compared to December 31, 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 $708.4 million as of December 31, 2018, an increase of $46.6 million, or 7.0%, compared to September 30, 2018 and $150.4 million, or 26.9%, compared to December 31, 2017. The growth in consumer loan balances was driven primarily by increased draw-downs on residential construction loans and production in portfolio residential mortgages, horse trailers and recreational vehicles.

Total delinquencies 30 days or more past due increased to 0.15% of total loans as of December 31, 2018, up from 0.02% as of September 30, 2018 and 0.05% as of December 31, 2017. The increase in delinquencies was due primarily to one seasoned residential mortgage loan with an unpaid principal balance of $3.1 million and a collateral value of $5.3 million based on a recent appraisal. Overall credit quality remained solid as nonperforming loans to total loans remained low at 0.03% as of December 31, 2018, compared to 0.01% at September 30, 2018 and down from 0.04% as of December 31, 2017.

The allowance for loan losses as a percentage of total loans was 0.66% as of December 31, 2018, compared to 0.67% as of September 30, 2018 and 0.72% as of December 31, 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 generally have lower loss reserve factors than other loan types.

Net charge-offs of $0.3 million were recognized during the fourth quarter of 2018, resulting in net charge-offs to average loans of 0.05%, compared to 0.04% for the third quarter and 0.06% for the fourth quarter of 2017. The provision for loan losses in the fourth quarter was $1.5 million, compared to $0.9 million for the third quarter and $1.2 million for the fourth quarter of 2017. The increase in the provision for loan losses compared to the third quarter of 2018 was driven primarily by the loan growth discussed above.

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 December 31, 2018, the Company had a total notional value of $435.9 million of pay fixed / receive variable interest rate swaps in place to hedge public finance loans, representing 61.7% of the total public finance loan balances outstanding. Including $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 $524.1 million in place at the end of the fourth 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 short term FHLB advances and brokered variable rate money market deposits to lessen the impact of future short term interest rate increases on deposit pricing. As of December 31, 2018, the Company had $210.0 million of notional value interest rate swaps related to these funding sources. Similar to the asset hedging strategy, these swaps are intended to improve asset sensitivity and reduce long term interest rate risk.




Capital
As of December 31, 2018, total shareholders’ equity was $288.7 million, increasing $1.0 million, or 0.3%, compared to September 30, 2018, primarily due to the net income earned during the quarter. Tangible book value per share increased to $27.93 as of December 31, 2018, from $27.80 as of September 30, 2018 and $26.09 as of December 31, 2017.

In connection with the announced stock repurchase program, the Company repurchased 10,897 shares during the fourth quarter at an average price of $19.83 per share. Subsequent to quarter-end, the Company repurchased an additional 17,101 shares at an average price of $23.07.

The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of December 31, 2018.
 
 
As of December 31, 2018
 
 
Company
 
Bank
 
 
 
 
 
Total shareholders' equity to assets
 
8.15%
 
7.75%
Tangible common equity to tangible assets 1
 
8.03%
 
7.63%
Tier 1 leverage ratio 2
 
9.00%
 
8.57%
Common equity tier 1 capital ratio 2
 
12.39%
 
11.81%
Tier 1 capital ratio 2
 
12.39%
 
11.81%
Total risk-based capital ratio 2
 
14.53%
 
12.55%
 
 
 
 
 
1 This information represents a non-GAAP financial measure. For a discussion of non-GAAP financial measures, see the section below entitled "Non-GAAP Financial Measures."
2 Regulatory capital ratios are preliminary pending filing of the Company's and the Bank's regulatory reports.

Conference Call and Webcast
The Company will host a conference call and webcast at 12:00 p.m. Eastern Time on Thursday, January 24, 2019 to discuss its quarterly financial results. The call can be accessed via telephone at (888) 317-6016. A recorded replay can be accessed through February 24, 2019 by dialing (877) 344-7529; passcode: 10127579.
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 $3.5 billion as of December 31, 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, net interest margin - FTE, adjusted income before income taxes, adjusted income tax provision, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity, adjusted return on average tangible common equity and adjusted effective income tax rate are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the table at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”


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
 
Twelve Months Ended
 
 
December 31,
2018
 
September 30,
2018
 
December 31,
2017
 
December 31,
2018
 
December 31,
2017
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
3,576

 
$
6,288

 
$
3,498

 
$
21,900

 
$
15,226

 
 
 
 
 
 
 
 
 
 
