Market Overview

First Internet Bancorp Quarterly Net Income Up 25% Year-over-Year, 17% over Prior Quarter

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FISHERS, Ind.--(BUSINESS WIRE)--

First Internet Bancorp (the "Company") (NASDAQ: INBK), the parent company of First Internet Bank (www.firstib.com), announced today financial and operational results for the second quarter 2016.

David Becker, Chairman, President and Chief Executive Officer, commented, "First Internet Bancorp continues to grow at an exceptional rate, with assets up more than 54% from one year ago. Our growth is meaningful because it produced outstanding interest and noninterest income results, fueling another quarter of record net income.

"We are reporting continued strong loan growth in both commercial and consumer loans, funded by deposit generation. To support our expanding balance sheet, we raised $22.8 million of equity capital during the quarter in an underwritten offering combined with sales through an ‘at-the-market' equity offering program.

"Importantly, the growth of our net income outweighed the effect of the newly issued shares. Diluted earnings per share of $0.57 were up $0.04 per share over the linked quarter and $0.07 over second quarter 2015. Our results reflect our ability to execute our strategy and perform at a high level for a sustained period."

Second quarter net income was a record $2.8 million and diluted earnings per share were $0.57. This compares with first quarter net income of $2.4 million and diluted earnings per share of $0.53 and second quarter 2015 net income of $2.3 million and diluted earnings per share of $0.50.

Highlights for the second quarter 2016 included:

  • Diluted earnings per share of $0.57, increasing $0.04, or 7.5%, compared to the linked quarter and increasing $0.07, or 14.0%, compared to the second quarter 2015
  • Solid quarterly performance
    • Return on average assets of 0.71%
    • Return on average shareholders' equity of 9.67%
    • Return on average tangible common equity of 10.07%
  • Total loan growth of $70.9 million, or 6.8%, compared to March 31, 2016 and $297.4 million, or 36.5%, compared to June 30, 2015
  • Total deposit growth of $145.8 million, or 11.7%, compared to March 31, 2016 and $532.4 million, or 62.2%, compared to June 30, 2015
  • Net interest income of $9.3 million, increasing $1.7 million, or 22.9%, compared to the second quarter 2015
  • Noninterest income, excluding the gain on sale of securities and the loss on fixed assets discussed below, of $3.6 million, increasing $1.1 million, or 46.0%, compared to the second quarter 2015
  • Strengthened capital levels following the equity offerings
    • Tangible common equity to tangible assets of 7.72%
    • Tier 1 leverage ratio of 8.08%
    • Common equity tier 1 capital ratio of 10.66%
    • Tier 1 capital ratio of 10.66%
    • Total risk-based capital ratio of 12.54%

During the second quarter, the Company recognized certain expenses associated with exiting its former headquarters location. Specifically, a lease impairment of $130,000 was recorded in noninterest expense and a loss on fixed assets of $45,000 related to the location was recorded as a reduction to noninterest income. In the aggregate, these items had a negative impact on diluted earnings per share of $0.02. Also during the second quarter, the provision for loan losses included a specific allowance of $0.5 million related to a commercial and industrial loan that was placed on nonaccrual status. Net of the impact of transferring the loan from the general reserve, this item negatively impacted pre-tax income by $0.4 million, or $0.05 per diluted share. Additionally, the Company recognized a gain on sale of investment securities of $177,000, or $0.02 per diluted share.

Net Interest Income and Net Interest Margin

Net interest income for the second quarter was $9.3 million compared to $9.1 million for the first quarter and $7.6 million for the second quarter 2015. Total interest income for the second quarter was $14.0 million, increasing $1.3 million, or 10.1%, compared to the first quarter and $3.8 million, or 37.9%, compared to the second quarter 2015. The increase in total interest income compared to the linked quarter was driven by a $133.4 million, or 59.3%, increase in average investment balances and an $81.3 million, or 8.2%, increase in average loans receivable. The growth in average investment and loan balances was partially offset by a decline of 18 bps in the yield earned on the loan portfolio from 4.43% for the first quarter to 4.25% for the second quarter. The decrease was driven primarily by a decline in prepayment fees related to commercial real estate loans and accelerated premium amortization related to early payoffs of purchased residential mortgages.

