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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 22, 2020
First Internet Bancorp
(Exact Name of Registrant as Specified in Its Charter)
Indiana
(State or Other Jurisdiction of Incorporation)
001-3575020-3489991
(Commission File Number)(IRS Employer Identification No.)
11201 USA Parkway46037
Fishers, Indiana
(Address of Principal Executive Offices)(Zip Code)
(317) 532-7900
(Registrant's Telephone Number, Including Area Code)

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))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolsName of each exchange on which registered
Common Stock, without par valueINBKThe Nasdaq Stock Market LLC
6.0% Fixed to Floating Subordinated Notes due 2026INBKLThe Nasdaq Stock Market LLC
6.0% Fixed to Floating Subordinated Notes due 2029INBKZThe Nasdaq Stock Market LLC
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 22, 2020, First Internet Bancorp (the "Company") issued a press release announcing financial results for the quarter ended June 30, 2020. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

        On July 23, at 12:00 p.m. (Eastern Time), the Company will host a conference call and webcast to discuss financial results for the quarter ended June 30, 2020. The electronic presentation slides, which will accompany the call and webcast, are furnished as Exhibit 99.2 and are incorporated by reference herein.


Item 9.01 Financial Statements and Exhibits

NumberDescriptionMethod of filing
Furnished herewith
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 22, 2020
FIRST INTERNET BANCORP
By:/s/ Kenneth J. Lovik
Kenneth J. Lovik, Executive Vice President & Chief Financial Officer

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Section 2: EX-99.1 (EX-99.1)

Document

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First Internet Bancorp Reports Second Quarter 2020 Results

Highlights for the second quarter include:

Total revenue of $19.4 million, net income of $3.9 million and diluted earnings per share of $0.40

Cost of interest-bearing deposits decreased 30 bps from the first quarter

Accelerated SBA platform build-out through further sales and operations hires
As of July 17, 2020, loan balances of $365.8 million, or 12.6% of total loans, remained on deferral programs, down from a peak of $647.2 million, or 22.4%, in late May

Fishers, Indiana, July 22, 2020 – First Internet Bancorp (the “Company”) (Nasdaq: INBK), the parent company of First Internet Bank (the “Bank”), announced today financial and operational results for the second quarter of 2020. Net income for the second quarter of 2020 was $3.9 million, or $0.40 diluted earnings per share. This compares to net income of $6.0 million, or $0.62 diluted earnings per share, for the first quarter of 2020, and net income of $6.1 million, or $0.60 diluted earnings per share, for the second quarter of 2019.

“Throughout the COVID-19 pandemic, we have focused on our customers whose families and businesses have been impacted by the virus,” said David Becker, Chairman, President and Chief Executive Officer. “For many borrowers, we were able to provide peace of mind in uncertain times by deferring loan payments for 60-90 days. And, because we have always served our nationwide customer base remotely, we were able to assist our customers when they needed us most, without missing a beat, even as we worked to transition our associates to telework. We have already seen a significant reduction in deferrals, and all of our borrowers coming off deferrals have resumed normal payment schedules.

“In the second quarter, our overall credit quality remained solid. Our direct-to-consumer mortgage business produced another quarter of strong results and has a healthy pipeline as we begin the third quarter. We continue to expand our national SBA platform, adding to our already strong and talented team of professionals, and we are excited about the near-term outlook for this government-guaranteed lending business.

“In addition, our efforts on the deposit side of our balance sheet continued to produce results as we shifted the mix of our deposits while reducing interest expense. We believe that we still have significant opportunities to reprice our deposits lower while maintaining relatively stable asset yields, and these bode well for our net interest income and net interest margin in future periods.

“We are well-capitalized and have the financial strength to serve our clients during this public health crisis. I would like to thank the entire First Internet team for their resilience and hard work during this challenging time,” Becker concluded.

Net Interest Income and Net Interest Margin
Net interest income for the second quarter of 2020 was $14.4 million, compared to $15.0 million for the first quarter of 2020 and $16.1 million for the second quarter of 2019. On a fully-taxable equivalent basis, net interest income for the second quarter was $15.9 million, compared to $16.6 million for the first quarter of 2020 and $17.7 million for the second quarter of 2019.