 
Per share and share information
 
 
 
 
 
 
 
 
 
 
Earnings per share - basic
 
$
0.35

 
$
0.61

 
$
0.41

 
$
2.31

 
$
2.14

Earnings per share - diluted
 
0.35

 
0.61

 
0.41

 
2.30

 
2.13

Dividends declared per share
 
0.06

 
0.06

 
0.06

 
0.24

 
0.24

Book value per common share
 
28.39

 
28.26

 
26.65

 
28.39

 
26.65

Tangible book value per common share
 
27.93

 
27.80

 
26.09

 
27.93

 
26.09

Common shares outstanding
 
10,170,778

 
10,181,675

 
8,411,077

 
10,170,778

 
8,411,077

Average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
10,263,086

 
10,261,967

 
8,490,951

 
9,490,506

 
7,118,628

Diluted
 
10,275,040

 
10,273,766

 
8,527,599

 
9,508,653

 
7,149,302

Performance ratios
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
0.43
%
 
0.79
%
 
0.52
%
 
0.72
%
 
0.66
%
Return on average shareholders' equity
 
4.89
%
 
8.75
%
 
6.23
%
 
8.44
%
 
8.54
%
Return on average tangible common equity
 
4.98
%
 
8.89
%
 
6.37
%
 
8.60
%
 
8.77
%
Net interest margin
 
1.89
%
 
2.06
%
 
2.35
%
 
2.09
%
 
2.39
%
Net interest margin - FTE 1
 
2.07
%
 
2.23
%
 
2.59
%
 
2.25
%
 
2.57
%
Capital ratios  2
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity to assets
 
8.15
%
 
8.98
%
 
8.10
%
 
8.15
%
 
8.10
%
Tangible common equity to tangible assets
 
8.03
%
 
8.85
%
 
7.94
%
 
8.03
%
 
7.94
%
Tier 1 leverage ratio
 
9.00
%
 
9.40
%
 
8.45
%
 
9.00
%
 
8.45
%
Common equity tier 1 capital ratio
 
12.39
%
 
13.14
%
 
11.43
%
 
12.39
%
 
11.43
%
Tier 1 capital ratio
 
12.39
%
 
13.14
%
 
11.43
%
 
12.39
%
 
11.43
%
Total risk-based capital ratio
 
14.53
%
 
15.38
%
 
14.07
%
 
14.53
%
 
14.07
%
Asset quality
 
 
 
 
 
 
 
 
 
 
Nonperforming loans
 
$
889

 
$
256

 
$
839

 
$
889

 
$
839

Nonperforming assets
 
3,508

 
5,304

 
5,892

 
3,508

 
5,892

Nonperforming loans to loans
 
0.03
%
 
0.01
%
 
0.04
%
 
0.03
%
 
0.04
%
Nonperforming assets to total assets
 
0.10
%
 
0.17
%
 
0.21
%
 
0.10
%
 
0.21
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
 
Loans
 
0.66
%
 
0.67
%
 
0.72
%
 
0.66
%
 
0.72
%
Nonperforming loans
 
2,013.1
%
 
6,525.0
%
 
1,784.3
%
 
2,013.1
%
 
1,784.3
%
Net charge-offs to average loans
 
0.05
%
 
0.04
%
 
0.06
%
 
0.04
%
 
0.05
%
Average balance sheet information
 
 
 
 
 
 
 
 
 
 
Loans
 
$
2,577,584

 
$
2,440,982

 
$
1,970,994

 
$
2,364,336

 
$
1,661,813

Total securities
 
494,256

 
483,900

 
500,627

 
486,030

 
496,143

Other earning assets
 
148,311

 
131,306

 
95,049

 
116,074

 
79,461

Total interest-earning assets
 
3,236,144

 
3,077,415

 
2,588,677

 
2,984,608

 
2,257,853

Total assets
 
3,320,850

 
3,148,230

 
2,650,583

 
3,055,224

 
2,313,469

Noninterest-bearing deposits
 
48,779

 
44,921

 
40,618

 
45,562

 
35,043

Interest-bearing deposits
 
2,472,443

 
2,368,472

 
1,963,405

 
2,272,037

 
1,713,603

Total deposits
 
2,521,222

 
2,413,393

 
2,004,023

 
2,317,599

 
1,748,646

Shareholders' equity
 
289,844

 
285,207

 
222,670

 
259,416

 
178,212


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, except for December 31, 2017)
 
 
Amounts in thousands
 
 
 