Total interest expense for the second quarter was $4.7 million, increasing $1.1 million, or 31.3%, compared to the first quarter and $2.1 million, or 82.4%, compared to the second quarter 2015. Average interest-bearing deposit balances increased $251.8 million, or 24.4%, compared to the linked quarter with the related cost of funds increasing 11 bps from 1.12% in the first quarter to 1.23% in the second quarter. The average interest-bearing deposit balance growth was driven primarily by an increase in average certificates of deposit balances of $233.5 million, or 41.5%, compared to the linked quarter. During the second quarter, the Company produced $168.1 million of new CD balances, which continued to enhance liquidity and asset/liability management. Most of the new CDs were in medium and long duration products as the weighted average term of the new production was approximately 28 months. As a result, the cost of funds related to CDs increased 9 bps during the quarter to 1.52% from 1.43% for the first quarter. Additionally, the cost of funds related to Advances from the Federal Home Loan Bank increased 36 bps as one $50.0 million borrowing converted from its first year floating rate of 0.00% (3 Month LIBOR less 75 bps) to a fixed rate of 1.05% for its remaining four year term. Overall, the total cost of interest-bearing liabilities increased 13 bps during the quarter to 1.30% from 1.17% for the first quarter.

Net interest margin ("NIM") was 2.39% for the second quarter compared to 2.78% for the first quarter and 2.87% for the second quarter 2015. The effect of the decline in prepayment fees related to commercial real estate loans and accelerated premium amortization related to early payoffs of purchased residential mortgages combined with higher deposit costs contributed significantly to the quarterly decline in NIM, partially offset by the growth in the investment portfolio. Additionally, the Company carried excess liquidity during the quarter as cash inflows generated from year-to-date deposit activity and proceeds from the equity offerings outpaced loan growth and investment purchases, which also negatively impacted NIM.

Noninterest Income

Noninterest income for the second quarter was $3.7 million compared to $2.5 million for the first quarter and $2.5 million for the second quarter 2015. Excluding the gain on sale of securities of $177,000 and the loss on fixed assets of $45,000 related to the former headquarters location, the increase of $1.1 million, or 42.4%, compared to the linked quarter was driven by an increase of $1.0 million, or 46.2%, in mortgage banking revenue resulting from higher origination volumes and an improvement in gain on sale margin.

Noninterest Expense

Noninterest expense for the second quarter was $7.9 million compared to $7.0 million for the first quarter and $6.3 million for the second quarter 2015. Excluding the lease impairment related to the former headquarters location, the increase of $0.7 million, or 10.6%, compared to the linked quarter was due primarily to higher salaries and employee benefits and consulting and professional fees. The increase in salaries and employee benefits resulted from higher incentive compensation related to increased mortgage production and personnel growth. The increase in consulting and professional fees was due to higher legal expenses and consulting engagements that occurred during the quarter.

Income Taxes

Income tax expense was $1.4 million for the second quarter, resulting in an effective tax rate of 33.4%, compared to $1.3 million and an effective tax rate of 34.8% for the linked quarter and $1.2 million and an effective tax rate of 33.7% for the second quarter 2015.

Loans and Credit Quality

Total loans as of June 30, 2016 were $1.1 billion, increasing $70.9 million, or 6.8%, compared to March 31, 2016 and $297.4 million, or 36.5%, compared to June 30, 2015. Total commercial loan balances were $725.0 million as of June 30, 2016, increasing $58.6 million, or 8.8%, compared to March 31, 2016 and $276.0 million, or 61.5%, compared to June 30, 2015. Continued strong production in single tenant lease financing balances contributed significantly to the growth as balances increased $55.4 million, or 12.4%, compared to March 31, 2016 and $221.0 million, or 79.0%, compared to June 30, 2015. Commercial and industrial and owner-occupied commercial real estate production was solid as balances increased $4.2 million on a combined basis, or 2.8%, compared to March 31, 2016 and $29.0 million, or 22.5%, compared to June 30, 2015. Construction loan originations also continued to grow during the second quarter as balances increased $0.8 million, or 1.5%, compared to March 31, 2016 and $33.2 million, or 164.8%, compared to June 30, 2015.