Total interest income for the second quarter of 2020 was $34.2 million, a decrease of 5.6%, compared to the first quarter of 2020, and a decrease of 7.1% compared to the second quarter of 2019. On a fully-taxable equivalent basis, total interest income for the second quarter was $35.7 million, a decrease of 5.6% compared to the first quarter of 2020, and a decrease of 7.3% compared to the second quarter of 2019.

Pandemic Impact: Interest income declined during the second quarter following the Federal Reserve rate cuts in the first quarter of 2020, which negatively impacted the yields earned on variable rate loans and securities as well as cash balances. Furthermore, market uncertainty encouraged a continued flight to safety for consumers and small businesses. Rapid growth in deposit balances led to an increase in average cash balances of $152.8 million quarter-over-quarter.

The decline in short term interest rates reduced the yield earned on the loan portfolio by 11 bps to 4.00% as compared to the prior quarter. In total, the yield on interest-earning assets for the second quarter of 2020 declined to 3.24% from 3.62% in the prior quarter.

Total interest expense for the second quarter of 2020 was $19.8 million, a decrease of 6.7% compared to the first quarter of 2020 and a decrease of 4.5% compared to the second quarter of 2019. The decrease compared to the linked quarter was due mainly to a decline of 30 bps in the cost of interest-bearing deposits, partially offset by an increase in the average balance of these deposits. The decrease in deposit costs reflects a continued decline in the rates paid on deposits as well as a shift in the deposit mix.

During the second quarter of 2020, the cost of money market deposits decreased by 43 bps while the average balance of these deposits grew $222.5 million, or 25.7%. The Company lowered money market rates 60-70 bps throughout the quarter.

Furthermore, the cost of certificates and brokered deposits decreased 18 bps while balances decreased by $62.2 million, or 3.0%. During the second quarter, new certificates and brokered deposits were originated at a weighted average cost of 1.08% while maturing deposits had a weighted average cost of 2.64%.

Net interest margin (“NIM”) was 1.37% for the second quarter of 2020, compared to 1.50% for the first quarter of 2020 and 1.73% for the second quarter of 2019. On a fully-taxable equivalent basis, NIM decreased 15 bps to 1.50% for the second quarter of 2020, from 1.65% for the first quarter of 2020, and was down 41 bps from 1.91% for the second quarter of 2019. The decrease in fully-taxable equivalent NIM compared to the linked quarter was due mainly to the decline in loan yields, which had a negative impact of 24 bps, as well as lower yields earned on securities and cash balances, which each had a negative impact of 7 bps. These were partially offset by deposit costs, which had a positive impact of 23 bps.

Noninterest Income
Noninterest income for the second quarter of 2020 was $5.0 million, down from $6.2 million for the first quarter of 2020, and up from $3.5 million for the second quarter of 2019. The decrease compared to the first quarter of 2020 was driven primarily by lower gain on sale of loans sold during the quarter and a modest decrease in revenue from mortgage banking activities.

Pandemic Impact: Due to market conditions, the Company did not sell any public finance, single tenant lease financing or portfolio residential mortgage loans in the second quarter. Secondary market volatility early in the quarter led to a modest decrease in mortgage banking revenue; however, the secondary market has stabilized and origination activity is strong going into the third quarter.




The Company sold $11.5 million of U.S. Small Business Administration (“SBA”) 7(a) guaranteed loans at a net gain of $0.8 million in the second quarter of 2020, representing continued growth in this line of business with a robust pipeline heading into the third quarter.

Noninterest Expense
Noninterest expense for the second quarter of 2020 was $13.2 million, compared to $13.5 million for the first quarter of 2020 and $11.7 million for the second quarter of 2019. The decrease from the first quarter of 2020 was due primarily to lower consulting and professional fees, loan expenses and deposit insurance premium, partially offset by an increase in other expense.