 
 
 
 
 
December 31,
2018
 
September 30,
2018
 
December 31,
2017
Assets
 
 
 
 
 
 
Cash and due from banks
 
$
7,080

 
$
3,517

 
$
4,539

Interest-bearing deposits
 
181,632

 
82,273

 
43,442

Securities available-for-sale, at fair value
 
481,345

 
468,997

 
473,275

Securities held-to-maturity, at amortized cost
 
22,750

 
20,200

 
19,209

Loans held-for-sale
 
18,328

 
23,493

 
51,407

Loans
 
2,716,228

 
2,493,622

 
2,091,193

Allowance for loan losses
 
(17,896
)
 
(16,704
)
 
(14,970
)
Net loans
 
2,698,332

 
2,476,918

 
2,076,223

Accrued interest receivable
 
16,822

 
14,472

 
11,944

Federal Home Loan Bank of Indianapolis stock
 
23,625

 
22,050

 
19,575

Cash surrender value of bank-owned life insurance
 
36,059

 
35,819

 
35,105

Premises and equipment, net
 
10,697

 
10,041

 
10,058

Goodwill
 
4,687

 
4,687

 
4,687

Other real estate owned
 
2,619

 
5,041

 
5,041

Accrued income and other assets
 
37,716

 
35,410

 
13,182

Total assets
 
$
3,541,692

 
$
3,202,918

 
$
2,767,687

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
43,301

 
$
42,750

 
$
44,686

Interest-bearing deposits
 
2,628,050

 
2,403,814

 
2,040,255

Total deposits
 
2,671,351

 
2,446,564

 
2,084,941

Advances from Federal Home Loan Bank
 
525,153

 
425,160

 
410,176

Subordinated debt
 
33,875

 
33,837

 
36,726

Accrued interest payable
 
1,108

 
887

 
311

Accrued expenses and other liabilities
 
21,470

 
8,730

 
11,406

Total liabilities
 
3,252,957

 
2,915,178

 
2,543,560

Shareholders' equity
 
 
 
 
 
 
Voting common stock
 
227,587

 
227,454

 
172,043

Retained earnings
 
77,689

 
74,733

 
57,103

Accumulated other comprehensive loss
 
(16,541
)
 
(14,447
)
 
(5,019
)
Total shareholders' equity
 
288,735

 
287,740

 
224,127

Total liabilities and shareholders' equity
 
$
3,541,692

 
$
3,202,918

 
$
2,767,687




First Internet Bancorp
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Income (unaudited, except for the twelve months ended December 31, 2017)
Amounts in thousands, except per share data
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
2018
 
September 30,
2018
 
December 31,
2017
 
December 31,
2018
 
December 31,
2017
Interest income
 
 
 
 
 
 
 
 
 
Loans
$
27,249

 
$
26,019

 
$
20,971

 
$
99,082

 
$
70,465

Securities - taxable
2,927

 
2,659

 
2,521

 
10,630

 
10,036

Securities - non-taxable
701

 
698

 
696

 
2,810

 
2,786

Other earning assets
972

 
847

 
450

 
2,945

 
1,410

Total interest income
31,849

 
30,223

 
24,638

 
115,467

 
84,697

Interest expense
 
 
 
 
 
 
 
 
 
Deposits
13,338

 
11,650

 
7,358

 
42,484

 
23,975

Other borrowed funds
3,090

 
2,603

 
1,920

 
10,716

 
6,740

Total interest expense
16,428

 
14,253

 
9,278

 
53,200

 
30,715

Net interest income
15,421

 
15,970

 
15,360

 
62,267

 
53,982

Provision for loan losses
1,487

 
888

 
1,179

 
3,892

 
4,872

Net interest income after provision for loan losses
13,934

 
15,082

 
14,181

 
58,375

 
49,110

Noninterest income
 
 
 
 
 
 
 
 
 
Service charges and fees
237

 
236

 
231

 
934

 
888

Mortgage banking activities
1,141

 
1,402

 
1,530

 
5,718

 
7,836

Gain on sale of loans
89

 