Total consumer loan balances were $382.8 million as of June 30, 2016, increasing $12.9 million, or 3.5%, compared to March 31, 2016 and $22.3 million, or 6.2%, compared to June 30, 2015. Due to the Company's recent initiative in financing home improvement loans, other consumer loans continued to grow as balances increased $12.3 million, or 120.4%, compared to March 31, 2016 and $19.9 million, or 733.3%, compared to June 30, 2015. The trailer portfolio also had a solid quarter as balances increased $4.9 million, or 7.1%, compared to March 31, 2016 and $8.7 million, or 13.2%, compared to June 30, 2015. Recreational vehicle lending contributed to the growth as well as balances increased $3.2 million, or 7.7%, compared to March 31, 2016 and $10.0 million, or 29.2%, compared to June 30, 2015.

Overall credit quality continued to remain strong as total delinquencies 30 days or more past due as a percentage of total loans receivable dropped to 0.09% as of June 30, 2016 from 0.12% as of March 31, 2016. During the quarter, a commercial and industrial loan with an outstanding balance of $4.7 million was placed on nonaccrual status and a specific allowance of $0.5 million was added to the allowance for loan losses. As a result, nonperforming loans to loans receivable increased to 0.51% as of June 30, 2016 from 0.04% as of March 31, 2016 and 0.02% as of June 30, 2015. Additionally, nonperforming assets to total assets increased to 0.60% as of June 30, 2016 from 0.32% as of March 31, 2016 and 0.43% as of June 30, 2015.

The allowance for loan losses was $10.0 million as of June 30, 2016 compared to $9.2 million as of March 31, 2016 and $7.1 million as of June 30, 2015. Due to the increase in nonperforming loans, the allowance as a percentage of total nonperforming loans declined to 177.6% as of June 30, 2016 from 2,512.3% as of March 31, 2016 and 3,762.2% as of June 30, 2015. The allowance as a percentage of total loans receivable was 0.90% as of June 30, 2016 compared to 0.89% as of March 31, 2016 and 0.87% as of June 30, 2015.

Net charge-offs of $0.1 million were recognized during the second quarter, resulting in net charge-offs to average loans receivable of 0.05% as compared to 0.03% for the first quarter and net recoveries of 0.20% for the second quarter 2015. The provision for loan losses in the second quarter was $0.9 million compared to $0.9 million for the first quarter and $0.3 million for the second quarter 2015.

Capital

During the second quarter, total shareholders' equity increased $27.8 million, due primarily to capital raising activities that included an underwritten offering of 895,955 shares of common stock and sales of an additional 139,811 shares in an "at-the-market" equity offering program. In the aggregate, the offerings resulted in $22.8 million of net proceeds for the Company. Additionally, net income earned during the quarter and the change in the unrealized gain/loss related to the investment portfolio contributed to the increase in total shareholders' equity, partially offset by declared dividends. As of June 30, 2016, the Company's tier 1 leverage, common equity tier 1, tier 1 and total risk-based capital ratios were 8.08%, 10.66%, 10.66% and 12.54% compared to 7.65%, 9.38%, 9.38% and 11.38% as of March 31, 2016, respectively. The increases in regulatory capital ratios were due to the equity offerings, partially offset by continued average asset and risk-weighted asset growth. Tangible common equity to tangible assets increased 95 bps during the second quarter to 7.72% as a result of the equity offerings, partially offset by strong balance sheet growth. Tangible book value per share increased to $23.67 as of June 30, 2016 from $22.93 as of March 31, 2016 and $21.23 as of June 30, 2015.

About First Internet Bancorp

First Internet Bancorp is the parent company of First Internet Bank of Indiana, which opened for business in 1999 as the nation's first state-chartered, FDIC-insured institution to operate solely via the Internet. With customers in all 50 states, First Internet Bank offers consumers services including checking, savings, money market, certificates of deposit and IRA accounts as well as consumer loans, residential mortgages, residential construction loans and home equity products. For commercial clients, it provides commercial real estate loans, commercial and industrial loans and treasury management services. First Internet Bank has been recognized as one of the "Best Banks to Work For" by American Banker Magazine, a "Best Place to Work in Indiana" by a consortium of statewide resources, and a "Top Workplace" by The Indianapolis Star. 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.

Safe Harbor Statement

This press release may contain forward-looking statements with respect to the financial condition, results of operations, 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 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 and commercial and industrial 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, return on average tangible common equity and tangible common equity to tangible assets are used by the Company's management to measure the strength of its capital and its ability to generate earnings on tangible capital invested by its shareholders. Although management believes these non-GAAP measures provide 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."

