Market Overview

First Internet Bancorp Reports Record Quarterly Net Income

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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 third quarter 2016.

David Becker, Chairman, President and Chief Executive Officer, commented, "Once again, we produced record quarterly net income as we continue to deliver on our growth strategy. Our execution has been impressive: loans are up over 36% and assets are up over 56% compared to this period last year.

"To support this growth, we successfully completed a subordinated debt offering in the third quarter, which followed our equity offering in the second quarter.

"We serve an ever-increasing, nationwide customer base with a broad range of innovative products and services. We are exceptionally pleased with our continued success in commercial real estate lending. Additionally, mortgage banking performed very well this quarter."

Third quarter net income was a record $3.1 million and diluted earnings per share were $0.55. This compares with second quarter net income of $2.8 million and diluted earnings per share of $0.57 and third quarter 2015 net income of $2.3 million and diluted earnings per share of $0.51. The third quarter's diluted earnings per share results reflect the full impact of the 1,035,766 common shares issued during the second quarter through an underwritten offering and an "at-the-market" ("ATM") equity offering program.

During the third quarter, the Company charged-off the full balance of a commercial and industrial loan it placed on nonaccrual status during the second quarter. The outstanding balance of the loan was $1.6 million and the associated specific allowance was $0.5 million. As a result, the provision for loan losses for the third quarter includes $1.1 million related to the charge-off of this loan, reducing after-tax net income by $0.7 million and diluted earnings per share by $0.13.

Highlights for the third quarter 2016 include:

  • Diluted earnings per share of $0.55, decreasing $0.02, or 3.5%, compared to the linked quarter and increasing $0.04, or 7.8%, compared to the third quarter 2015
    • Excluding the charge-off discussed above, net income was $3.8 million and diluted earnings per share were $0.68
  • Solid quarterly performance
    • Return on average assets of 0.71%; 0.88% excluding the charge-off above
    • Return on average shareholders' equity of 9.08%; 11.20% excluding the charge-off above
    • Return on average tangible common equity of 9.41%; 11.60% excluding the charge-off above
  • Total loan growth of $87.3 million, or 7.9%, compared to June 30, 2016 and $322.4 million, or 36.8%, compared to September 30, 2015
  • Total deposit growth of $104.7 million, or 7.5%, compared to June 30, 2016 and $593.9 million, or 66.0%, compared to September 30, 2015
  • Net interest income of $10.3 million, increasing $1.0 million, or 11.1%, compared to the linked quarter and $2.5 million, or 31.9%, compared to the third quarter 2015
  • Noninterest income of $4.9 million, increasing $1.2 million, or 30.7%, compared to the linked quarter and $2.5 million, or 106.3%, compared to the third quarter 2015
  • Total capital enhanced following the subordinated notes offering
    • Tangible common equity to tangible assets of 7.28%
    • Tier 1 leverage ratio of 7.62%
    • Common equity tier 1 capital ratio of 10.07%
    • Tier 1 capital ratio of 10.07%
    • Total risk-based capital ratio of 13.67%
  • Strong asset quality
    • Nonperforming loans to total loans of 0.09% as of September 30, 2016
    • Net charge-offs to average loans of 0.57%; 0.03% excluding the charge-off above

Net Interest Income and Net Interest Margin

Net interest income for the third quarter was $10.3 million compared to $9.3 million for the second quarter and $7.8 million for the third quarter 2015. Total interest income for the third quarter was $15.5 million, increasing $1.5 million, or 10.7%, compared to the second quarter and $4.9 million, or 46.8%, compared to the third quarter 2015. The increase in total interest income compared to the linked quarter was driven by an $82.8 million, or 7.7%, increase in average loan balances and a $98.9 million, or 27.6%, increase in average investment balances. The growth in average loan balances was partially offset by a modest decline of 4 bps in the yield earned on the loan portfolio to 4.21% for the third quarter from 4.25% for the second quarter. The yield earned on the investment portfolio increased 5 bps to 2.42% for the third quarter from 2.37% for the second quarter. In total, the Company's yield on interest-earning assets increased 3 bps during the third quarter to 3.62% from 3.59% for the second quarter.