 
395

 
503

 
395

Other
580

 
356

 
383

 
1,605

 
1,422

Total noninterest income
2,047

 
1,994

 
2,539

 
8,760

 
10,541

Noninterest expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
5,738

 
5,704

 
5,701

 
23,174

 
21,164

Marketing, advertising and promotion
543

 
601

 
590

 
2,468

 
2,393

Consulting and professional fees
862

 
709

 
617

 
3,055

 
3,091

Data processing
320

 
368

 
242

 
1,233

 
971

Loan expenses
204

 
241

 
303

 
942

 
1,027

Premises and equipment
1,307

 
1,244

 
1,125

 
4,996

 
4,183

Deposit insurance premium
570

 
441

 
420

 
1,956

 
1,410

Write-down of other real estate owned
2,423

 

 

 
2,423

 

Other
772

 
737

 
703

 
2,936

 
2,484

Total noninterest expense
12,739

 
10,045

 
9,701

 
43,183

 
36,723

Income before income taxes
3,242

 
7,031

 
7,019

 
23,952

 
22,928

Income tax (benefit) provision
(334
)
 
743

 
3,521

 
2,052

 
7,702

Net income
$
3,576

 
$
6,288

 
$
3,498

 
$
21,900

 
$
15,226

 
 
 
 
 
 
 
 
 
 
Per common share data
 
 
 
 
 
 
 
 
 
Earnings per share - basic
$
0.35

 
$
0.61

 
$
0.41

 
$
2.31

 
$
2.14

Earnings per share - diluted
$
0.35

 
$
0.61

 
$
0.41

 
$
2.30

 
$
2.13

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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts in thousands
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended

December 31, 2018
 
September 30, 2018
 
December 31, 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
$
2,593,577

 
$
27,249

 
4.17
%
 
$
2,462,209

 
$
26,019

 
4.19
%
 
$
1,993,001

 
$
20,971

 
4.17
%
Securities - taxable
402,179

 
2,927

 
2.89
%
 
389,880

 
2,659

 
2.71
%
 
403,905

 
2,521

 
2.48
%
Securities - non-taxable
92,077

 
701

 
3.02
%
 
94,020

 
698

 
2.95
%
 
96,722

 
696

 
2.85
%
Other earning assets
148,311

 
972

 
2.60
%
 
131,306

 
847

 
2.56
%
 
95,049

 
450

 
1.88
%
Total interest-earning assets
3,236,144

 
31,849

 
3.90
%
 
3,077,415

 
30,223

 
3.90
%
 
2,588,677

 
24,638

 
3.78
%
Allowance for loan losses
(17,065
)
 
 
 
 
 
(16,312
)
 
 
 
 
 
(14,486
)
 
 
 
 
Noninterest earning-assets
101,771

 
 
 
 
 
87,127

 
 
 
 
 
76,392

 
 
 
 
Total assets
$
3,320,850

 
 
 
 
 
$
3,148,230

 
 
 
 
 
$
2,650,583

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
89,234

 
$
182

 
0.81
%
 
$
87,102

 
$
133

 
0.61
%
 
$
86,744

 
$
119

 
0.54
%
Regular savings accounts
42,694

 
123

 
1.14
%
 
51,557

 
147

 
1.13
%
 
52,092

 
132

 
1.01
%
Money market accounts
518,421

 
2,575

 
1.97
%
 
527,715

 
2,206

 
1.66
%
 
479,201

 
1,428

 
1.18
%
Certificates and brokered deposits
1,822,094

 
10,458

 
2.28
%
 
1,702,098

 
9,164

 
2.14
%
 
1,345,368

 
5,679

 
1.67
%
Total interest-bearing deposits
2,472,443

 
13,338

 
2.14
%
 
2,368,472

 
11,650

 
1.95
%
 
1,963,405

 
7,358

 
1.49
%
Other borrowed funds
499,877

 
3,090

 
2.45
%
 
439,412

 
2,603

 
2.35
%
 
411,283

 
1,920

 
1.85
%
Total interest-bearing liabilities
2,972,320

 
16,428

 
2.19
%
 
2,807,884

 
14,253

 
2.01
%
 
2,374,688

 
9,278

 
1.55
%
Noninterest-bearing deposits
48,779

 
 
 
 
 
44,921

 
 
 
 
 
40,618

 
 
 
 
Other noninterest-bearing liabilities
9,907

 
 
 
 
 
10,218

 
 
 
 
 
12,607

 
 
 
 
Total liabilities
3,031,006

 
 
 
 
 
2,863,023

 
 
 
 
 
2,427,913

 
 
 
 
Shareholders' equity
289,844

 
 
 
 
 
285,207

 
 
 
 
 
222,670

 
 
 
 
Total liabilities and shareholders' equity
$
3,320,850

 
 
 
 
 
$
3,148,230

 
 
