Market Overview

First Internet Bancorp Reports Record Quarterly Net Income

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First Internet Bancorp (the "Company") (NASDAQ:INBK), the parent
company of First Internet Bank (the "Bank") (www.firstib.com),
announced today financial and operational results for the second quarter
2017.

David Becker, Chairman, President and Chief Executive Officer,
commented, "Loan growth continues to drive net interest income to record
levels. With loans up 52.8% since this time one year ago and 18.5% over
the previous quarter, we produced our highest ever quarterly net income
as we saw growth and success across all business lines. We have done so
without compromising our strong credit culture. Nonperforming loans to
total loans were a modest 20 basis points as we closed out the quarter.

"Over the past three months, we were also honored with two awards,
naming First Internet Bank as an employer of choice at the city and
state levels. These awards were especially gratifying because both are
based on voluntary employee feedback. This measurement of organizational
health affirms our capability to recruit and retain the talent we need
to grow and nurture strong customer relationships. I am very proud of
the team we have assembled, and I thank them for their dedication."

Second quarter net income was a record $4.0 million and diluted earnings
per share were $0.61. This compares with first quarter net income of
$2.8 million and diluted earnings per share of $0.43 and second quarter
2016 net income of $2.8 million and diluted earnings per share of $0.57.

The comparability of diluted earnings per share between the second
quarter and the year-over-year quarter is impacted by the effect on
average diluted shares outstanding resulting from the Company's issuance
of an aggregate of 1,980,766 shares of common stock through equity
offerings completed during May and December 2016.

Highlights for the second quarter include:

  • Diluted earnings per share of $0.61, increasing $0.18, or 41.9%,
    compared to the linked quarter and $0.04, or 7.0%, compared to second
    quarter 2016
  • Total loan growth of $265.2 million, or 18.5%, compared to March 31,
    2017 and $586.8 million, or 52.8%, compared to June 30, 2016
  • Net interest income of $13.0 million, increasing $1.5 million, or
    13.2%, compared to the linked quarter and $3.7 million, or 39.4%,
    compared to the second quarter 2016
  • Capital levels continued to support the balance sheet as lower
    risk-weighted loan generation contributed significantly to overall
    growth

 

   

Company

     

Bank

Total shareholders' equity to assets

6.88%

7.66%

Tangible common equity to tangible assets

6.70%

7.47%

Tier 1 leverage ratio

7.50%

8.34%

Common equity tier 1 capital ratio

9.74%

10.84%

Tier 1 capital ratio

9.74%

10.84%

Total risk-based capital ratio

12.68%

11.62%

  • Asset quality remained strong
    • Nonperforming loans to total loans of 0.20% as of June 30, 2017
    • Net charge-offs to average loans of 0.01%

Net Interest Income and Net Interest Margin

Net interest income for the second quarter was $13.0 million compared to
$11.5 million for the first quarter and $9.3 million for the second
quarter 2016. Total interest income for the second quarter was $20.0
million, increasing $2.6 million, or 14.9%, compared to the first
quarter and $6.0 million, or 43.0%, compared to the second quarter 2016.
The increase in total interest income compared to the linked quarter was
driven primarily by a $232.4 million, or 17.6%, increase in average loan
balances, partially offset by a decline of 11 bps in the yield earned on
the loan portfolio to 4.19% in the second quarter from 4.30% for the
first quarter. The yield earned on the loan portfolio was impacted by
strong growth in public finance lending, which carry lower tax-exempt
rates, and continued growth in portfolio mortgage loans. Growth in total
interest income also benefitted from increases in the average balances
of securities and other interest-earning assets during the quarter. In
total, the Company's yield on interest-earning assets decreased 4 bps
during the second quarter to 3.75% from 3.79% for the first quarter.

Total interest expense for the second quarter was $7.0 million,
increasing $1.1 million, or 18.0%, compared to the first quarter and
$2.3 million, or 50.1%, compared to the second quarter 2016. The
increase in total interest expense compared to the linked quarter was
due primarily to increases of $142.7 million, or 9.8%, in average
interest-bearing deposit balances and $135.4 million, or 59.9%, in the
average balance of Federal Home Loan Bank ("FHLB") advances. Interest
expense was also impacted by the cost of funds related to
interest-bearing deposits which increased 3 bps during the second
quarter to 1.34% from 1.31% for the first quarter. Additionally, the
cost of funds related to FHLB advances increased 8 bps to 1.16% from
1.08% for the first quarter as the Company extended the maturities on
certain borrowings to manage interest rate risk. Overall, the total cost
of interest-bearing liabilities increased 1 bp during the second quarter
to 1.41% from 1.40% for the first quarter.

