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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 22, 2020
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)

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 class
 
Trading Symbols
 
Name of each exchange on which registered
Common Stock, without par value
 
INBK
 
The Nasdaq Stock Market LLC
6.0% Fixed to Floating Subordinated Notes due 2026
 
INBKL
 
The Nasdaq Stock Market LLC
6.0% Fixed to Floating Subordinated Notes due 2029
 
INBKZ
 
The 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 January 22, 2020, First Internet Bancorp issued a press release announcing financial results for the quarter ended December 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

On January 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 December 31, 2019. The Company provided electronic presentation slides that will be used in connection with the earnings conference call. A copy of the electronic presentation slides is included in this report as Exhibit 99.2 and is incorporated by reference herein.


Item 9.01
Financial Statements and Exhibits

Number
 
Description
 
Method 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:
January 22, 2020
 
 
 
 
 
 
 
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
402393415_fibancorplogoa64.jpg

First Internet Bancorp Reports Fourth Quarter and Full Year 2019 Results

Highlights for the fourth quarter and full year 2019 include:

Record annual net income and diluted earnings per share of $25.2 million and $2.51, respectively

Record quarterly net income of $7.1 million, compared to $6.3 million for the third quarter of 2019 and $3.6 million for the fourth quarter of 2018

Record quarterly diluted earnings per share of $0.72, compared to $0.63 diluted earnings per share for the third quarter of 2019 and $0.35 diluted earnings per share for the fourth quarter of 2018

Total quarterly revenue of $20.8 million, consistent with the third quarter of 2019 and an 18.9% increase from the fourth quarter of 2018

Fishers, Indiana, January 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 fourth quarter and full year ended December 31, 2019. Net income for the fourth quarter of 2019 was a record $7.1 million, or $0.72 diluted earnings per share. This compares to net income of $6.3 million, or $0.63 diluted earnings per share, for the third quarter of 2019, and net income of $3.6 million, or $0.35 diluted earnings per share, for the fourth quarter of 2018. The fourth quarter of 2018 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, or $0.53 adjusted diluted earnings per share.

For the twelve month period ended December 31, 2019, net income was a record $25.2 million and diluted earnings per share were a record $2.51 compared to net income of $21.9 million and diluted earnings per share of $2.30 for the twelve month period ended December 31, 2018. Excluding the OREO write-down described above, adjusted net income for the full year 2018 was $23.8 million, or $2.50 adjusted diluted earnings per share.

“First Internet Bancorp produced strong 2019 results, highlighted by record annual net income that was driven by full-year revenue growth of 12%, well-managed expenses and disciplined balance sheet management,” said David Becker, Chairman, President and Chief Executive Officer. “We generated strong production in both commercial and consumer loans, particularly in a number of our specialty lending areas, including single-tenant lease financing, healthcare finance and horse trailer and recreational vehicle lending. Additionally, we capitalized on the lower interest rate environment to drive strong origination growth in our direct-to-consumer mortgage business.

“Looking to 2020, we continue to see opportunities for growth within our collection of lending franchises and to further implement strategies to diversify our revenue and enhance margins in a capital efficient manner,” Becker added. “In 2019, we made significant progress with our expansion into small business banking, capitalizing on attractive opportunities on both sides of our balance sheet. During the fourth quarter, we completed our acquisition of the small business lending division of First Colorado National Bank. This transaction, combined with the experienced professionals we brought on board during the year, positions us to accelerate our efforts to build a nationwide platform that offers a full suite of services to small business entrepreneurs.”




Mr. Becker concluded, “As always, I would like to thank the entire First Internet team for their very hard work to deliver record revenue and earnings performance again in 2019. Their dedication and efforts are the key to our ongoing growth and success.”

Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2019 was $15.4 million, compared to $15.2 million for the third quarter of 2019. On a fully-taxable equivalent basis, net interest income for the fourth quarter was $16.9 million, compared to $16.8 million for the third quarter. Net interest income on both a reported and fully-taxable equivalent basis, was consistent with the fourth quarter of 2018.