         
First Internet Bancorp
Summary Financial Information (unaudited)
Amounts in thousands, except per share data
     
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
 
Net income $ 2,834 $ 2,432 $ 2,265 $ 5,266 $ 4,328
 
Per share and share information
Earnings per share - basic $ 0.57 $ 0.54 $ 0.50 $ 1.11 $ 0.96
Earnings per share - diluted 0.57 0.53 0.50 1.10 0.95
Dividends declared per share 0.06 0.06 0.06 0.12 0.12
Book value per common share 24.52 23.98 22.28 24.52 22.28
Tangible book value per common share 23.67 22.93 21.23 23.67 21.23
Common shares outstanding 5,533,050 4,497,284 4,484,513 5,533,050 4,484,513
Average common shares outstanding:
Basic 4,972,759 4,541,728 4,529,823 4,757,243 4,523,336
Diluted 4,992,025 4,575,555 4,550,034 4,782,700 4,536,736
Performance ratios
Return on average assets 0.71 % 0.72 % 0.84 % 0.72 % 0.84 %
Return on average shareholders' equity 9.67 % 9.20 % 9.15 % 9.45 % 8.85 %
Return on average tangible common equity 10.07 % 9.63 % 9.60 % 9.86 % 9.29 %
Net interest margin 2.39 % 2.78 % 2.87 % 2.57 % 2.86 %
Capital ratios 1
Tangible common equity to tangible assets 7.72 % 6.77 % 8.66 % 7.72 % 8.66 %
Tier 1 leverage ratio 8.08 % 7.65 % 8.93 % 8.08 % 8.93 %
Common equity tier 1 capital ratio 10.66 % 9.38 % 11.12 % 10.66 % 11.12 %
Tier 1 capital ratio 10.66 % 9.38 % 11.12 % 10.66 % 11.12 %
Total risk-based capital ratio 12.54 % 11.38 % 12.28 % 12.54 % 12.28 %
Asset quality
Nonperforming loans $ 5,639 $ 367 $ 188 $ 5,639 $ 188
Nonperforming assets 10,173 4,930 4,765 10,173 4,765
Nonperforming loans to loans receivable 0.51 % 0.04 % 0.02 % 0.51 % 0.02 %
Nonperforming assets to total assets 0.60 % 0.32 % 0.43 % 0.60 % 0.43 %
Allowance for loan losses to:
Loans receivable 0.90 % 0.89 % 0.87 % 0.90 % 0.87 %
Nonperforming loans 177.6 % 2,512.3 % 3,762.2 % 177.6 % 3,762.2 %

Net charge-offs (recoveries) to average loans receivable

0.05 % 0.03 % (0.20

%)

0.04 % (0.14 %)
Average balance sheet information
Loans receivable $ 1,072,901 $ 991,614 $ 787,339 $ 1,032,257 $ 766,512
Securities available-for-sale 358,498 225,077 181,864 291,787 163,654
Other earning assets 97,774 78,291 49,001 88,033 45,342
Total interest-earning assets 1,566,554 1,323,536 1,056,485 1,445,045 1,012,082
Total assets 1,596,504 1,352,832 1,085,118 1,474,668 1,040,731
Noninterest-bearing deposits 27,687 22,899 20,697 25,293 21,477
Interest-bearing deposits 1,284,952 1,033,144 822,735 1,159,048 792,494
Total deposits 1,312,639 1,056,043 843,432 1,184,341 813,971
Shareholders' equity 117,913 106,278 99,333 112,096 98,592

1 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, March 31, June 30,
2016 2016 2015
Assets
Cash and due from banks $ 1,868 $ 2,411 $ 1,713
Interest-bearing demand deposits 68,140 98,533 28,889
Interest-bearing time deposits 250 1,000 1,250
Securities available-for-sale, at fair value 433,806 315,311 190,767
Loans held-for-sale 44,503 29,491 29,872
Loans receivable 1,111,622 1,040,683 814,243
Allowance for loan losses   (10,016 )   (9,220 )   (7,073 )
Net loans receivable 1,101,606 1,031,463 807,170
Accrued interest receivable 5,508 4,528 3,550
Federal Home Loan Bank of Indianapolis stock 8,595 8,595 6,946
Cash surrender value of bank-owned life insurance 12,932 12,826 12,524
Premises and equipment, net 9,267 8,485 8,120
Goodwill 4,687 4,687 4,687
Other real estate owned 4,488 4,488 4,488
Accrued income and other assets   6,818     5,901     4,669  
Total assets $ 1,702,468   $ 1,527,719   $ 1,104,645  
 