Net interest margin ("NIM") was 2.43% for the second quarter compared to
2.50% for the first quarter and 2.39% for the second quarter 2016. On a
fully-taxable equivalent basis, NIM was 2.53% for the second quarter
compared to 2.57% for the first quarter and 2.43% for the second quarter
2016.

Noninterest Income

Noninterest income for the second quarter was $2.7 million compared to
$2.1 million for the first quarter and $3.7 million for the second
quarter 2016. The increase of $0.6 million, or 28.4%, compared to the
linked quarter was due primarily to an increase of $0.5 million, or
33.4%, in mortgage banking revenue. Mortgage origination activity
remained solid as the dollar volume of commitments / locks increased
11.2% compared to the linked quarter, which included an increase of
almost 32% in mortgages held-for-sale originations, driving the growth
in mortgage banking revenue.

Noninterest Expense

Noninterest expense for the second quarter was $8.9 million compared to
$8.7 million for the first quarter and $7.9 million for the second
quarter 2016. The increase of $0.2 million, or 2.6%, compared to the
linked quarter was due primarily to higher salaries and employee
benefits and, to a lesser extent, higher premises and equipment expense.
The increase in salaries and employee benefits was driven primarily by
higher mortgage incentive compensation and a full quarter's impact of
annual merit increases, partially offset by a decline in claims
experience related to medical and prescription drug insurance. The
increase in premises and equipment expense was due to several
software-related costs, none of which were individually significant.

Income Taxes

Income tax expense was $1.5 million for the second quarter, resulting in
an effective tax rate of 26.8%, compared to $1.0 million and an
effective tax rate of 26.5% for the linked quarter and $1.4 million and
an effective tax rate of 33.4% for the second quarter 2016. Compared to
the linked quarter, the impact on the effective tax rate resulting from
tax benefits associated with equity compensation vesting events
occurring during the first quarter was mostly offset in the second
quarter by the increase in tax-exempt earning assets due to the strong
growth in the public finance loan portfolio.

Loans and Credit Quality

Total loans as of June 30, 2017 were $1.7 billion, increasing $265.2
million, or 18.5%, compared to March 31, 2017 and $586.8 million, or
52.8%, compared to June 30, 2016. Total commercial loan balances were
$1.2 billion as of June 30, 2017, increasing $199.1 million, or 20.7%,
compared to March 31, 2017 and $436.0 million, or 60.1%, compared to
June 30, 2016. The growth in commercial loan balances was driven largely
by production in public finance and single tenant lease financing. The
public finance portfolio increased $101.9 million, or 130.6%, compared
to March 31, 2017 with balances totaling $179.9 million at quarter end.
Single tenant lease financing balances increased $82.4 million, or
12.4%, compared to March 31, 2017 and $246.9 million, or 49.3%, compared
to June 30, 2016. Commercial and industrial and owner-occupied
commercial real estate balances increased $17.0 million on a combined
basis, or 10.6%, compared to March 31, 2017 and $19.7 million, or 12.5%,
compared to June 30, 2016. Investor commercial real estate balances
increased modestly during the second quarter but declined compared to
June 30, 2016 while construction balances declined compared to March 31,
2017 and June 30, 2016.

Total consumer loan balances were $534.9 million as of June 30, 2017,
increasing $65.8 million, or 14.0%, compared to March 31, 2017 and
$152.1 million, or 39.7%, compared to June 30, 2016. Residential
mortgage balances increased $47.0 million, or 19.1%, compared to March
31, 2017 and $90.9 million, or 45.0%, compared to June 30, 2016 as the
Company continued to see strong consumer interest in adjustable rate
mortgage products during the second quarter.

Trailer portfolio balances increased $7.3 million, or 8.5%, compared to
March 31, 2017 and $19.3 million, or 25.8%, compared to June 30, 2016.
Recreational vehicle balances increased $6.3 million, or 11.0%, compared
to March 31, 2017 and $19.1 million, or 43.1%, compared to June 30,
2016. Furthermore, other consumer loan balances increased $6.8 million,
or 15.3%, compared to March 31, 2017 and $28.5 million, or 126.0%,
compared to June 30, 2016, driven primarily by home improvement lending.