Total interest income for the fourth quarter of 2019 was $37.9 million, an increase of 0.5%, compared to the third quarter of 2019, and an increase of 18.9% compared to the fourth quarter of 2018. On a fully-taxable equivalent basis, total interest income for the fourth quarter was $39.4 million, an increase of 0.4% compared to the third quarter, and an increase of 18.4% compared to the fourth quarter of 2018. The slight increase in total interest income compared to the third quarter of 2019 was driven primarily by a $98.0 million, or 2.5%, increase in average interest-earning assets, partially offset by a 7 basis point (“bp”) decrease in the yield on those assets. The yield on interest-earning assets for the fourth quarter of 2019 declined to 3.73% from 3.80% in the prior quarter due primarily to the decline in short term rates during the quarter following Federal Reserve rate cuts in September and October, which negatively impacted the yields earned on cash balances, securities and other earning assets. Additionally, cash balances remained elevated as time deposit renewal rates exceeded expectations, which also negatively affected the yield on earning assets. Partially offsetting this was a 2 bp increase in the yield earned on the loan portfolio, including loans held for sale, which benefitted from the acquisition of Small Business Administration (“SBA”) loans and strong healthcare finance production during the quarter.

Total interest expense for the fourth quarter of 2019 was $22.5 million, relatively consistent with the third quarter of 2019, and an increase of 37.0% compared to the fourth quarter of 2018. During the fourth quarter, average interest-bearing deposit balances increased by $79.4 million, compared to the third quarter, while the cost of funds related to those deposits declined 5 bps. The increase in average interest-bearing deposit balances was due primarily to a $113.8 million, or 17.8%, increase in average money market account balances but was partially offset by a $32.1 million, or 1.4%, decrease in the average balance of certificates and brokered deposits. The decrease in deposit costs reflects a decrease in the rates paid on money market accounts and certificates of deposit (“CDs”) as well as a shift in the deposit mix from CDs to money market accounts. During the fourth quarter, the cost of money market deposits decreased by 10 bps and the cost of certificates and brokered deposits decreased 3 bps as rates paid on new CD production and renewals were below the rates paid on maturing CDs.

Net interest margin (“NIM”) was 1.51% for the fourth quarter of 2019, compared to 1.54% for the third quarter of 2019 and 1.89% for the fourth quarter of 2018. On a fully-taxable equivalent basis, NIM decreased 3 basis points to 1.67% for the fourth quarter of 2019, from 1.70% for the third quarter of 2019, and was down from 2.07% for the fourth quarter of 2018. Compared to the linked quarter, deposit costs had a positive impact of 4 bps on NIM while loan yields provided a benefit of 2 bps. However, these benefits were offset by the lower yields earned on elevated cash balances, which had a negative impact of 7 bps, and on other interest-earning assets, which had a negative impact of 2 bps.

Noninterest Income
Noninterest income for the fourth quarter of 2019 was $5.4 million, down from $5.6 million for the third quarter of 2019, and up from $2.0 million for the fourth quarter of 2018. Compared to the linked quarter, a decline in mortgage banking revenue was essentially offset by higher gain on sale of loans and loan servicing revenue. Mortgage banking revenue decreased $1.4 million, or 31.4%, as mandatory pipeline volumes and margins declined due to seasonal factors following an extraordinarily strong third quarter. The increase of $1.2 million in gain on sale of loans was driven by sales of $53.7 million of single tenant lease financing and public finance loans and the Company’s first sales of SBA 7(a) guaranteed loans, which included $9.2 million of balances. The Company also began earning loan servicing revenue from the acquired SBA servicing portfolio, recognizing $0.2 million during the fourth quarter.




Noninterest Expense
Noninterest expense for the fourth quarter of 2019 was $12.6 million, compared to $11.2 million for the third quarter of 2019 and $12.7 million for the fourth quarter of 2018. The increase from the third quarter was due primarily to a $0.6 million increase in deposit insurance premium, a $0.5 million increase in consulting and professional fees and a $0.3 million increase in salaries and employee benefits. Deposit insurance premium expense resumed in the fourth quarter after not incurring any expense in the third quarter of 2019 as a result of the small bank assessment credit applied by the Federal Deposit Insurance Corporation. The increase in consulting and professional fees was due to higher recruiting fees and third party loan review fees while salaries and employee benefits expense increased due to the headcount growth in the Company’s SBA lending business.

Income Taxes
The Company reported an income tax expense of $0.6 million for the fourth quarter of 2019 and an effective tax rate of 7.8%, compared to income tax expense of $0.4 million and an effective tax rate of 6.6% for the third quarter of 2019 and an income tax benefit of $0.3 million for the fourth quarter of 2018. The income tax benefit reported in the fourth quarter of 2018 primarily related to the write-down of the OREO property and the continued growth in the public finance portfolio, which increased the proportion of tax-exempt income relative to overall total pre-tax income. When excluding the income tax benefit related to the OREO write-down, the Company’s adjusted effective income tax rate for the fourth quarter of 2018 was 3.1%.