Liabilities
Noninterest-bearing deposits $ 28,066 $ 28,945 $ 20,994
Interest-bearing deposits   1,360,867     1,214,233     835,509  
Total deposits 1,388,933 1,243,178 856,503
Advances from Federal Home Loan Bank 147,974 150,969 140,935
Subordinated debt 12,778 12,751 2,915
Accrued interest payable 138 108 108
Accrued expenses and other liabilities   16,966     12,883     4,276  
Total liabilities   1,566,789     1,419,889     1,004,737  
Shareholders' equity
Voting common stock 95,642 72,697 72,218
Retained earnings 37,630 35,135 28,928
Accumulated other comprehensive income (loss)   2,407     (2 )   (1,238 )
Total shareholders' equity   135,679     107,830     99,908  
Total liabilities and shareholders' equity $ 1,702,468   $ 1,527,719   $ 1,104,645  
         
First Internet Bancorp
Condensed Consolidated Statements of Income (unaudited)
Amounts in thousands, except per share data
     
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
Interest income
Loans $ 11,661 $ 11,189 $ 9,043 $ 22,850 $ 17,433
Securities - taxable 1,747 1,169 945 2,916 1,667
Securities - non-taxable 368 165 59 533 59
Other earning assets   195     170     83     365     158  
Total interest income   13,971     12,693     10,130     26,664     19,317  
Interest expense
Deposits 3,930 2,888 2,137 6,818 4,090
Other borrowed funds   735     664     421     1,399     881  
Total interest expense   4,665     3,552     2,558     8,217     4,971  
Net interest income 9,306 9,141 7,572 18,447 14,346
Provision for loan losses   924     946     304     1,870     746  

Net interest income after provision for loan losses

  8,382     8,195     7,268     16,577     13,600  
Noninterest income
Service charges and fees 215 200 193 415 369
Mortgage banking activities 3,295 2,254 2,214 5,549 5,100
Gain on sale of securities 177 - - 177 -
Loss on asset disposals (48 ) (16 ) (33 ) (64 ) (47 )
Other   109     102     102     211     202  
Total noninterest income   3,748     2,540     2,476     6,288     5,624  
Noninterest expense
Salaries and employee benefits 4,329 3,898 3,787 8,227 7,365
Marketing, advertising and promotion 434 464 334 898 786
Consulting and professional fees 895 638 564 1,533 1,156
Data processing 275 274 233 549 481
Loan expenses 200 184 181 384 362
Premises and equipment 963 798 691 1,761 1,333
Deposit insurance premium 215 180 160 395 310
Other   564     569     377     1,133     791  
Total noninterest expense   7,875     7,005     6,327     14,880     12,584  
Income before income taxes 4,255 3,730 3,417 7,985 6,640
Income tax provision   1,421     1,298     1,152     2,719     2,312  
Net income $ 2,834   $ 2,432   $ 2,265   $ 5,266   $ 4,328  
 
Per common share data
Earnings per share - basic $ 0.57 $ 0.54 $ 0.50 $ 1.11 $ 0.96
Earnings per share - diluted $ 0.57 $ 0.53 $ 0.50 $ 1.10 $ 0.95
Dividends declared per share $ 0.06 $ 0.06 $ 0.06 $ 0.12 $ 0.12

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

                 
First Internet Bancorp
Average Balances and Rates (unaudited)
Amounts in thousands
     
Three Months Ended
June 30, 2016 March 31, 2016 June 30, 2015
Average Interest / Yield / Average Interest / Yield / Average Interest / Yield /
Balance Dividends Cost Balance Dividends Cost Balance Dividends Cost
Assets
Interest-earning assets
Loans, including loans held-for-sale $ 1,110,282 $ 11,661 4.22 % $ 1,020,168 $ 11,189 4.41 % $ 825,620 $ 9,043 4.39 %
Securities - taxable 307,336 1,747 2.29 % 202,898 1,169 2.32 % 174,057 945 2.18 %
Securities - non-taxable 51,162 368 2.89 % 22,179 165 2.99 % 7,807 59 3.03 %
Other earning assets   97,774     195 0.80 %   78,291     170 0.87 %   49,001     83 0.68 %
Total interest-earning assets 1,566,554 13,971 3.59 % 1,323,536 12,693 3.86 % 1,056,485 10,130 3.85 %
 