Credit quality continued to remain sound as total delinquencies 30 days
or more past due were 0.12% of total loans as of June 30, 2017,
consistent with March 31, 2017 and compared to 0.09% as of June 30,
2016. Nonperforming loans to total loans was 0.20% as of June 30, 2017
compared to 0.24% as of March 31, 2017 and 0.51% as of June 30, 2016.
Nonperforming assets to total assets was 0.33% as of June 30, 2017
compared to 0.39% as of March 31, 2017 and 0.60% as of June 30, 2016.

The allowance for loan losses was $13.2 million as of June 30, 2017
compared to $11.9 million as of March 31, 2017 and $10.0 million as of
June 30, 2016. The allowance as a percentage of total nonperforming
loans was 383.8% as of June 30, 2017 compared to 348.7% as of March 31,
2017 and 177.6% as of June 30, 2016. The allowance as a percentage of
total loans was 0.78% as of June 30, 2017 compared to 0.83% as of March
31, 2017 and 0.90% as of June 30, 2016. The decline in the allowance as
a percentage of total loans was due to the growth in the public finance
and residential mortgage portfolios as these loan categories have lower
loss reserve factors than all other commercial and most consumer loan
types.

Net charge-offs of less than $0.1 million were recognized during the
second quarter, resulting in net charge-offs to average loans of 0.01%
compared to 0.04% for the first quarter and 0.05% for the second quarter
2016. The provision for loan losses in the second quarter was $1.3
million compared to $1.0 million for the first quarter and $0.9 million
for the second quarter 2016. The increase of $0.3 million, or 27.7%,
compared to the linked quarter was due mainly to the strong loan growth
experienced in the second quarter.

Capital

During the second quarter, total shareholders' equity increased $6.3
million, due primarily to net income earned during the quarter and the
change in the unrealized gain/loss related to the investment portfolio,
partially offset by declared dividends. As of June 30, 2017, the
Company's tier 1 leverage, common equity tier 1, tier 1 and total
risk-based capital ratios were 7.50%, 9.74%, 9.74% and 12.68% compared
to 8.41%, 10.88%, 10.88% and 14.16% as of March 31, 2017, respectively.
The declines in the regulatory capital ratios were due primarily to
increases in average and risk-weighted assets resulting from the strong
quarterly loan growth. Tangible common equity to tangible assets
declined 76 bps during the second quarter to 6.70% as of June 30, 2017
due primarily to continued strong balance sheet growth. Tangible book
value per share increased to $24.43 as of June 30, 2017 from $23.52 as
of March 31, 2017 and $23.67 as of June 30, 2016.

About First Internet Bancorp

First Internet Bancorp is a bank holding company with assets of $2.4
billion as of June 30, 2017. The Company's subsidiary, First Internet
Bank, opened for business in 1999 as an industry pioneer in the
branchless delivery of banking services. The Bank now provides consumer
and small business deposit, consumer loan, residential mortgage, and
specialty finance services nationally as well as commercial real estate
loans, commercial and industrial loans and treasury management services
in select geographies. First Internet Bancorp's common stock trades on
the NASDAQ Global Select Market under the symbol "INBK" and is a
component of the Russell 2000® Index. Additional information about the
Company is available at www.firstinternetbancorp.com and
additional information about the Bank, including its products and
services, is available at www.firstib.com.

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,
commercial and industrial, and public finance loan portfolios;
competition with national, regional and community financial
institutions; the loss of any key members of senior management;
fluctuations in interest rates; general economic conditions; risks
relating to the regulation of financial institutions; and other factors
identified in reports we file with the U.S. Securities and Exchange
Commission. All statements in this press release, including
forward-looking statements, speak only as of the date they are made, and
the Company undertakes no obligation to update any statement in light of
new information or future events.

Non-GAAP Financial Measures

This press release contains financial information determined by methods
other than in accordance with U.S. generally accepted accounting
principles ("GAAP"). Non-GAAP financial measures, specifically tangible
common equity, tangible assets, tangible book value per common share,
return on average tangible common equity and tangible common equity to
tangible assets, net interest income – FTE and net interest margin – FTE
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 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,
2017   2017 2016 2017   2016
 