Pandemic Impact: In an effort to prevent the spread of COVID-19 in its facilities, the Company incurred costs in the second quarter to enable its employees to work remotely and to promote social distancing and enhanced disinfection for those employees who continued to work from the Company’s offices. The majority of these costs will be amortized over future periods. The Company also made a $250,000 charitable contribution to assist small businesses and nonprofits address the economic challenges of the COVID-19 pandemic.

Income Taxes
The Company reported an income tax benefit of $0.3 million for the second quarter of 2020 compared to income tax expense of $0.3 million and an effective tax rate of 4.2% for the first quarter of 2020 and income tax expense of $0.3 million and an effective tax rate of 5.3% for the second quarter of 2019. The income tax benefit was primarily due to the decrease in pre-tax earnings compared to the linked quarter.

Loans and Credit Quality
Total loans as of June 30, 2020 were $3.0 billion, an increase of $81.6 million, or 2.8%, compared to March 31, 2020, and an increase of $112.5 million, or 3.9%, compared to June 30, 2019. Total commercial loan balances were $2.4 billion as of June 30, 2020, an increase of $98.8 million, or 4.3%, compared to March 31, 2020, and an increase of $203.5 million, or 9.3%, compared to June 30, 2019.

Pandemic Impact: The Company originated 449 SBA Paycheck Protection Plan (“PPP”) loans totaling $58.9 million in the second quarter, accounting for a significant portion of the quarterly growth. Pursuant to terms in the CARES Act and the PPP Flexibility Act, payments on these loans are currently deferred. PPP loans are fully guaranteed by the SBA.

Total consumer loan balances were $523.0 million as of June 30, 2020, a decrease of $16.2 million, or 3.0%, compared to March 31, 2020, and a decrease of $116.8 million, or 18.3%, compared to June 30,
2019. The decline in consumer loan balances from March 31, 2020 was due primarily to increased prepayment activity in the residential mortgage loan portfolio.

Total delinquencies 30 days or more past due decreased to 0.25% of total loans as of June 30, 2020, down from 0.32% as of March 31, 2020 and up slightly from 0.24% as of June 30, 2019. The decrease in delinquencies compared to the linked quarter was due primarily to a decline in delinquent residential mortgage loans. Overall credit quality remained relatively stable as nonperforming loans to total loans was 0.28% as of June 30, 2020, compared to 0.26% at March 31, 2020 and 0.19% as of June 30, 2019.

The allowance for loan losses as a percentage of total loans was 0.82% as of June 30, 2020, or 0.84% when excluding SBA PPP loans, compared to 0.79% as of March 31, 2020 and 0.70% as of June 30, 2019.

Pandemic Impact: During the quarter, the Company made additional adjustments to qualitative factors in its allowance model to reflect the continued economic uncertainty resulting from the COVID-19 pandemic. As a result, both the amount of the allowance for loan



losses and the allowance as a percentage of total loans increased compared to March 31, 2020.

Net charge-offs of $0.9 million were recognized during the second quarter of 2020, resulting in net charge-offs to average loans of 0.12%, compared to 0.06% for the first quarter of 2020 and 0.04% for the second quarter of 2019. Compared to the prior quarter, the increase in net charge-offs was due primarily to a $0.7 million charge-off in the healthcare finance portfolio, partially offset by an increase in recoveries.

The provision for loan losses in the second quarter of 2020 was $2.5 million, compared to $1.5 million for the first quarter of 2020 and $1.4 million for the second quarter of 2019. The increase of $1.0 million, or 70.5%, compared to the linked quarter was due primarily to the adjustments to the qualitative factors in the allowance model discussed above and, to a lesser extent, the charge-off in the healthcare finance portfolio.

Capital
As of June 30, 2020, total shareholders’ equity was $307.7 million, an increase of $2.6 million, or 0.8%, compared to March 31, 2020, primarily due to the net income earned during the quarter, partially offset by an increase in accumulated other comprehensive loss. Book value per common share increased to $31.40 as of June 30, 2020, up from $31.13 as of March 31, 2020, and up from $29.56 as of June 30, 2019. Tangible book value per share at June 30, 2020 was $30.92, up from $30.65 and up from $29.10, each as of the same reference dates.
The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of June 30, 2020.