Total interest expense for the third quarter was $5.1 million, increasing $0.5 million, or 10.0%, compared to the second quarter and $2.4 million, or 90.3%, compared to the third quarter 2015. Average interest-bearing deposit balances increased $100.5 million, or 7.8%, compared to the linked quarter with the related cost of funds increasing 2 bps from 1.23% in the second quarter to 1.25% in the third quarter. The average interest-bearing deposit balance growth was driven primarily by an increase in average certificates of deposit balances of $98.3 million, or 12.3%, compared to the linked quarter. Overall, the total cost of interest-bearing liabilities increased 1 bp during the third quarter to 1.31% from 1.30% for the second quarter.

Net interest margin was 2.42% for the third quarter compared to 2.39% for the second quarter and 2.84% for the third quarter 2015. The Company deployed its excess liquidity during the third quarter as average cash balances declined $46.0 million, or 51.6%, compared to the second quarter and growth in loan and investment securities balances outpaced deposit growth.

Noninterest Income

Noninterest income for the third quarter was $4.9 million compared to $3.7 million for the second quarter and $2.4 million for the third quarter 2015. The increase of $1.2 million, or 30.7%, compared to the linked quarter was driven by an increase of $1.1 million, or 34.8%, in mortgage banking revenue due to increases in mortgage originations and sales as well as higher gain on sale margins.

Noninterest Expense

Noninterest expense for the third quarter was $8.4 million compared to $7.9 million for the second quarter and $6.2 million for the third quarter 2015. Excluding the lease impairment of $0.1 million related to the former headquarters location recognized in premises and equipment in the second quarter, the increase of $0.7 million, or 8.6%, compared to the linked quarter was due primarily to higher salaries and employee benefits, deposit insurance premium expense and premises and equipment. The increase in salaries and employee benefits resulted primarily from higher incentive compensation related to increased mortgage production and personnel growth. The increase in deposit insurance was due to the new methodology implemented by the FDIC as of July 1, 2016 used to calculate the assessment rate. The increase in premises and equipment was due to expenses associated with the Company's new headquarters location.

Income Taxes

Income tax expense was $1.5 million for the third quarter, resulting in an effective tax rate of 32.9%, compared to $1.4 million and an effective tax rate of 33.4% for the linked quarter and $1.2 million and an effective tax rate of 34.6% for the third quarter 2015.

Loans and Credit Quality

Total loans as of September 30, 2016 were $1.2 billion, increasing $87.3 million, or 7.9%, compared to June 30, 2016 and $322.4 million, or 36.8%, compared to September 30, 2015. Total commercial loan balances were $793.9 million as of September 30, 2016, increasing $69.0 million, or 9.5%, compared to June 30, 2016 and $285.2 million, or 56.1%, compared to September 30, 2015. The growth in commercial loan balances was due primarily to strong production in single tenant lease financing as balances increased $71.0 million, or 14.2%, compared to June 30, 2016 and $242.8 million, or 73.8%, compared to September 30, 2015. Construction loan production was solid as balances increased $3.0 million, or 5.7%, compared to June 30, 2016 and $26.2 million, or 86.7%, compared to September 30, 2015. Commercial and industrial and owner-occupied commercial real estate balances decreased $4.9 million on a combined basis, or 3.1%, compared to June 30, 2016 but increased $20.9 million, or 15.9%, compared to September 30, 2015.

Total consumer loan balances were $401.9 million as of September 30, 2016, increasing $19.1 million, or 5.0%, compared to June 30, 2016 and $38.9 million, or 10.7%, compared to September 30, 2015. Due primarily to the Company's recent initiative in financing home improvement loans, other consumer loans continued to grow as balances increased $12.9 million, or 57.0%, compared to June 30, 2016 and $32.8 million, or 1,244.4%, compared to September 30, 2015. Growth in recreational vehicle lending was solid as balances increased $4.9 million, or 11.0%, compared to June 30, 2016 and $12.5 million, or 33.9%, compared to September 30, 2015. The trailer portfolio also contributed to the growth as balances increased $3.6 million, or 4.9%, compared to June 30, 2016 and $11.7 million, or 17.5%, compared to September 30, 2015.

Credit quality continued to remain strong as total delinquencies 30 days or more past due increased modestly to 0.13% as a percent of total loans as of September 30, 2016 from 0.09% as of June 30, 2016. Due primarily to the charge-off of the commercial and industrial loan discussed above, nonperforming loans to total loans dropped to 0.09% as of September 30, 2016 from 0.51% as of June 30, 2016 and nonperforming assets to total assets declined to 0.31% as of September 30, 2016 from 0.60% as of June 30, 2016.