Loans and Credit Quality
Total loans as of December 31, 2019 were $3.0 billion, an increase of $82.3 million, or 2.9%, compared to September 30, 2019 and an increase of $247.3 million, or 9.1%, compared to December 31, 2018. Total commercial loan balances were $2.3 billion as of December 31, 2019, an increase of $93.5 million, or 4.3%, compared to September 30, 2019 and an increase of $296.9 million, or 14.9%, compared to December 31, 2018. Compared to the linked quarter, the growth in commercial loan balances was driven largely by production in healthcare finance and the acquisition of the SBA loan portfolio. These increases were partially offset by the sale of $53.7 million of single tenant lease financing and public finance loans discussed above.

Total consumer loan balances were $633.5 million as of December 31, 2019, a decrease of $8.6 million, or 1.3%, compared to September 30, 2019 and a decrease of $74.9 million, or 10.6%, compared to December 31, 2018. The decline in consumer loan balances from September 30, 2019 was driven primarily by increased early payoffs on portfolio residential mortgage loans.

Total delinquencies 30 days or more past due increased to 0.24% of total loans as of December 31, 2019, up from 0.13% as of September 30, 2019 and 0.15% as of December 31, 2018. The increase in delinquencies compared to the linked and prior year quarters was due primarily to the single tenant lease financing relationship that was placed on nonaccrual status in the third quarter of 2019 becoming past due. Overall credit quality remained solid as nonperforming loans to total loans remained low at 0.23% as of December 31, 2019, compared to 0.20% at September 30, 2019 and 0.03% as of December 31, 2018.

The allowance for loan losses as a percentage of total loans was 0.74% as of December 31, 2019, compared to 0.75% as of September 30, 2019 and 0.66% as of December 31, 2018. The slight decline in the coverage ratio compared to the linked quarter was due primarily to lower specific reserves in the commercial and industrial portfolio.

Net charge-offs of $0.3 million were recognized during the fourth quarter of 2019, resulting in net charge-offs to average loans of 0.04%, compared to 0.15% for the third quarter and 0.05% for the fourth quarter of 2018. The provision for loan losses in the fourth quarter was $0.5 million, compared to $2.8 million for the third quarter and $1.5 million for the fourth quarter of 2018. The third quarter’s results included a specific reserve of $1.7 million recognized on the single tenant lease financing relationship mentioned above and a $0.8 million commercial loan charge-off. The provision for the fourth quarter was driven primarily by growth in the healthcare finance portfolio and net charge-offs, partially offset by the loan sale activity.




Capital
As of December 31, 2019, total shareholders’ equity was $304.9 million, an increase of $9.8 million, or 3.3%, compared to September 30, 2019, primarily due to the net income earned during the quarter and a decrease in accumulated other comprehensive loss. Book value per common share increased to $31.30 as of December 30, 2019, up from $30.30 as of September 30, 2019 and $28.39 as of December 31, 2018. Tangible book value per share increased to $30.82, up from $29.82 and $27.93, each as of the same reference dates.

The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of December 31, 2019.
 
 
As of December 31, 2019
 
 
Company
 
Bank
 
 
 
 
 
Total shareholders' equity to assets
 
7.44
%
 
8.11
%
Tangible common equity to tangible assets 1
 
7.33
%
 
8.01
%
Tier 1 leverage ratio 2
 
7.64
%
 
8.32
%
Common equity tier 1 capital ratio 2
 
10.84
%
 
11.80
%
Tier 1 capital ratio 2
 
10.84
%
 
11.80
%
Total risk-based capital ratio 2
 
14.00
%
 
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 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 February 23, 2020 by dialing (877) 344-7529; passcode: 10138147.
Additionally, interested parties can listen to a live webcast of the call on Company's website at www.firstinternetbancorp.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

About First Internet Bancorp
First Internet Bancorp is a bank holding company with assets of $4.1 billion as of December 31, 2019. 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, timing of pending acquisitions, 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,” “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. 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; failure to close any pending acquisitions; failure to satisfy or waive closing condition; 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 adjusted net income, adjusted diluted earnings per share, 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
 
 
 



First Internet Bancorp
 
 
 
 
 
 
 
Summary Financial Information (unaudited)
 
 
 
 
 
 
Amounts in thousands, except per share data
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31,
2019
 
September 30,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
7,096

 
$
6,326

 
$
3,576

 
$
25,239

 
$
21,900

 
 