As of June 30, 2020
CompanyBank
Total shareholders’ equity to assets 7.12%7.85%
Tangible common equity to tangible assets 1
7.01%7.75%
Tier 1 leverage ratio 2
7.50%8.22%
Common equity tier 1 capital ratio 2
10.97%12.05%
Tier 1 capital ratio 2
10.97%12.05%
Total risk-based capital ratio 2
14.16%12.88%
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, July 23, 2020 to discuss its quarterly financial results. The call can be accessed via telephone at (888) 348-3664. A recorded replay can be accessed through August 23, 2020 by dialing (877) 344-7529; passcode: 10145915.

Additionally, interested parties can listen to a live webcast of the call on the Company's website at www.firstinternetbancorp.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

About First Internet Bancorp
First Internet Bancorp is a bank holding company with assets of $4.3 billion as of June 30, 2020. The Company’s subsidiary, First Internet Bank, opened for business in 1999 as an industry pioneer in the branchless delivery of banking services. The Bank provides consumer and small business deposit, consumer loan, residential mortgage, and specialty finance services nationally as well as commercial real estate loans,



commercial and industrial loans, SBA financing and treasury management services in select geographies. First Internet Bancorp’s common stock trades on the Nasdaq Global Select Market under the symbol “INBK” and is a component of the Russell 2000® Index. Additional information about the Company is available at www.firstinternetbancorp.com and additional information about the Bank, including its products and services, is available at www.firstib.com.

Forward-Looking Statements
This press release may contain forward-looking statements with respect to the financial condition, results of operations, trends in lending policies, plans, objectives, future performance or business of the Company. Forward-looking statements are generally identifiable by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “pending,” “plan,” “position,” “preliminary,” “remain,” “should,” “will,” “would” or other similar expressions. Forward-looking statements are not a guarantee of future performance or results, are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the information in the forward-looking statements. The COVID-19 pandemic crisis is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects remains uncertain. Continued deterioration in general business and economic conditions, including further increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Other factors that may cause such differences include: failures or breaches of or interruptions in the communications and information systems on which we rely to conduct our business; failure of our plans to grow our commercial real estate, commercial and industrial, public finance, SBA and healthcare finance loan portfolios; competition with national, regional and community financial institutions; the loss of any key members of senior management; fluctuations in interest rates; general economic conditions; risks relating to the regulation of financial institutions; and other factors identified in reports we file with the U.S. Securities and Exchange Commission. All statements in this press release, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, average tangible common equity and return on average tangible common equity, total interest income – FTE, net interest income – FTE, net interest margin – FTE and allowance for loan losses to loans, excluding PPP loans, 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/AnalystsMedia
Paula DeemerNicole Lorch
Director of Corporate AdministrationExecutive Vice President & Chief Operating Officer
(317) 428-4628(317) 532-7906
investors@firstib.comnlorch@firstib.com