 
 
 
$
2,650,583

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
15,421

 
 
 
 
 
$
15,970

 
 
 
 
 
$
15,360

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
 
1.71
%
 
 
 
 
 
1.89
%
 
 
 
 
 
2.23
%
Net interest margin
 
 
 
 
1.89
%
 
 
 
 
 
2.06
%
 
 
 
 
 
2.35
%
Net interest margin - FTE 2
 
 
 
 
2.07
%
 
 
 
 
 
2.23
%
 
 
 
 
 
2.59
%

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
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
December 31, 2018
 
December 31, 2017
 
Average Balance
 
Interest/Dividends
 
Yield/Cost
 
Average Balance
 
Interest/Dividends
 
Yield/Cost
Assets
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets
 
 
 
 
 
 
 
 
 
 
 
Loans, including loans held-for-sale 1
$
2,382,504

 
$
99,082

 
4.16
%
 
$
1,682,249

 
$
70,465

 
4.19
%
Securities - taxable
391,958

 
10,630

 
2.71
%
 
400,449

 
10,036

 
2.51
%
Securities - non-taxable
94,072

 
2,810

 
2.99
%
 
95,694

 
2,786

 
2.91
%
Other earning assets
116,074

 
2,945

 
2.54
%
 
79,461

 
1,410

 
1.77
%
Total interest-earning assets
2,984,608

 
115,467

 
3.87
%
 
2,257,853

 
84,697

 
3.75
%
Allowance for loan losses
(16,097
)
 
 
 
 
 
(12,964
)
 
 
 
 
Noninterest earning-assets
86,713

 
 
 
 
 
68,580

 
 
 
 
Total assets
$
3,055,224

 
 
 
 
 
$
2,313,469

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
90,229

 
$
583

 
0.65
%
 
$
89,081

 
$
488

 
0.55
%
Regular savings accounts
51,333

 
585

 
1.14
%
 
39,393

 
342

 
0.87
%
Money market accounts
544,802

 
8,803

 
1.62
%
 
415,910

 
4,227

 
1.02
%
Certificates and brokered deposits
1,585,673

 
32,513

 
2.05
%
 
1,169,219

 
18,918

 
1.62
%
Total interest-bearing deposits
2,272,037

 
42,484

 
1.87
%
 
1,713,603

 
23,975

 
1.40
%
Other borrowed funds
468,411

 
10,716

 
2.29
%
 
376,470

 
6,740

 
1.79
%
Total interest-bearing liabilities
2,740,448

 
53,200

 
1.94
%
 
2,090,073

 
30,715

 
1.47
%
Noninterest-bearing deposits
45,562

 
 
 
 
 
35,043

 
 
 
 
Other noninterest-bearing liabilities
9,798

 
 
 
 
 
10,141

 
 
 
 
Total liabilities
2,795,808

 
 
 
 
 
2,135,257

 
 
 
 
Shareholders' equity
259,416

 
 
 
 
 
178,212

 
 
 
 
Total liabilities and shareholders' equity
$
3,055,224

 
 
 
 
 
$
2,313,469

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
62,267

 
 
 
 
 
$
53,982

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
 
1.93
%
 
 
 
 
 
2.28
%
Net interest margin
 
 
 
 
2.09
%
 
 
 
 
 
2.39
%
Net interest margin - FTE 2
 
 
 
 
2.25
%
 
 
 
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
Commercial loans
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
114,382

 
4.2
%
 
$
105,489

 
4.2
%
 
$
122,940

 
5.9
%
Owner-occupied commercial real estate
 
87,962

 
3.2
%
 
93,568

 
3.8
%
 
75,768

 
3.6
%
Investor commercial real estate
 
5,391

 
0.2
%
 
5,595

 
0.2
%
 
7,273

 
0.4
%
Construction
 
39,916

 
1.5
%
 
38,228

 
1.5
%
 
49,213

 
2.4
%
Single tenant lease financing
 
919,440

 
33.8
%
 
883,372

 
35.4
%
 
803,299

 
38.4
%
Public finance
 
706,342

 
26.0
%
 
610,858

 
24.5
%
 
438,341

 
21.0
%
Healthcare finance
 
117,007

 
4.4
%
 
89,525

 
3.7
%
 
31,573

 
1.5
%
Total commercial loans
 
1,990,440

 
73.3
%
 
1,826,635

 
73.3
%
 
1,528,407

 
73.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer loans
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
 