 
 
 
 
 
 
 
 
 
Per share and share information
 
 
 
 
 
 
 
 
 
 
Earnings per share - basic
 
$
0.72

 
$
0.63

 
$
0.35

 
$
2.51

 
$
2.31

Earnings per share - diluted
 
0.72

 
0.63

 
0.35

 
2.51

 
2.30

Dividends declared per share
 
0.06

 
0.06

 
0.06

 
0.24

 
0.24

Book value per common share
 
31.30

 
30.30

 
28.39

 
31.30

 
28.39

Tangible book value per common share 1
 
30.82

 
29.82

 
27.93

 
30.82

 
27.93

Common shares outstanding
 
9,741,800

 
9,741,800

 
10,170,778

 
9,741,800

 
10,170,778

Average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
9,825,784

 
9,979,603

 
10,263,086

 
10,041,581

 
9,490,506

Diluted
 
9,843,829

 
9,980,612

 
10,275,040

 
10,044,483

 
9,508,653

Performance ratios
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
0.69
%
 
0.63
%
 
0.43
%
 
0.65
%
 
0.72
%
Return on average shareholders' equity
 
9.46
%
 
8.40
%
 
4.89
%
 
8.52
%
 
8.44
%
Return on average tangible common equity 1
 
9.61
%
 
8.53
%
 
4.98
%
 
8.65
%
 
8.60
%
Net interest margin
 
1.51
%
 
1.54
%
 
1.89
%
 
1.65
%
 
2.09
%
Net interest margin - FTE 1,2
 
1.67
%
 
1.70
%
 
2.07
%
 
1.82
%
 
2.25
%
Capital ratios  3
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity to assets
 
7.44
%
 
7.21
%
 
8.15
%
 
7.44
%
 
8.15
%
Tangible common equity to tangible assets 1
 
7.33
%
 
7.10
%
 
8.03
%
 
7.33
%
 
8.03
%
Tier 1 leverage ratio
 
7.64
%
 
7.66
%
 
9.00
%
 
7.64
%
 
9.00
%
Common equity tier 1 capital ratio
 
10.84
%
 
10.93
%
 
12.39
%
 
10.84
%
 
12.39
%
Tier 1 capital ratio
 
10.84
%
 
10.93
%
 
12.39
%
 
10.84
%
 
12.39
%
Total risk-based capital ratio
 
14.00
%
 
14.17
%
 
14.53
%
 
14.00
%
 
14.53
%
Asset quality
 
 
 
 
 
 
 
 
 
 
Nonperforming loans
 
$
6,732

 
$
5,783

 
$
889

 
$
6,732

 
$
889

Nonperforming assets
 
8,872

 
8,497

 
3,508

 
8,872

 
3,508

Nonperforming loans to loans
 
0.23
%
 
0.20
%
 
0.03
%
 
0.23
%
 
0.03
%
Nonperforming assets to total assets
 
0.22
%
 
0.21
%
 
0.10
%
 
0.22
%
 
0.10
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
 
Loans
 
0.74
%
 
0.75
%
 
0.66
%
 
0.74
%
 
0.66
%
Nonperforming loans
 
324.4
%
 
374.9
%
 
2,013.1
%
 
324.4
%
 
2,013.1
%
Net charge-offs to average loans
 
0.04
%
 
0.15
%
 
0.05
%
 
0.07
%
 
0.04
%
Average balance sheet information
 
 
 
 
 
 
 
 
 
 
Loans
 
$
2,936,144

 
$
2,865,258

 
$
2,577,584

 
$
2,863,250

 
$
2,364,336

Total securities
 
597,049

 
561,780

 
494,256

 
560,317

 
486,030

Other earning assets
 
452,945

 
469,454

 
148,311

 
355,412

 
116,074

Total interest-earning assets
 
4,031,327

 
3,933,315

 
3,236,144

 
3,809,903

 
2,984,608

Total assets
 
4,108,216

 
4,015,433

 
3,320,850

 
3,890,708

 
3,055,224

Noninterest-bearing deposits
 
49,570

 
43,972

 
48,779

 
44,682

 
45,562

Interest-bearing deposits
 
3,110,501

 
3,031,095

 
2,472,443

 
2,938,622

 
2,272,037

Total deposits
 
3,160,071

 
3,075,067

 
2,521,222

 
2,983,304

 
2,317,599

Shareholders' equity
 
297,623

 
298,782

 
289,844

 
296,382

 
259,416


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




First Internet Bancorp
 
 
 