Net income $ 4,001 $ 2,832 $ 2,834 $ 6,833 $ 5,266
 
Per share and share information
Earnings per share - basic $ 0.61 $ 0.43 $ 0.57 $ 1.04 $ 1.11
Earnings per share - diluted 0.61 0.43 0.57 1.04 1.10
Dividends declared per share 0.06 0.06 0.06 0.12 0.12
Book value per common share 25.15 24.24 24.52 25.15 24.52
Tangible book value per common share 24.43 23.52 23.67 24.43 23.67
Common shares outstanding 6,513,577 6,497,662 5,533,050 6,513,577 5,533,050
Average common shares outstanding:
Basic 6,583,515 6,547,807 4,972,759 6,565,760 4,757,243
Diluted 6,597,991 6,602,200 4,992,025 6,599,681 4,782,700
Performance ratios
Return on average assets 0.73 % 0.60 % 0.71 % 0.67 % 0.72 %
Return on average shareholders' equity 9.95 % 7.42 % 9.67 % 8.72 % 9.45 %
Return on average tangible common equity 10.25 % 7.65 % 10.07 % 8.99 % 9.86 %
Net interest margin 2.43 % 2.50 % 2.39 % 2.46 % 2.57 %
Net interest margin - FTE 1 2.53 % 2.57 % 2.43 % 2.55 % 2.60 %
Capital ratios 2
Total shareholders' equity to assets 6.88 % 7.67 % 7.97 % 6.88 % 7.97 %
Tangible common equity to tangible assets 6.70 % 7.46 % 7.72 % 6.70 % 7.72 %
Tier 1 leverage ratio

7.50

% 8.41 % 8.08 %

7.50

% 8.08 %
Common equity tier 1 capital ratio

9.74

%

10.88 % 10.66 %

9.74

%

10.66 %
Tier 1 capital ratio

9.74

%

10.88 % 10.66 %

9.74

%

10.66 %
Total risk-based capital ratio

12.68

%

14.16 % 12.54 %

12.68

%

12.54 %
Asset quality
Nonperforming loans $ 3,438 $ 3,411 $ 5,639 $ 3,438 $ 5,639
Nonperforming assets 7,952 7,992 10,173 7,952 10,173
Nonperforming loans to loans 0.20 % 0.24 % 0.51 % 0.20 % 0.51 %
Nonperforming assets to total assets 0.33 % 0.39 % 0.60 % 0.33 % 0.60 %
Allowance for loan losses to:
Loans 0.78 % 0.83 % 0.90 % 0.78 % 0.90 %
Nonperforming loans 383.8 % 348.7 % 177.6 % 383.8 % 177.6 %
Net charge-offs to average

Loans

0.01 % 0.04 % 0.05 % 0.02 % 0.04 %
Average balance sheet information
Loans $ 1,552,456 $ 1,320,065 $ 1,072,901 $ 1,436,903 $ 1,032,257
Total securities 500,816 474,845 358,498 487,902 291,787
Other earning assets 67,989 45,392 97,774 56,753 88,033
Total interest-earning assets 2,139,040 1,858,931 1,566,554 1,999,759 1,445,045
Total assets 2,194,652 1,905,736 1,596,504 2,050,992 1,474,668
Noninterest-bearing deposits 32,897 31,463 27,687 32,184 25,293
Interest-bearing deposits 1,593,364 1,450,677 1,284,952 1,522,415 1,159,048
Total deposits 1,626,261 1,482,140 1,312,639 1,554,599 1,184,341
Shareholders' equity 161,228 154,798 117,913 158,030 112,096
 
1 On a fully-taxable equivalent ("FTE") basis assuming a
35% tax rate
2 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,
2017 2017 2016
 
Assets
Cash and due from banks $ 5,425 $ 4,137 $ 1,868
Interest-bearing deposits 60,818 48,961 68,140
Interest-bearing time deposits - 250 250
Securities available-for-sale, at fair value 489,775 470,065 433,806
Securities held-to-maturity, at amortized cost 19,215 19,218 -
Loans held-for-sale 27,335 13,202 44,503
Loans 1,698,421 1,433,190 1,111,622
Allowance for loan losses   (13,194 )   (11,894 )   (10,016 )
Net loans 1,685,227 1,421,296 1,101,606
Accrued interest receivable 8,479 6,868 5,508
Federal Home Loan Bank of Indianapolis stock 19,575 13,050 8,595
Cash surrender value of bank-owned life insurance 34,602 24,367 12,932
Premises and equipment, net 9,667 9,853 9,267
Goodwill 4,687 4,687 4,687
Other real estate owned 4,488 4,488 4,488
Accrued income and other assets   11,978     12,361     6,818  
Total assets $ 2,381,271   $ 2,052,803   $ 1,702,468  
 