The allowance for loan losses was $10.6 million as of September 30, 2016 compared to $10.0 million as of June 30, 2016 and $7.7 million as of September 30, 2015. Due primarily to the charged-off commercial and industrial loan, the allowance as a percentage of total nonperforming loans increased to 932.1% as of September 30, 2016 from 177.6% as of June 30, 2016. The allowance as a percentage of total loans was 0.88% as of September 30, 2016 compared to 0.90% as of June 30, 2016 and 0.88% as of September 30, 2015.

Net charge-offs of $1.7 million were recognized during the third quarter, resulting in net charge-offs to average loans of 0.57% as compared to 0.05% for the second quarter and net recoveries of 0.07% for the third quarter 2015. Excluding the $1.6 million balance of the charged-off commercial and industrial loan, net charge-offs totaled $0.1 million and net charge-offs to average loans were 0.03%. The provision for loan losses in the third quarter was $2.2 million compared to $0.9 million for the second quarter and $0.5 million for the third quarter 2015. As discussed above, $1.1 million of the third quarter's provision was due to the charged-off commercial and industrial loan. The remaining $1.1 million was driven primarily by growth in the loan portfolio.

Capital

During the third quarter, total shareholders' equity increased $1.5 million, due primarily to net income earned during the quarter, partially offset by the change in the unrealized gain/loss related to the investment portfolio and declared dividends. As of September 30, 2016, the Company's tier 1 leverage, common equity tier 1, tier 1 and total risk-based capital ratios were 7.62%, 10.07%, 10.07% and 13.67% compared to 8.08%, 10.66%, 10.66% and 12.54% as of June 30, 2016, respectively. The declines in the tier 1 leverage, common equity tier 1 and tier 1 capital ratios were due to increases in average assets and risk-weighted assets resulting primarily from loan growth during the third quarter. The total risk-based capital ratio increased compared to the linked quarter as the impact of the increase in risk-weighted assets was more than offset by the issuance of $25.0 million of subordinated notes during the quarter which qualify as tier 2 capital, a component of total capital for regulatory purposes. Tangible common equity to tangible assets decreased 44 bps during the third quarter to 7.28% due primarily to balance sheet growth. Tangible book value per share increased to $23.94 as of September 30, 2016 from $23.67 as of June 30, 2016 and $21.90 as of September 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, tangible common equity to tangible assets, adjusted net income, adjusted net charge-offs (recoveries), adjusted diluted earnings per share, adjusted net charge-offs (recoveries) to average loans, adjusted return on average assets, adjusted return on average shareholders' equity and adjusted return on average tangible common equity 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 Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2016 2016 2015 2016 2015
 
Net income $ 3,098 $ 2,834 $ 2,323 $ 8,364 $ 6,651
 
Per share and share information
Earnings per share - basic $ 0.55 $ 0.57 $ 0.51 $ 1.66 $ 1.47
Earnings per share - diluted 0.55 0.57 0.51 1.65 1.46
Dividends declared per share 0.06 0.06 0.06 0.18 0.18
Book value per common share 24.79 24.52 22.95 24.79 22.95
Tangible book value per common share 23.94 23.67 21.90 23.94 21.90
Common shares outstanding 5,533,050 5,533,050 4,484,513 5,533,050 4,484,513
Average common shares outstanding:
Basic 5,597,867 4,972,759 4,532,360 5,039,497 4,526,377
Diluted 5,622,181 4,992,025 4,574,455 5,063,299 4,549,447
Performance ratios
Return on average assets 0.71 % 0.71 % 0.82 % 0.72 % 0.83 %
Return on average shareholders' equity 9.08 % 9.67 % 9.14 % 9.31 % 8.95 %
Return on average tangible common equity 9.41 % 10.07 % 9.58 % 9.69 % 9.39 %
Net interest margin 2.42 % 2.39 % 2.84 % 2.51 % 2.85 %
Capital ratios 1
Tangible common equity to tangible assets 7.28 % 7.72 % 8.46 % 7.28 % 8.46 %
Tier 1 leverage ratio 7.62 % 8.08 % 8.81 % 7.62 % 8.81 %
Common equity tier 1 capital ratio