First Internet Bancorp
Summary Financial Information (unaudited)
Dollar amounts in thousands, except per share data
Three Months EndedSix Months Ended
June 30,
2020
March 31,
2020
June 30,
2019
June 30,
2020
June 30,
2019
Net income$3,932  $6,019  $6,121  $9,951  $11,817  
Per share and share information
Earnings per share - basic$0.40  $0.62  $0.60  $1.02  $1.16  
Earnings per share - diluted0.40  0.62  0.60  1.02  1.16  
Dividends declared per share0.06  0.06  0.06  0.12  0.12  
Book value per common share31.40  31.13  29.56  31.40  29.56  
Tangible book value per common share 1
30.92  30.65  29.10  30.92  29.10  
Common shares outstanding9,799,047  9,801,825  10,016,458  9,799,047  10,016,458  
Average common shares outstanding:
Basic9,768,227  9,721,485  10,148,285  9,798,528  10,182,770  
Diluted9,768,227  9,750,528  10,148,285  9,802,427  10,186,833  
Performance ratios
Return on average assets0.37 %0.59 %0.65 %0.47 %0.64 %
Return on average shareholders' equity5.15 %7.78 %8.26 %6.48 %8.09 %
Return on average tangible common equity 1
5.23 %7.90 %8.39 %6.58 %8.22 %
Net interest margin1.37 %1.50 %1.73 %1.43 %1.79 %
Net interest margin - FTE 1,2
1.50 %1.65 %1.91 %1.58 %1.97 %
Capital ratios 3
Total shareholders' equity to assets7.12 %7.32 %7.48 %7.12 %7.48 %
Tangible common equity to tangible assets 1
7.01 %7.22 %7.37 %7.01 %7.37 %
Tier 1 leverage ratio7.50 %7.82 %8.06 %7.50 %8.06 %
Common equity tier 1 capital ratio10.97 %10.78 %11.08 %10.97 %11.08 %
Tier 1 capital ratio10.97 %10.78 %11.08 %10.97 %11.08 %
Total risk-based capital ratio14.16 %13.90 %14.31 %14.16 %14.31 %
Asset quality
Nonperforming loans$8,195  $7,443  $5,386  $8,195  $5,386  
Nonperforming assets10,304  9,622  8,041  10,304  8,041  
Nonperforming loans to loans0.28 %0.26 %0.19 %0.28 %0.19 %
Nonperforming assets to total assets0.24 %0.23 %0.20 %0.24 %0.20 %
Allowance for loan losses to:
Loans0.82 %0.79 %0.70 %0.82 %0.70 %
Loans, excluding PPP loans0.84 %0.79 %0.70 %0.84 %0.70 %
Nonperforming loans298.5 %307.1 %370.9 %298.5 %370.9 %
Net charge-offs to average loans0.12 %0.06 %0.04 %0.09 %0.04 %
Average balance sheet information
Loans$2,943,165  $2,931,108  $2,889,478  $2,937,136  $2,825,178  
Total securities657,622  630,879  558,352  644,251  540,905  
Other earning assets594,296  415,927  248,996  505,111  247,871  
Total interest-earning assets4,241,690  4,024,800  3,723,424  4,133,245  3,634,630  
Total assets4,330,174  4,099,932  3,805,021  4,215,053  3,716,755  
Noninterest-bearing deposits73,758  60,456  42,566  67,107  42,558  
Interest-bearing deposits3,270,720  3,089,045  2,879,007  3,179,882  2,804,257  
Total deposits3,344,478  3,149,501  2,921,573  3,246,989  2,846,815  
Shareholders' equity306,868  311,005  297,148  308,937  294,530  

1 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below
2 On a fully-taxable equivalent (“FTE”) basis assuming a 21% tax rate
3 Regulatory capital ratios are preliminary pending filing of the Company's regulatory reports



First Internet Bancorp
Condensed Consolidated Balance Sheets (unaudited)
Amounts in thousands
June 30,
2020
March 31,
2020
June 30,
2019
Assets
Cash and due from banks$7,016  $5,726  $5,638  
Interest-bearing deposits491,603  345,542  342,660  
Securities available-for-sale, at fair value589,017  608,682  522,334  
Securities held-to-maturity, at amortized cost68,295  66,331  35,826  
Loans held-for-sale38,813  52,394  30,642  
Loans2,973,674  2,892,093  2,861,156  
Allowance for loan losses(24,465) (22,857) (19,976) 
Net loans2,949,209  2,869,236  2,841,180  
Accrued interest receivable21,093  16,960  18,887  
Federal Home Loan Bank of Indianapolis stock25,650  25,650  25,650  
Cash surrender value of bank-owned life insurance37,474  37,238  36,527  
Premises and equipment, net23,939  18,883  14,405  
Goodwill4,687  4,687  4,687  
Servicing asset2,522  2,415  —  
Other real estate owned2,065  2,065  2,619  
Accrued income and other assets63,217  112,337  77,774  
Total assets$4,324,600  $4,168,146  $3,958,829  
Liabilities
Noninterest-bearing deposits$82,864  $70,562  $44,040  
Interest-bearing deposits3,297,925  3,107,944  2,962,223  
Total deposits3,380,789  3,178,506  3,006,263  
Advances from Federal Home Loan Bank514,913  514,911  514,906  
Subordinated debt69,681  69,605  69,375  
Accrued interest payable1,073  3,293  2,930  
Accrued expenses and other liabilities50,433  96,704  69,235  
Total liabilities4,016,889  3,863,019  3,662,709  
Shareholders' equity
Voting common stock220,418  219,893  224,244  
Retained earnings108,431  105,100  87,454  
Accumulated other comprehensive loss(21,138) (19,866) (15,578) 
Total shareholders' equity307,711  305,127  296,120  
Total liabilities and shareholders' equity$4,324,600  $4,168,146  $3,958,829  