 
 
 
Condensed Consolidated Balance Sheets (unaudited, except for December 31, 2018)
 
 
Amounts in thousands
 
 
 
 
 
 
 
 
December 31,
2019
 
September 30,
2019
 
December 31,
2018
Assets
 
 
 
 
 
 
Cash and due from banks
 
$
5,061

 
$
6,283

 
$
7,080

Interest-bearing deposits
 
322,300

 
410,119

 
181,632

Securities available-for-sale, at fair value
 
540,852

 
544,742

 
481,345

Securities held-to-maturity, at amortized cost
 
61,878

 
46,807

 
22,750

Loans held-for-sale
 
56,097

 
41,119

 
18,328

Loans
 
2,963,547

 
2,881,272

 
2,716,228

Allowance for loan losses
 
(21,840
)
 
(21,683
)
 
(17,896
)
Net loans
 
2,941,707

 
2,859,589

 
2,698,332

Accrued interest receivable
 
18,607

 
16,652

 
16,822

Federal Home Loan Bank of Indianapolis stock
 
25,650

 
25,650

 
23,625

Cash surrender value of bank-owned life insurance
 
37,002

 
36,764

 
36,059

Premises and equipment, net
 
14,630

 
14,512

 
10,697

Goodwill
 
4,687

 
4,687

 
4,687

Servicing asset
 
2,481

 

 

Other real estate owned
 
2,065

 
2,619

 
2,619

Accrued income and other assets
 
67,066

 
85,948

 
37,716

Total assets
 
$
4,100,083

 
$
4,095,491

 
$
3,541,692

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
57,115

 
$
50,560

 
$
43,301

Interest-bearing deposits
 
3,096,848

 
3,097,682

 
2,628,050

Total deposits
 
3,153,963

 
3,148,242

 
2,671,351

Advances from Federal Home Loan Bank
 
514,910

 
514,908

 
525,153

Subordinated debt
 
69,528

 
69,452

 
33,875

Accrued interest payable
 
3,767

 
2,635

 
1,108

Accrued expenses and other liabilities
 
53,002

 
65,114

 
21,470

Total liabilities
 
3,795,170

 
3,800,351

 
3,252,957

Shareholders' equity
 
 
 
 
 
 
Voting common stock
 
219,423

 
219,013

 
227,587

Retained earnings
 
99,681

 
93,182

 
77,689

Accumulated other comprehensive loss
 
(14,191
)
 
(17,055
)
 
(16,541
)
Total shareholders' equity
 
304,913

 
295,140

 
288,735

Total liabilities and shareholders' equity
 
$
4,100,083

 
$
4,095,491

 
$
3,541,692




First Internet Bancorp
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Income (unaudited, except for the twelve months ended December 31, 2018)
Amounts in thousands, except per share data
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
2019
 
September 30,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
Interest income
 
 
 
 
 
 
 
 
 
Loans
$
31,574

 
$
30,594

 
$
27,249

 
$
122,228

 
$
99,082

Securities - taxable
3,475

 
3,468

 
2,927

 
13,807

 
10,630

Securities - non-taxable
604

 
639

 
701

 
2,595

 
2,810

Other earning assets
2,224

 
2,993

 
972

 
8,784

 
2,945

Total interest income
37,877

 
37,694

 
31,849

 
147,414

 
115,467

Interest expense
 
 
 
 
 
 
 
 
 
Deposits
18,417

 
18,363

 
13,338

 
69,313

 
42,484

Other borrowed funds
4,086

 
4,087

 
3,090

 
15,134

 
10,716

Total interest expense
22,503

 
22,450

 
16,428

 
84,447

 
53,200

Net interest income
15,374

 
15,244

 
15,421

 
62,967

 
62,267

Provision for loan losses
468

 
2,824

 
1,487

 
5,966

 
3,892

Net interest income after provision for loan losses
14,906

 
12,420

 
13,934

 
57,001

 
58,375

Noninterest income
 
 
 
 
 
 
 
 
 
Service charges and fees
213

 
211

 
237

 
885

 
934

Loan servicing revenue
166

 

 

 
166

 

Mortgage banking activities
2,953

 
4,307

 
1,141

 
11,541

 
5,718

Gain on sale of loans
1,721

 
523

 
89

 
2,074

 
503

Loss on sale of securities

 

 

 
(458
)
 