10.07

%

10.66 % 10.74 %

10.07

%

10.74 %
Tier 1 capital ratio

10.07

%

10.66 % 10.74 %

10.07

%

10.74 %
Total risk-based capital ratio

13.67

%

12.54 % 11.90 %

13.67

%

11.90 %
Asset quality
Nonperforming loans $ 1,133 $ 5,639 $ 206 $ 1,133 $ 206
Nonperforming assets 5,735 10,173 4,724 5,735 4,724
Nonperforming loans to loans 0.09 % 0.51 % 0.02 % 0.09 % 0.02 %
Nonperforming assets to total assets 0.31 % 0.60 % 0.41 % 0.31 % 0.41 %
Allowance for loan losses to:
Loans 0.88 % 0.90 % 0.88 % 0.88 % 0.88 %
Nonperforming loans 932.1 % 177.6 % 3,723.8 % 932.1 % 3,723.8 %
Net charge-offs (recoveries) to average
loans 0.57 % 0.05 % (0.07 %) 0.23 % (0.11 %)
Average balance sheet information
Loans $ 1,155,749 $ 1,072,901 $ 835,938 $ 1,073,722 $ 789,908
Total securities 457,407 358,498 191,634 347,397 173,083
Other earning assets 51,779 97,774 37,638 75,860 42,746
Total interest-earning assets 1,702,002 1,566,554 1,094,622 1,531,323 1,039,898
Total assets 1,734,943 1,596,504 1,123,741 1,562,059 1,068,705
Noninterest-bearing deposits 32,897 27,687 23,267 27,846 22,080
Interest-bearing deposits 1,385,487 1,284,952 854,889 1,235,078 813,521
Total deposits 1,418,384 1,312,639 878,156 1,262,924 835,601
Shareholders' equity 135,666 117,913 100,885 120,010 99,365
 

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
   
 
September 30, June 30, September 30,
2016 2016 2015
 
Assets
Cash and due from banks $ 2,314 $ 1,868 $ 1,460
Interest-bearing demand deposits 65,511 68,140 19,185
Interest-bearing time deposits 250 250 1,250
Securities available-for-sale, at fair value 470,978 433,806 202,565
Securities held-to-maturity, at amortized cost 5,500 - -
Loans held-for-sale 32,471 44,503 27,773
Loans 1,198,932 1,111,622 876,578
Allowance for loan losses   (10,561 )   (10,016 )   (7,671 )
Net loans 1,188,371 1,101,606 868,907
Accrued interest receivable 5,848 5,508 3,581
Federal Home Loan Bank of Indianapolis stock 8,595 8,595 6,946
Cash surrender value of bank-owned life insurance 18,044 12,932 12,625
Premises and equipment, net 10,116 9,267 8,508
Goodwill 4,687 4,687 4,687
Other real estate owned 4,533 4,488 4,488
Accrued income and other assets   6,978     6,818     4,195  
Total assets $ 1,824,196   $ 1,702,468   $ 1,166,170  
 
Liabilities
Noninterest-bearing deposits $ 32,938 $ 28,066 $ 22,338
Interest-bearing deposits   1,460,663     1,360,867     877,412  
Total deposits 1,493,601 1,388,933 899,750
Advances from Federal Home Loan Bank 147,978 147,974 150,946
Subordinated debt 36,541 12,778 2,937
Accrued interest payable 125 138 112
Accrued expenses and other liabilities   8,797     16,966     9,513  
Total liabilities   1,687,042     1,566,789     1,063,258  
Shareholders' equity
Voting common stock 95,839 95,642 72,409
Retained earnings 40,389 37,630 30,977
Accumulated other comprehensive income (loss)   926     2,407     (474 )
Total shareholders' equity   137,154     135,679     102,912  
Total liabilities and shareholders' equity $ 1,824,196   $ 1,702,468   $ 1,166,170  
 
         
First Internet Bancorp
Condensed Consolidated Statements of Income (unaudited)
Amounts in thousands, except per share data
     
 
Three Months Ended Nine Months Ended
 
September 30, June 30, September 30, September 30, September 30,
2016 2016 2015 2016 2015
 