Allowance for loan losses (9,472 ) (8,655 ) (6,545 )
Noninterest-earning assets   39,422     37,951     35,178  
Total assets $ 1,596,504   $ 1,352,832   $ 1,085,118  
 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 83,712 $ 114 0.55 % $ 81,338 $ 111 0.55 % $ 76,095 $ 104 0.55 %
Regular savings accounts 28,023 40 0.57 % 25,021 36 0.58 % 23,873 34 0.57 %
Money market accounts 363,767 641 0.71 % 350,809 616 0.71 % 282,015 503 0.72 %
Certificates and brokered deposits   809,450     3,135 1.56 %   575,976     2,125 1.48 %   440,752     1,496 1.36 %
Total interest-bearing deposits 1,284,952 3,930 1.23 % 1,033,144 2,888 1.12 % 822,735 2,137 1.04 %
Other borrowed funds   161,127     735 1.83 %   185,618     664 1.44 %   137,421     421 1.23 %
Total interest-bearing liabilities 1,446,079 4,665 1.30 % 1,218,762 3,552 1.17 % 960,156 2,558 1.07 %
 
Noninterest-bearing deposits 27,687 22,899 20,697
Other noninterest-bearing liabilities   4,825     4,893     4,932  
Total liabilities 1,478,591 1,246,554 985,785
 
Shareholders' equity   117,913     106,278     99,333  
Total liabilities and shareholders' equity $ 1,596,504   $ 1,352,832   $ 1,085,118  
     
Net interest income $ 9,306 $ 9,141 $ 7,572
 
Interest rate spread 2.29 % 2.69 % 2.78 %
 
Net interest margin 2.39 % 2.78 % 2.87 %
           
First Internet Bancorp
Average Balances and Rates (unaudited)
Amounts in thousands
     
Six Months Ended
June 30, 2016 June 30, 2015
Average Interest / Yield / Average Interest / Yield /
Balance Dividends Cost Balance Dividends Cost
Assets
Interest-earning assets
Loans, including loans held-for-sale $ 1,065,225 $ 22,850 4.31 % $ 803,086 $ 17,433 4.38 %
Securities - taxable 255,116 2,916 2.30 % 159,729 1,667 2.10 %
Securities - non-taxable 36,671 533 2.92 % 3,925 59 3.03 %
Other earning assets   88,033     365 0.83 %   45,342     158 0.70 %
Total interest-earning assets 1,445,045 26,664 3.71 % 1,012,082 19,317 3.85 %
 
Allowance for loan losses (9,063 ) (6,215 )
Noninterest-earning assets   38,686     34,864  
Total assets $ 1,474,668   $ 1,040,731  
 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 82,525 $ 225 0.55 % $ 75,752 $ 206 0.55 %
Regular savings accounts 26,522 76 0.58 % 22,991 66 0.58 %
Money market accounts 357,288 1,257 0.71 % 278,185 995 0.72 %
Certificates and brokered deposits   692,713     5,260 1.53 %   415,566     2,823 1.37 %
Total interest-bearing deposits 1,159,048 6,818 1.18 % 792,494 4,090 1.04 %
Other borrowed funds   173,372     1,399 1.62 %   123,680     881 1.44 %
Total interest-bearing liabilities 1,332,420 8,217 1.24 % 916,174 4,971 1.09 %
 
Noninterest-bearing deposits 25,293 21,477
Other noninterest-bearing liabilities   4,859     4,488  
Total liabilities 1,362,572 942,139
 
Shareholders' equity   112,096     98,592  
Total liabilities and shareholders' equity $ 1,474,668   $ 1,040,731  
   
Net interest income $ 18,447 $ 14,346
 
Interest rate spread 2.47 % 2.76 %
 
Net interest margin 2.57 % 2.86 %
           
First Internet Bancorp
Loans and Deposits (unaudited)
Amounts in thousands
     
June 30, 2016 March 31, 2016 June 30, 2015
Amount Percent Amount Percent Amount Percent
Commercial loans
Commercial and industrial $ 111,130 10.0 % $ 106,431 10.2 % $ 89,316 11.0 %
Owner-occupied commercial real estate 46,543 4.2 % 47,010 4.5 % 39,405 4.8 %
Investor commercial real estate 12,976 1.2 % 14,756 1.4 % 20,163 2.5 %
Construction 53,368 4.8 % 52,591 5.1 % 20,155 2.5 %
Single tenant lease financing   500,937 45.1 %   445,534 42.8 %   279,891 34.4 %
Total commercial loans 724,954 65.3 % 666,322 64.0 % 448,930 55.2 %
 