Liabilities
Noninterest-bearing deposits $ 36,636 $ 34,427 $ 28,066
Interest-bearing deposits   1,695,476     1,522,692     1,360,867  
Total deposits 1,732,112 1,557,119 1,388,933
Advances from Federal Home Loan Bank 435,183 289,985 147,974
Subordinated debt 36,652 36,615 12,778
Accrued interest payable 210 148 138
Accrued expenses and other liabilities   13,284     11,445     16,966  
Total liabilities   2,217,441     1,895,312     1,566,789  
Shareholders' equity
Voting common stock 119,883 119,627 95,642
Retained earnings 49,738 46,139 37,630
Accumulated other comprehensive income (loss)   (5,791 )   (8,275 )   2,407  
Total shareholders' equity   163,830     157,491     135,679  
Total liabilities and shareholders' equity $ 2,381,271   $ 2,052,803   $ 1,702,468  
 
 
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,
2017 2017 2016 2017 2016
 
Interest income
Loans $ 16,416 $ 14,156 $ 11,661 $ 30,572 $ 22,850
Securities - taxable 2,566 2,367 1,747 4,933 2,916
Securities - non-taxable 696 697 368 1,393 533
Other earning assets   297   170   195   467   365
Total interest income   19,975   17,390   13,971   37,365   26,664
Interest expense
Deposits 5,324 4,699 3,930 10,023 6,818
Other borrowed funds   1,677   1,234   735   2,911   1,399
Total interest expense   7,001   5,933   4,665   12,934   8,217
Net interest income 12,974 11,457 9,306 24,431 18,447
Provision for loan losses 1,322 1,035 924 2,357 1,870
Net interest income after provision          
for loan losses   11,652   10,422   8,382   22,074   16,577
Noninterest income
Service charges and fees 220 211 215 431 415
Mortgage banking activities 2,155 1,616 3,295 3,771 5,549
Gain on sale of securities - - 177 - 177
Other   361   304   61   665   147
Total noninterest income   2,736   2,131   3,748   4,867   6,288
Noninterest expense
Salaries and employee benefits 5,193 5,073 4,329 10,266 8,227
Marketing, advertising and promotion 544 518 434 1,062 898
Consulting and professional fees 764 813 895 1,577 1,533
Data processing 245 237 275 482 549
Loan expenses 248 214 200 462 384
Premises and equipment 1,025 953 963 1,978 1,761
Deposit insurance premium 300 315 215 615 395
Other   604   575   564   1,179   1,133
Total noninterest expense   8,923   8,698   7,875   17,621   14,880
Income before income taxes 5,465 3,855 4,255 9,320 7,985
Income tax provision   1,464   1,023   1,421   2,487   2,719
Net income $ 4,001 $ 2,832 $ 2,834 $ 6,833 $ 5,266
 
Per common share data
Earnings per share - basic $ 0.61 $ 0.43 $ 0.57 $ 1.04 $ 1.11
Earnings per share - diluted $ 0.61 $ 0.43 $ 0.57 $ 1.04 $ 1.10
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, 2017 March 31, 2017 June 30, 2016
 
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 $ 1,570,235 $ 16,416 4.19 % $ 1,338,694 $ 14,156 4.29 % $ 1,110,282 $ 11,661 4.22 %
Securities - taxable 405,380 2,566 2.54 % 381,522 2,367 2.52 % 307,336 1,747 2.29 %
Securities - non-taxable 95,436 696 2.93 % 93,323 697 3.03 % 51,162 368 2.89 %
Other earning assets   67,989     297 1.75 %   45,392     170 1.52 %   97,774     195 0.80 %
Total interest-earning assets 2,139,040 19,975 3.75 % 1,858,931 17,390 3.79 % 1,566,554 13,971 3.59 %
Allowance for loan losses (12,372 ) (11,299 ) (9,472 )
Noninterest-earning assets   67,984     58,104     39,422  
Total assets $ 2,194,652   $ 1,905,736   $ 1,596,504  
 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 92,676 $ 127 0.55 % $ 88,295 $ 119 0.55 % $ 83,712 $ 114 0.55 %
Regular savings accounts 34,545 67 0.78 % 28,333 47 0.67 % 28,023 40 0.57 %
Money market accounts 394,735 915 0.93 % 347,696 696 0.81 % 363,767 641 0.71 %
Certificates and brokered deposits   1,071,408     4,215 1.58 %   986,353     3,837 1.58 %   809,450     3,135 1.56 %
Total interest-bearing deposits 1,593,364 5,324 1.34 % 1,450,677 4,699 1.31 % 1,284,952 3,930 1.23 %
Other borrowed funds   398,044     1,677 1.69 %   262,573     1,234 1.91 %   161,127     735 1.83 %
Total interest-bearing liabilities 1,991,408 7,001 1.41 % 1,713,250 5,933 1.40 % 1,446,079 4,665 1.30 %
Noninterest-bearing deposits 32,897 31,463 27,687
Other noninterest-bearing liabilities   9,119     6,225     4,825  
Total liabilities 2,033,424 1,750,938 1,478,591
 