Interest income
Loans $ 12,544 $ 11,661 $ 9,326 $ 35,394 $ 26,759
Securities - taxable 2,148 1,747 994 5,064 2,661
Securities - non-taxable 637 368 116 1,170 175
Other earning assets   142   195     100     507     258  
Total interest income   15,471   13,971     10,536     42,135     29,853  
Interest expense
Deposits 4,368 3,930 2,260 11,186 6,350
Other borrowed funds   765   735     437     2,164     1,318  
Total interest expense   5,133   4,665     2,697     13,350     7,668  
Net interest income 10,338 9,306 7,839 28,785 22,185
Provision for loan losses 2,204 924 454 4,074 1,200
Net interest income after provision          
for loan losses   8,134   8,382     7,385     24,711     20,985  
Noninterest income
Service charges and fees 207 215 202 622 571
Mortgage banking activities 4,442 3,295 2,095 9,991 7,195
Gain on sale of securities - 177 - 177 -
Gain (loss) on asset disposals 5 (48 ) (27 ) (59 ) (74 )
Other   244   109     104     455     306  
Total noninterest income   4,898   3,748     2,374     11,186     7,998  
Noninterest expense
Salaries and employee benefits 4,550 4,329 3,446 12,777 10,811
Marketing, advertising and promotion 454 434 544 1,352 1,330
Consulting and professional fees 901 895 544 2,434 1,700
Data processing 286 275 248 835 729
Loan expenses 240 200 97 624 459
Premises and equipment 983 963 676 2,744 2,009
Deposit insurance premium 420 215 163 815 473
Other   579   564     489     1,712     1,280  
Total noninterest expense   8,413   7,875     6,207     23,293     18,791  
Income before income taxes 4,619 4,255 3,552 12,604 10,192
Income tax provision   1,521   1,421     1,229     4,240     3,541  
Net income $ 3,098 $ 2,834   $ 2,323   $ 8,364   $ 6,651  
 
Per common share data
Earnings per share - basic $ 0.55 $ 0.57 $ 0.51 $ 1.66 $ 1.47
Earnings per share - diluted $ 0.55 $ 0.57 $ 0.51 $ 1.65 $ 1.46
Dividends declared per share $ 0.06 $ 0.06 $ 0.06 $ 0.18 $ 0.18
 

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

First Internet Bancorp
Average Balances and Rates (unaudited)
Amounts in thousands
                       
 
Three Months Ended
September 30, 2016 June 30, 2016 September 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 $ 1,192,816 $ 12,544 4.18 % $ 1,110,282 $ 11,661 4.22 % $ 865,350 $ 9,326 4.28 %
Securities - taxable 366,810 2,148 2.33 % 307,336 1,747 2.29 % 176,722 994 2.23 %
Securities - non-taxable 90,597 637 2.80 % 51,162 368 2.89 % 14,912 116 3.09 %
Other earning assets   51,779     142 1.09 %   97,774     195 0.80 %   37,638     100 1.05 %
Total interest-earning assets 1,702,002 15,471 3.62 % 1,566,554 13,971 3.59 % 1,094,622 10,536 3.82 %
 
Allowance for loan losses (10,378 ) (9,472 ) (7,223 )
Noninterest-earning assets   43,319     39,422     36,342  
Total assets $ 1,734,943   $ 1,596,504   $ 1,123,741  
 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 81,151 $ 112 0.55 % $ 83,712 $ 114 0.55 % $ 75,965 $ 105 0.55 %
Regular savings accounts 27,479 40 0.58 % 28,023 40 0.57 % 25,500 38 0.59 %
Money market accounts 369,082 658 0.71 % 363,767 641 0.71 % 297,545 533 0.71 %
Certificates and brokered deposits   907,775     3,558 1.56 %   809,450     3,135 1.56 %   455,879     1,584 1.38 %
Total interest-bearing deposits 1,385,487 4,368 1.25 % 1,284,952 3,930 1.23 % 854,889 2,260 1.05 %
Other borrowed funds   173,568     765 1.75 %   161,127     735 1.83 %   139,731     437 1.24 %
Total interest-bearing liabilities 1,559,055 5,133 1.31 % 1,446,079 4,665 1.30 % 994,620 2,697 1.08 %
 
Noninterest-bearing deposits 32,897 27,687 23,267
Other noninterest-bearing liabilities   7,325     4,825     4,969  
Total liabilities 1,599,277 1,478,591 1,022,856
 
Shareholders' equity   135,666     117,913     100,885  
Total liabilities and shareholders' equity $ 1,734,943   $ 1,596,504   $ 1,123,741  
     
Net interest income $ 10,338 $ 9,306 $ 7,839
 
Interest rate spread 2.31 % 2.29 % 2.74 %
 
Net interest margin 2.42 % 2.39 % 2.84 %
 
 
First Internet Bancorp
Average Balances and Rates (unaudited)
Amounts in thousands
                 