Consumer loans
Residential mortgage 202,107 18.2 % 208,636 20.1 % 207,703 25.5 %
Home equity 38,981 3.5 % 40,000 3.8 % 49,662 6.1 %
Trailers 74,777 6.7 % 69,845 6.7 % 66,080 8.1 %
Recreational vehicles 44,387 4.0 % 41,227 4.0 % 34,366 4.2 %
Other consumer loans   22,592 2.0 %   10,251 1.0 %   2,711 0.3 %
Total consumer loans 382,844 34.4 % 369,959 35.6 % 360,522 44.2 %
 
Net deferred loan fees, premiums and discounts   3,824 0.3 %   4,402 0.4 %   4,791 0.6 %
Total loans receivable $ 1,111,622 100.0 % $ 1,040,683 100.0 % $ 814,243 100.0 %
 
 
June 30, 2016 March 31, 2016 June 30, 2015
Amount Percent Amount Percent Amount Percent
Deposits
Noninterest-bearing deposits $ 28,066 2.0 % $ 28,945 2.3 % $ 20,994 2.5 %
Interest-bearing demand deposits 83,031 6.0 % 89,180 7.2 % 77,822 9.1 %
Regular savings accounts 28,900 2.1 % 27,279 2.2 % 24,405 2.8 %
Money market accounts 373,932 26.9 % 366,195 29.5 % 278,791 32.5 %
Certificates of deposits 862,150 62.1 % 718,733 57.8 % 440,936 51.5 %
Brokered deposits   12,854 0.9 %   12,846 1.0 %   13,555 1.6 %
Total deposits $ 1,388,933 100.0 % $ 1,243,178 100.0 % $ 856,503 100.0 %
         
First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Amounts in thousands, except per share data
 
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
 
Total equity - GAAP $ 135,679 $ 107,830 $ 99,908 $ 135,679 $ 99,908
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Tangible common equity $ 130,992   $ 103,143   $ 95,221   $ 130,992   $ 95,221  
 
Total assets - GAAP $ 1,702,468 $ 1,527,719 $ 1,104,645 $ 1,702,468 $ 1,104,645
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Tangible assets $ 1,697,781   $ 1,523,032   $ 1,099,958   $ 1,697,781   $ 1,099,958  
 
Common shares outstanding 5,533,050 4,497,284 4,484,513 5,533,050 4,484,513
 
Book value per common share $ 24.52 $ 23.98 $ 22.28 $ 24.52 $ 22.28
Effect of goodwill   (0.85 )   (1.05 )   (1.05 )   (0.85 )   (1.05 )
Tangible book value per common share $ 23.67   $ 22.93   $ 21.23   $ 23.67   $ 21.23  
 
Total shareholders' equity to assets ratio 7.97 % 7.06 % 9.04 % 7.97 % 9.04 %
Effect of goodwill   (0.25 %)   (0.29 %)   (0.38 %)   (0.25 %)   (0.38 %)
Tangible common equity to tangible assets ratio   7.72 %   6.77 %   8.66 %   7.72 %   8.66 %
 
Total average equity - GAAP $ 117,913 $ 106,278 $ 99,333 $ 112,096 $ 98,592
Adjustments:
Average goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Average tangible common equity $ 113,226   $ 101,591   $ 94,646   $ 107,409   $ 93,905  
 
Return on average shareholders' equity 9.67 % 9.20 % 9.15 % 9.45 % 8.85 %
Effect of goodwill   0.40 %   0.43 %   0.45 %   0.41 %   0.44 %
Return on average tangible common equity   10.07 %   9.63 %   9.60 %   9.86 %   9.29 %

First Internet Bancorp
Investors/Analysts
Paula Deemer, 317-428-4628
investors@firstib.com
or
Media
Nicole Lorch, Senior Vice President, Retail Banking, 317-532-7906
nlorch@firstib.com

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