First Internet Bancorp
Condensed Consolidated Statements of Income (unaudited)
Amounts in thousands, except per share data
Three Months EndedSix Months Ended
June 30,
2020
March 31,
2020
June 30,
2019
June 30,
2020
June 30,
2019
Interest income
Loans$29,730  $30,408  $30,842  $60,138  $60,060  
Securities - taxable3,276  3,619  3,540  6,895  6,864  
Securities - non-taxable457  572  668  1,029  1,352  
Other earning assets759  1,645  1,794  2,404  3,567  
Total interest income34,222  36,244  36,844  70,466  71,843  
Interest expense
Deposits15,763  17,208  17,147  32,971  32,533  
Other borrowed funds4,033  4,018  3,592  8,051  6,961  
Total interest expense19,796  21,226  20,739  41,022  39,494  
Net interest income14,426  15,018  16,105  29,444  32,349  
Provision for loan losses2,491  1,461  1,389  3,952  2,674  
Net interest income after provision
for loan losses
11,935  13,557  14,716  25,492  29,675  
Noninterest income
Service charges and fees182  212  225  394  461  
Loan servicing revenue255  251  —  506  —  
Loan servicing asset revaluation(90) (179) —  (269) —  
Mortgage banking activities3,408  3,668  2,664  7,076  4,281  
Gain (loss) on sale of loans762  1,801  (66) 2,563  (170) 
Gain (loss) on sale of securities—  41  (458) 41  (458) 
Other456  417  1,089  873  1,712  
Total noninterest income4,973  6,211  3,454  11,184  5,826  
Noninterest expense
Salaries and employee benefits7,789  7,774  6,642  15,563  12,963  
Marketing, advertising and promotion411  375  466  786  935  
Consulting and professional fees932  1,177  835  2,109  1,649  
Data processing339  375  328  714  645  
Loan expenses399  599  292  998  606  
Premises and equipment1,602  1,625  1,497  3,227  2,997  
Deposit insurance premium435  485  747  920  1,302  
Other1,337  1,076  902  2,413  1,721  
Total noninterest expense13,244  13,486  11,709  26,730  22,818  
Income before income taxes3,664  6,282  6,461  9,946  12,683  
Income tax (benefit) provision(268) 263  340  (5) 866  
Net income$3,932  $6,019  $6,121  $9,951  $11,817  
Per common share data
Earnings per share - basic$0.40  $0.62  $0.60  $1.02  $1.16  
Earnings per share - diluted$0.40  $0.62  $0.60  $1.02  $1.16  
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)
Dollar amounts in thousands
Three Months Ended
June 30, 2020March 31, 2020June 30, 2019
Average BalanceInterest / DividendsYield / CostAverage BalanceInterest / DividendsYield / CostAverage BalanceInterest / DividendsYield / Cost
Assets
Interest-earning assets
Loans, including loans held-for-sale 1
$2,989,772  $29,730  4.00 %$2,977,994  $30,408  4.11 %$2,916,076  $30,842  4.24 %
Securities - taxable560,947  3,276  2.35 %531,046  3,619  2.74 %460,816  3,540  3.08 %
Securities - non-taxable96,675  457  1.90 %99,833  572  2.30 %97,536  668  2.75 %
Other earning assets594,296  759  0.51 %415,927  1,645  1.59 %248,996  1,794  2.89 %
Total interest-earning assets4,241,690  34,222  3.24 %4,024,800  36,244  3.62 %3,723,424  36,844  3.97 %
Allowance for loan losses(23,388) (22,059) (19,275) 
Noninterest-earning assets111,872  97,191  100,872  
Total assets$4,330,174  $4,099,932  $3,805,021  
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits$137,487  $237  0.69 %$122,925  $219  0.72 %$117,665  $214  0.73 %
Savings accounts37,204  92  0.99 %30,345  78  1.03 %37,507  106  1.13 %
Money market accounts1,089,063  3,541  1.31 %866,605  3,743  1.74 %592,106  2,995  2.03 %
Certificates and brokered deposits2,006,966  11,893  2.38 %2,069,170  13,168  2.56 %2,131,729  13,832  2.60 %
Total interest-bearing deposits3,270,720  15,763  1.94 %3,089,045  17,208  2.24 %2,879,007  17,147  2.39 %
Other borrowed funds584,543  4,033  2.77 %584,465  4,018  2.76 %548,932  3,592  2.62 %
Total interest-bearing liabilities3,855,263  19,796  2.07 %3,673,510  21,226  2.32 %3,427,939  20,739  2.43 %
Noninterest-bearing deposits73,758  60,456  42,566  
Other noninterest-bearing liabilities94,285  54,961  37,368  
Total liabilities4,023,306  3,788,927  3,507,873  
Shareholders' equity306,868  311,005  297,148  
Total liabilities and shareholders' equity$4,330,174  $4,099,932  $3,805,021  
Net interest income$14,426  $15,018  $16,105  
Interest rate spread1.17 %1.30 %1.54 %
Net interest margin1.37 %1.50 %1.73 %
Net interest margin - FTE 2,3
1.50 %1.65 %1.91 %