Nine Months Ended
September 30, 2016 September 30, 2015
Average Interest / Yield / Average Interest / Yield /
Balance Dividends Cost Balance Dividends Cost
 
Assets
Interest-earning assets
Loans, including loans held-for-sale $ 1,108,066 $ 35,394 4.27 % $ 824,069 $ 26,759 4.34 %
Securities - taxable 292,620 5,064 2.31 % 165,456 2,661 2.15 %
Securities - non-taxable 54,777 1,170 2.85 % 7,627 175 3.07 %
Other earning assets   75,860     507 0.89 %   42,746     258 0.81 %
Total interest-earning assets 1,531,323 42,135 3.68 % 1,039,898 29,853 3.84 %
 
Allowance for loan losses (9,505 ) (6,555 )
Noninterest-earning assets   40,241     35,362  
Total assets $ 1,562,059   $ 1,068,705  
 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 82,063 $ 336 0.55 % $ 75,824 $ 311 0.55 %
Regular savings accounts 26,844 117 0.58 % 23,836 104 0.58 %
Money market accounts 361,248 1,915 0.71 % 284,709 1,528 0.72 %
Certificates and brokered deposits   764,923     8,818 1.54 %   429,152     4,407 1.37 %
Total interest-bearing deposits 1,235,078 11,186 1.21 % 813,521 6,350 1.04 %
Other borrowed funds   173,438     2,164 1.67 %   129,089     1,318 1.37 %
Total interest-bearing liabilities 1,408,516 13,350 1.27 % 942,610 7,668 1.09 %
 
Noninterest-bearing deposits 27,846 22,080
Other noninterest-bearing liabilities   5,687     4,650  
Total liabilities 1,442,049 969,340
 
Shareholders' equity   120,010     99,365  
Total liabilities and shareholders' equity $ 1,562,059   $ 1,068,705  
   
Net interest income $ 28,785 $ 22,185
 
Interest rate spread 2.41 % 2.75 %
 
Net interest margin 2.51 % 2.85 %
 
           
First Internet Bancorp
Loans and Deposits (unaudited)
Amounts in thousands
 
September 30, 2016 June 30, 2016 September 30, 2015
Amount Percent Amount Percent Amount Percent
 
Commercial loans
Commercial and industrial $ 107,250 8.9 % $ 111,130 10.0 % $ 89,762 10.2 %
Owner-occupied commercial real estate 45,540 3.8 % 46,543 4.2 % 42,117 4.8 %
Investor commercial real estate 12,752 1.1 % 12,976 1.2 % 17,483 2.0 %
Construction 56,391 4.7 % 53,368 4.8 % 30,196 3.4 %
Single tenant lease financing   571,972 47.7 %   500,937 45.1 %   329,149 37.6 %
Total commercial loans 793,905 66.2 % 724,954 65.3 % 508,707 58.0 %
 
Consumer loans
Residential mortgage 200,889 16.7 % 202,107 18.2 % 209,507 23.9 %
Home equity 37,849 3.2 % 38,981 3.5 % 47,319 5.4 %
Trailers 78,419 6.5 % 74,777 6.7 % 66,749 7.6 %
Recreational vehicles 49,275 4.1 % 44,387 4.0 % 36,800 4.2 %
Other consumer loans   35,464 3.0 %   22,592 2.0 %   2,638 0.3 %
Total consumer loans 401,896 33.5 % 382,844 34.4 % 363,013 41.4 %
 
Net deferred loan fees, premiums and discounts 3,131 0.3 % 3,824 0.3 % 4,858 0.6 %
           
Total loans $ 1,198,932 100.0 % $ 1,111,622 100.0 % $ 876,578 100.0 %
 
 
September 30, 2016 June 30, 2016 September 30, 2015
Amount Percent Amount Percent Amount Percent
 
Deposits
Noninterest-bearing deposits $ 32,938 2.2 % $ 28,066 2.0 % $ 22,338 2.5 %
Interest-bearing demand deposits 84,939 5.7 % 83,031 6.0 % 79,031 8.8 %
Regular savings accounts 27,661 1.8 % 28,900 2.1 % 26,316 2.9 %
Money market accounts 364,517 24.4 % 373,932 26.9 % 314,105 34.9 %
Certificates of deposits 970,684 65.0 % 862,150 62.1 % 444,396 49.4 %
Brokered deposits 12,862 0.9 % 12,854 0.9 % 13,564 1.5 %
           