399,898

 
14.7
%
 
362,574

 
14.5
%
 
299,935

 
14.3
%
Home equity
 
28,735

 
1.1
%
 
28,713

 
1.2
%
 
30,554

 
1.5
%
Trailers
 
136,620

 
5.0
%
 
129,571

 
5.2
%
 
101,369

 
4.8
%
Recreational vehicles
 
91,912

 
3.4
%
 
85,821

 
3.4
%
 
69,196

 
3.3
%
Other consumer loans
 
51,239

 
1.9
%
 
55,175

 
2.2
%
 
56,968

 
2.7
%
Total consumer loans
 
708,404

 
26.1
%
 
661,854

 
26.5
%
 
558,022

 
26.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net deferred loan fees, premiums, discounts and other 1
 
17,384

 
0.6
%
 
5,133

 
0.2
%
 
4,764

 
0.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
 
$
2,716,228

 
100.0
%
 
$
2,493,622

 
100.0
%
 
$
2,091,193

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
Deposits
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
43,301

 
1.6
%
 
$
42,750

 
1.7
%
 
$
44,686

 
2.1
%
Interest-bearing demand deposits
 
121,055

 
4.5
%
 
94,681

 
3.9
%
 
94,674

 
4.5
%
Savings accounts
 
38,489

 
1.4
%
 
47,033

 
1.9
%
 
49,939

 
2.4
%
Money market accounts
 
528,533

 
19.9
%
 
478,548

 
19.6
%
 
499,501

 
24.0
%
Certificates of deposits
 
1,292,883

 
48.4
%
 
1,252,690

 
51.2
%
 
1,319,488

 
63.3
%
Brokered deposits 2
 
647,090

 
24.2
%
 
530,862

 
21.7
%
 
76,653

 
3.7
%
Total deposits
 
$
2,671,351

 
100.0
%
 
$
2,446,564

 
100.0
%
 
$
2,084,941

 
100.0
%

1 Includes carrying value adjustments of $5.0 million, <$5.2> million and $0.3 million as of December 31, 2018, September 30, 2018 and December 31, 2017, respectively, related to interest rate swaps associated with public finance loans.

2 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
 
Twelve Months Ended
 
 
December 31,
2018
 
September 30,
2018
 
December 31,
2017
 
December 31,
2018
 
December 31,
2017
 
 
 
 
 
 
 
 
 
 
 
Total equity - GAAP
 
$
288,735

 
$
287,740

 
$
224,127

 
$
288,735

 
$
224,127

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Tangible common equity
 
$
284,048

 
$
283,053

 
$
219,440

 
$
284,048

 
$
219,440

 
 
 
 
 
 
 
 
 
 
 
Total assets - GAAP
 
$
3,541,692

 
$
3,202,918

 
$
2,767,687

 
$
3,541,692

 
$
2,767,687

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Tangible assets
 
$
3,537,005

 
$
3,198,231

 
$
2,763,000

 
$
3,537,005

 
$
2,763,000

 
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
 
10,170,778

 
10,181,675

 
8,411,077

 
10,170,778

 
8,411,077

 
 
 
 
 
 
 
 
 
 
 
Book value per common share
 
$
28.39

 
$
28.26

 
$
26.65

 
$
28.39

 
$
26.65

Effect of goodwill
 
(0.46
)
 
(0.46
)
 
(0.56
)
 
(0.46
)
 
(0.56
)
Tangible book value per common share
 
$
27.93

 
$
27.80

 
$
26.09

 
$
27.93

 
$
26.09

 
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity to assets ratio
 
8.15
 %
 
8.98
 %
 
8.10
 %
 
8.15
 %
 
8.10
 %
Effect of goodwill
 
(0.12
)%
 
(0.13
)%
 
(0.16
)%
 
(0.12
)%
 
(0.16
)%
Tangible common equity to tangible assets ratio
 
8.03
 %
 
8.85
 %
 
7.94
 %
 
8.03
 %
 
7.94
 %
 
 
 
 
 
 
 
 
 
 
 
Total average equity - GAAP
 
$
289,844

 
$
285,207

 
$
222,670

 
$
259,416

 
$
178,212

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Average goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Average tangible common equity
 
$
285,157

 
$
280,520

 
$
217,983

 
$
254,729

 
$
173,525

 
 
 
 
 
 
 
 
 
 
 
Return on average shareholders' equity
 
4.89
 %
 
8.75
 %
 
6.23
 %
 
8.44
 %