Other
352

 
517

 
580

 
2,581

 
1,605

Total noninterest income
5,405

 
5,558

 
2,047

 
16,789

 
8,760

Noninterest expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
7,168

 
6,883

 
5,738

 
27,014

 
23,174

Marketing, advertising and promotion
409

 
456

 
543

 
1,800

 
2,468

Consulting and professional fees
1,242

 
778

 
862

 
3,669

 
3,055

Data processing
312

 
381

 
320

 
1,338

 
1,233

Loan expenses
289

 
247

 
204

 
1,142

 
942

Premises and equipment
1,556

 
1,506

 
1,307

 
6,059

 
4,996

Deposit insurance premium
601

 

 
570

 
1,903

 
1,956

Write-down of other real estate owned

 

 
2,423

 

 
2,423

Other
1,036

 
952

 
772

 
3,709

 
2,936

Total noninterest expense
12,613

 
11,203

 
12,739

 
46,634

 
43,183

Income before income taxes
7,698

 
6,775

 
3,242

 
27,156

 
23,952

Income tax (benefit) provision
602

 
449

 
(334
)
 
1,917

 
2,052

Net income
$
7,096

 
$
6,326

 
$
3,576

 
$
25,239

 
$
21,900

 
 
 
 
 
 
 
 
 
 
Per common share data
 
 
 
 
 
 
 
 
 
Earnings per share - basic
$
0.72

 
$
0.63

 
$
0.35

 
$
2.51

 
$
2.31

Earnings per share - diluted
$
0.72

 
$
0.63

 
$
0.35

 
$
2.51

 
$
2.30

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, 2019
 
September 30, 2019
 
December 31, 2018
 
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
$
2,981,333

 
$
31,574

 
4.20
%
 
$
2,902,081

 
$
30,594

 
4.18
%
 
$
2,593,577

 
$
27,249

 
4.17
%
Securities - taxable
497,739

 
3,475

 
2.77
%
 
462,490

 
3,468

 
2.97
%
 
402,179

 
2,927

 
2.89
%
Securities - non-taxable
99,310

 
604

 
2.41
%
 
99,290

 
639

 
2.55
%
 
92,077

 
701

 
3.02
%
Other earning assets
452,945

 
2,224

 
1.95
%
 
469,454

 
2,993

 
2.53
%
 
148,311

 
972

 
2.60
%
Total interest-earning assets
4,031,327

 
37,877

 
3.73
%
 
3,933,315

 
37,694

 
3.80
%
 
3,236,144

 
31,849

 
3.90
%
Allowance for loan losses
(21,967
)
 
 
 
 
 
(20,050
)
 
 
 
 
 
(17,065
)
 
 
 
 
Noninterest earning-assets
98,856

 
 
 
 
 
102,168

 
 
 
 
 
101,771

 
 
 
 
Total assets
$
4,108,216

 
 
 
 
 
$
4,015,433

 
 
 
 
 
$
3,320,850

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
122,031

 
$
223

 
0.73
%
 
$
126,130

 
$
233

 
0.73
%
 
$
89,234

 
$
182

 
0.81
%
Savings accounts
34,298

 
94

 
1.09
%
 
32,434

 
91

 
1.11
%
 
42,694

 
123

 
1.14
%
Money market accounts
752,941

 
3,653

 
1.92
%
 
639,181

 
3,261

 
2.02
%
 
518,421

 
2,575

 
1.97
%
Certificates and brokered deposits
2,201,231

 
14,447

 
2.60
%
 
2,233,350

 
14,778

 
2.63
%
 
1,822,094

 
10,458

 
2.28
%
Total interest-bearing deposits
3,110,501

 
18,417

 
2.35
%
 
3,031,095

 
18,363

 
2.40
%
 
2,472,443

 
13,338

 
2.14
%
Other borrowed funds
584,386

 
4,086

 
2.77
%
 
584,308

 
4,087

 
2.78
%
 
499,877

 
3,090

 
2.45
%
Total interest-bearing liabilities
3,694,887

 
22,503

 
2.42
%
 
3,615,403

 
22,450

 
2.46
%
 
2,972,320

 
16,428

 
2.19
%
Noninterest-bearing deposits
49,570

 
 
 
 
 
43,972

 
 
 
 
 
48,779

 
 
 
 
Other noninterest-bearing liabilities
66,136

 
 
 
 
 
57,276

 
 
 
 
 
9,907

 
 
 
 
Total liabilities
3,810,593

 
 
 
 
 
3,716,651

 
 
 
 
 
3,031,006

 
 
 
 
Shareholders' equity
297,623

 
 