Total deposits $ 1,493,601 100.0 % $ 1,388,933 100.0 % $ 899,750 100.0 %
 
 
First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Amounts in thousands, except per share data
           
 
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2016 2016   2015 2016 2015
 
Total equity - GAAP $ 137,154 $ 135,679 $ 102,912 $ 137,154 $ 102,912
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Tangible common equity $ 132,467   $ 130,992   $ 98,225   $ 132,467   $ 98,225  
 
Total assets - GAAP $ 1,824,196 $ 1,702,468 $ 1,166,170 $ 1,824,196 $ 1,166,170
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Tangible assets $ 1,819,509   $ 1,697,781   $ 1,161,483   $ 1,819,509   $ 1,161,483  
 
Common shares outstanding 5,533,050 5,533,050 4,484,513 5,533,050 4,484,513
 
Book value per common share $ 24.79 $ 24.52 $ 22.95 $ 24.79 $ 22.95
Effect of goodwill   (0.85 )   (0.85 )   (1.05 )   (0.85 )   (1.05 )
Tangible book value per common share $ 23.94   $ 23.67   $ 21.90   $ 23.94   $ 21.90  
 
Total shareholders' equity to assets ratio 7.52 % 7.97 % 8.82 % 7.52 % 8.82 %
Effect of goodwill   (0.24 %)   (0.25 %)   (0.36 %)   (0.24 %)   (0.36 %)
Tangible common equity to tangible assets ratio   7.28 %   7.72 %   8.46 %   7.28 %   8.46 %
 
Total average equity - GAAP $ 135,666 $ 117,913 $ 100,885 $ 120,010 $ 99,365
Adjustments:
Average goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Average tangible common equity $ 130,979   $ 113,226   $ 96,198   $ 115,323   $ 94,678  
 
Return on average shareholders' equity 9.08 % 9.67 % 9.14 % 9.31 % 8.95 %
Effect of goodwill   0.33 %   0.40 %   0.44 %   0.38 %   0.44 %
Return on average tangible common equity   9.41 %   10.07 %   9.58 %   9.69 %   9.39 %
 
 

First Internet Bancorp

Reconciliation of Non-GAAP Financial Measures
Amounts in thousands
         
 
Three Months Ended
September 30, June 30, September 30,
2016 2016 2015
 
Net income - GAAP $ 3,098 $ 2,834 $ 2,323
Adjustments:

Commercial and industrial loan charge-off 1

  722     -     -  
Net income - adjusted $ 3,820   $ 2,834   $ 2,323  
 
Net charge-offs (recoveries) - GAAP $ 1,659 $ 128 $ (144 )
Adjustments:

Commercial and industrial loan charge-off

  1,582     -     -  
Net charge-offs (recoveries) - adjusted $ 77   $ 128   $ (144 )
 
Diluted earnings per share - GAAP $ 0.55 $ 0.57 $ 0.51

Effect of commercial and industrial loan charge-off 2

  0.13     -     -  
Diluted earnings per share - adjusted $ 0.68   $ 0.57   $ 0.51  
 
Net charge-offs (recoveries) to average loans - GAAP 0.57 % 0.05 % (0.07 %)

Effect of commercial and industrial loan charge-off

  (0.54 %)   0.00 %   0.00 %
Net charge-offs (recoveries) to average loans - adjusted   0.03 %   0.05 %   (0.07 %)
 
Return on average assets - GAAP 0.71 % 0.71 % 0.82 %

Effect of commercial and industrial loan charge-off 2

  0.17 %   0.00 %   0.00 %
Return on average assets - adjusted   0.88 %   0.71 %   0.82 %
 
Return on average shareholders' equity - GAAP 9.08 % 9.67 % 9.14 %

Effect of commercial and industrial loan charge-off 2

  2.12 %   0.00 %   0.00 %
Return on average shareholders' equity - adjusted   11.20 %   9.67 %   9.14 %
 
Return on average tangible common equity 9.41 % 10.07 % 9.58 %

Effect of commercial and industrial loan charge-off 2

  2.19 %   0.00 %   0.00 %
Return on average tangible common equity - adjusted   11.60 %   10.07 %   9.58 %

 

1 Represents the full commercial and industrial loan charge-off of $1,582 less the associated specific allowance of $472 and assuming a tax rate of 35% applied

2 Assuming a tax rate of 35% applied

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

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