1 Includes nonaccrual loans
2 On a fully-taxable equivalent (“FTE”) basis assuming a 21% tax rate
3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below



First Internet Bancorp
Average Balances and Rates (unaudited)
Dollar amounts in thousands
Six Months Ended
June 30, 2020June 30, 2019
Average BalanceInterest / DividendsYield / CostAverage BalanceInterest / DividendsYield / Cost
Assets
Interest-earning assets
Loans, including loans held-for-sale 1
$2,983,883  $60,138  4.05 %$2,845,854  $60,060  4.26 %
Securities - taxable545,997  6,895  2.54 %445,006  6,864  3.11 %
Securities - non-taxable98,254  1,029  2.11 %95,899  1,352  2.84 %
Other earning assets505,111  2,404  0.96 %247,871  3,567  2.90 %
Total interest-earning assets4,133,245  70,466  3.43 %3,634,630  71,843  3.99 %
Allowance for loan losses(22,724) (18,755) 
Noninterest-earning assets104,532  100,880  
Total assets$4,215,053  $3,716,755  
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits$130,206  $456  0.70 %$113,582  $427  0.76 %
Savings accounts33,774  170  1.01 %38,177  213  1.13 %
Money market accounts977,834  7,284  1.50 %577,686  5,747  2.01 %
Certificates and brokered deposits2,038,068  25,061  2.47 %2,074,812  26,146  2.54 %
Total interest-bearing deposits3,179,882  32,971  2.09 %2,804,257  32,533  2.34 %
Other borrowed funds584,504  8,051  2.77 %544,841  6,961  2.58 %
Total interest-bearing liabilities3,764,386  41,022  2.19 %3,349,098  39,494  2.38 %
Noninterest-bearing deposits67,107  42,558  
Other noninterest-bearing liabilities74,623  30,569  
Total liabilities3,906,116  3,422,225  
Shareholders' equity308,937  294,530  
Total liabilities and shareholders' equity$4,215,053  $3,716,755  
Net interest income$29,444  $32,349  
Interest rate spread1.24 %1.61 %
Net interest margin1.43 %1.79 %
Net interest margin - FTE 2,3
1.58 %1.97 %


1 Includes nonaccrual loans
2 On a fully-taxable equivalent (“FTE”) basis assuming a 21% tax rate
3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below