 
 
 
298,782

 
 
 
 
 
289,844

 
 
 
 
Total liabilities and shareholders' equity
$
4,108,216

 
 
 
 
 
$
4,015,433

 
 
 
 
 
$
3,320,850

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
15,374

 
 
 
 
 
$
15,244

 
 
 
 
 
$
15,421

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
 
1.31
%
 
 
 
 
 
1.34
%
 
 
 
 
 
1.71
%
Net interest margin
 
 
 
 
1.51
%
 
 
 
 
 
1.54
%
 
 
 
 
 
1.89
%
Net interest margin - FTE 2,3
 
 
 
 
1.67
%
 
 
 
 
 
1.70
%
 
 
 
 
 
2.07
%

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)
 
 
 
 
 
 
 
 
 
 
Amounts in thousands
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
December 31, 2019
 
December 31, 2018
 
Average Balance
 
Interest/Dividends
 
Yield/Cost
 
Average Balance
 
Interest/Dividends
 
Yield/Cost
Assets
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets
 
 
 
 
 
 
 
 
 
 
 
Loans, including loans held-for-sale 1
$
2,894,174

 
$
122,228

 
4.22
%
 
$
2,382,504

 
$
99,082

 
4.16
%
Securities - taxable
462,704

 
13,807

 
2.98
%
 
391,958

 
10,630

 
2.71
%
Securities - non-taxable
97,613

 
2,595

 
2.66
%
 
94,072

 
2,810

 
2.99
%
Other earning assets
355,412

 
8,784

 
2.47
%
 
116,074

 
2,945

 
2.54
%
Total interest-earning assets
3,809,903

 
147,414

 
3.87
%
 
2,984,608

 
115,467

 
3.87
%
Allowance for loan losses
(19,891
)
 
 
 
 
 
(16,097
)
 
 
 
 
Noninterest earning-assets
100,696

 
 
 
 
 
86,713

 
 
 
 
Total assets
$
3,890,708

 
 
 
 
 
$
3,055,224

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
118,874

 
$
882

 
0.74
%
 
$
90,229

 
$
583

 
0.65
%
Regular savings accounts
35,751

 
398

 
1.11
%
 
51,333

 
585

 
1.14
%
Money market accounts
637,360

 
12,661

 
1.99
%
 
544,802

 
8,803

 
1.62
%
Certificates and brokered deposits
2,146,637

 
55,372

 
2.58
%
 
1,585,673

 
32,513

 
2.05
%
Total interest-bearing deposits
2,938,622

 
69,313

 
2.36
%
 
2,272,037

 
42,484

 
1.87
%
Other borrowed funds
564,757

 
15,134

 
2.68
%
 
468,411

 
10,716

 
2.29
%
Total interest-bearing liabilities
3,503,379

 
84,447

 
2.41
%
 
2,740,448

 
53,200

 
1.94
%
Noninterest-bearing deposits
44,682

 
 
 
 
 
45,562

 
 
 
 
Other noninterest-bearing liabilities
46,265

 
 
 
 
 
9,798

 
 
 
 
Total liabilities
3,594,326

 
 
 
 
 
2,795,808

 
 
 
 
Shareholders' equity
296,382

 
 
 
 
 
259,416

 
 
 
 
Total liabilities and shareholders' equity
$
3,890,708

 
 
 
 
 
$
3,055,224

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
62,967

 
 
 
 
 
$
62,267

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
 
1.46
%
 
 
 
 
 
1.93
%
Net interest margin
 
 
 
 
1.65
%
 
 
 
 
 
2.09
%
Net interest margin - FTE 2,3
 
 
 
 
1.82
%
 
 
 
 
 
2.25
%

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)
 
 
 
 
 
 
 
 
 
 
 
Amounts in thousands
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
Commercial loans
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
96,420

 
3.3
%
 
$
82,791

 
2.9
%
 
$
107,405

 
4.0
%
Owner-occupied commercial real estate
 
73,392

 
2.5
%
 
76,197

 
2.6
%
 
77,569

 
2.9
%
Investor commercial real estate
 
12,567

 
0.4
%
 
11,852

 
0.4
%
 
5,391

 
0.2
%
Construction
 
60,274

 
2.0
%
 
54,131

 
1.9
%
 
39,916

 
1.5
%
Single tenant lease financing
 
995,879

 
33.6
%
 
1,008,247

 
35.0
%
 
919,440

 
33.8
%
Public finance
 
687,094

 
23.2
%
 
686,622

 
23.8
%
 
706,342

 
26.0
%
Healthcare finance
 
300,612

 
10.1
%
 
251,530

 
8.6
%
 
117,007

 
4.4
%
Small business lending
 
61,121

 
2.1
%
 
22,447

 
0.8
%
 
17,370

 
0.5
%
Total commercial loans
 
2,287,359

 
77.2
%
 
2,193,817

 
76.0
%
 
1,990,440

 
73.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer loans
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
 