First Internet Bancorp
Loans and Deposits (unaudited)
Dollar amounts in thousands
June 30, 2020March 31, 2020June 30, 2019
AmountPercentAmountPercentAmountPercent
Commercial loans
Commercial and industrial$81,687  2.7 %$95,227  3.3 %$106,517  3.7 %
Owner-occupied commercial real estate86,897  2.9 %87,956  3.0 %82,148  2.8 %
Investor commercial real estate13,286  0.4 %13,421  0.5 %21,179  0.7 %
Construction77,591  2.6 %64,581  2.2 %47,849  1.7 %
Single tenant lease financing980,292  33.0 %972,275  33.6 %1,001,196  35.1 %
Public finance647,107  21.8 %627,678  21.7 %706,161  24.7 %
Healthcare finance380,956  12.8 %372,266  12.9 %212,351  7.4 %
Small business lending 118,526  4.0 %54,056  1.9 %5,457  0.2 %
Total commercial loans2,386,342  80.2 %2,287,460  79.1 %2,182,858  76.3 %
Consumer loans
Residential mortgage208,728  7.0 %218,730  7.6 %318,678  11.1 %
Home equity22,640  0.8 %23,855  0.8 %26,825  0.9 %
Trailers147,326  5.0 %148,700  5.1 %144,704  5.1 %
Recreational vehicles102,088  3.4 %103,868  3.6 %100,518  3.6 %
Other consumer loans42,218  1.4 %44,037  1.5 %49,029  1.7 %
Total consumer loans523,000  17.6 %539,190  18.6 %639,754  22.4 %
Net deferred loan fees, premiums, discounts and other 1
64,332  2.2 %65,443  2.3 %38,544  1.3 %
Total loans$2,973,674  100.0 %$2,892,093  100.0 %$2,861,156  100.0 %
June 30, 2020March 31, 2020June 30, 2019
AmountPercentAmountPercentAmountPercent
Deposits
Noninterest-bearing deposits$82,864  2.5 %$70,562  2.2 %$44,040  1.5 %
Interest-bearing demand deposits152,391  4.5 %123,233  3.9 %126,669  4.2 %
Savings accounts43,366  1.3 %32,485  1.0 %31,445  1.0 %
Money market accounts1,241,874  36.7 %930,698  29.3 %607,849  20.3 %
Certificates of deposits1,470,905  43.5 %1,493,644  47.0 %1,629,886  54.2 %
Brokered deposits 389,389  11.5 %527,884  16.6 %566,374  18.8 %
Total deposits$3,380,789  100.0 %$3,178,506  100.0 %$3,006,263  100.0 %

1 Includes carrying value adjustments of $46.0 million related to terminated interest rate swaps associated with public finance loans as of June 30, 2020 and $44.6 million and $22.2 million as of March 31, 2020 and June 30, 2019, respectively, related to interest rate swaps associated with public finance loans.
















First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Dollar amounts in thousands, except per share data
Three Months EndedSix Months Ended
June 30,
2020
March 31,
2020
June 30,
2019
June 30,
2020
June 30,
2019
Total equity - GAAP$307,711  $305,127  $296,120  $307,711  $296,120  
Adjustments:
           Goodwill(4,687) (4,687) (4,687) (4,687) (4,687) 
Tangible common equity$303,024  $300,440  $291,433  $303,024  $291,433  
Total assets - GAAP$4,324,600  $4,168,146  $3,958,829  $4,324,600  $3,958,829  
Adjustments:
           Goodwill(4,687) (4,687) (4,687) (4,687) (4,687) 
Tangible assets$4,319,913  $4,163,459  $3,954,142  $4,319,913  $3,954,142  
Common shares outstanding9,799,047  9,801,825  10,016,458  9,799,047  10,016,458  
Book value per common share$31.40  $31.13  $29.56  $31.40  $29.56  
Effect of goodwill(0.48) (0.48) (0.46) (0.48) (0.46) 
Tangible book value per common share$30.92  $30.65  $29.10  $30.92  $29.10  
Total shareholders' equity to assets7.12 %7.32%7.48 %7.12 %7.48 %
Effect of goodwill(0.11 %)(0.10 %)(0.11 %)(0.11)%(0.11)%
Tangible common equity to tangible assets7.01 %7.22%7.37 %7.01 %7.37 %
Total average equity - GAAP$306,868  $311,005  $297,148  $