313,849

 
10.6
%
 
320,451

 
11.1
%
 
399,898

 
14.7
%
Home equity
 
24,306

 
0.8
%
 
25,042

 
0.9
%
 
28,735

 
1.1
%
Trailers
 
146,734

 
5.0
%
 
145,600

 
5.1
%
 
136,620

 
5.0
%
Recreational vehicles
 
102,702

 
3.5
%
 
102,698

 
3.6
%
 
91,912

 
3.4
%
Other consumer loans
 
45,873

 
1.5
%
 
48,275

 
1.7
%
 
51,239

 
1.9
%
Total consumer loans
 
633,464

 
21.4
%
 
642,066

 
22.4
%
 
708,404

 
26.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net deferred loan fees, premiums, discounts and other 1
 
42,724

 
1.4
%
 
45,389

 
1.6
%
 
17,384

 
0.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
 
$
2,963,547

 
100.0
%
 
$
2,881,272

 
100.0
%
 
$
2,716,228

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
Deposits
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
57,115

 
1.8
%
 
$
50,560

 
1.6
%
 
$
43,301

 
1.6
%
Interest-bearing demand deposits
 
129,020

 
4.1
%
 
122,551

 
3.9
%
 
121,055

 
4.5
%
Savings accounts
 
29,616

 
0.9
%
 
34,886

 
1.1
%
 
38,489

 
1.4
%
Money market accounts
 
786,390

 
24.9
%
 
698,077

 
22.2
%
 
528,533

 
19.9
%
Certificates of deposits
 
1,613,453

 
51.2
%
 
1,681,377

 
53.4
%
 
1,292,883

 
48.4
%
Brokered deposits
 
538,369

 
17.1
%
 
560,791

 
17.8
%
 
647,090

 
24.2
%
Total deposits
 
$
3,153,963

 
100.0
%
 
$
3,148,242

 
100.0
%
 
$
2,671,351

 
100.0
%

1 Includes carrying value adjustments of $21.4 million, $27.6 million and $5.0 million as of December 31, 2019, September 30, 2019 and December 31, 2018, respectively, related to interest rate swaps associated with public finance loans.









First Internet Bancorp
 
 
 
 
 
 
 
 
 
 
Reconciliation of Non-GAAP Financial Measures
 
 
 
 
 
 
Amounts in thousands, except per share data
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31,
2019
 
September 30,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
 
 
 
 
 
 
 
 
 
 
 
Total equity - GAAP
 
$
304,913

 
$
295,140

 
$
288,735

 
$
304,913

 
$
288,735

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Tangible common equity
 
$
300,226

 
$
290,453

 
$
284,048

 
$
300,226

 
$
284,048

 
 
 
 
 
 
 
 
 
 
 
Total assets - GAAP
 
$
4,100,083

 
$
4,095,491

 
$
3,541,692

 
$
4,100,083

 
$
3,541,692

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Tangible assets
 
$
4,095,396

 
$
4,090,804

 
$
3,537,005

 
$
4,095,396

 
$
3,537,005

 
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
 
9,741,800

 
9,741,800

 
10,170,778

 
9,741,800

 
10,170,778

 
 
 
 
 
 
 
 
 
 
 
Book value per common share
 
$
31.30

 
$
30.30

 
$
28.39

 
$
31.30

 
$
28.39

Effect of goodwill
 
(0.48
)
 
(0.48
)
 
(0.46
)
 
(0.48
)
 
(0.46
)
Tangible book value per common share
 
$
30.82

 
$
29.82

 
$
27.93

 
$
30.82

 
$
27.93

 
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity to assets ratio
 
7.44
 %
 
7.21
 %
 
8.15
 %
 
7.44
 %
 
8.15
 %
Effect of goodwill
 
(0.11
)%
 
(0.11
)%
 
(0.12
)%
 
(0.11
)%
 
(0.12
)%
Tangible common equity to tangible assets ratio
 
7.33
 %
 
7.10
 %
 
8.03
 %
 
7.33
 %
 
8.03
 %