Shareholders' equity   161,228     154,798     117,913  
Total liabilities and shareholders' equity $ 2,194,652   $ 1,905,736   $ 1,596,504  
     
Net interest income $ 12,974 $ 11,457 $ 9,306
Interest rate spread 2.34 % 2.39 % 2.29 %
Net interest margin 2.43 % 2.50 % 2.39 %
Net interest margin - FTE 1 2.53 % 2.57 % 2.43 %
1 On a fully-taxable equivalent ("FTE") basis assuming a
35% tax rate
 
First Internet Bancorp
Average Balances and Rates (unaudited)
Amounts in thousands
                     
 
Six Months Ended
 
June 30, 2017 June 30, 2016
 
Average Interest / Yield / Average Interest / Yield /
Balance Dividends Cost Balance Dividends Cost
 
Assets
Interest-earning assets
Loans, including loans held-for-sale $ 1,455,104 $ 30,572 4.24% $ 1,065,225 $ 22,850 4.31%
Securities - taxable 393,517 4,933 2.53% 255,116 2,916 2.30%
Securities - non-taxable 94,385 1,393 2.98% 36,671 533 2.92%
Other earning assets 56,753 467 1.66% 88,033 365 0.83%
Total interest-earning assets 1,999,759 37,365 3.77% 1,445,045 26,664 3.71%
Allowance for loan losses (11,839) (9,063)
Noninterest-earning assets 63,072 38,686
Total assets $ 2,050,992 $ 1,474,668
 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 90,498 $ 246 0.55% $ 82,525 $ 225 0.55%
Regular savings accounts 31,456 114 0.73% 26,522 76 0.58%
Money market accounts 371,346 1,611 0.87% 357,288 1,257 0.71%
Certificates and brokered deposits 1,029,115 8,052 1.58% 692,713 5,260 1.53%
Total interest-bearing deposits 1,522,415 10,023 1.33% 1,159,048 6,818 1.18%
Other borrowed funds 330,683 2,911 1.78% 173,372 1,399 1.62%
Total interest-bearing liabilities 1,853,098 12,934 1.41% 1,332,420 8,217 1.24%
Noninterest-bearing deposits 32,184 25,293
Other noninterest-bearing liabilities 7,680 4,859
Total liabilities 1,892,962 1,362,572
 
Shareholders' equity 158,030 112,096
Total liabilities and shareholders' equity $ 2,050,992 $ 1,474,668
   
Net interest income $ 24,431 $ 18,447
Interest rate spread 2.36% 2.47%
Net interest margin 2.46% 2.57%
Net interest margin - FTE 1 2.55% 2.60%
1 On a fully-taxable equivalent ("FTE") basis assuming a
35% tax rate.
 
First Internet Bancorp
Loans and Deposits (unaudited)
Amounts in thousands
                   
 
June 30, 2017 March 31, 2017 June 30, 2016
 
Amount Percent Amount Percent Amount Percent
 
Commercial loans
Commercial and industrial $ 110,379 6.5 % $ 97,487 6.8 % $ 111,130 10.0 %
Owner-occupied commercial real estate 66,952 4.0 % 62,887 4.4 % 46,543 4.2 %
Investor commercial real estate 10,062 0.6 % 8,510 0.6 % 12,976 1.2 %
Construction 45,931 2.7 % 49,618 3.5 % 53,368 4.8 %
Single tenant lease financing 747,790 44.0 % 665,382 46.4 % 500,937 45.1 %
Public finance   179,873 10.6 %   77,995 5.4 %   - 0.0 %
Total commercial loans 1,160,987 68.4 % 961,879 67.1 % 724,954 65.3 %
 
Consumer loans
Residential mortgage 292,997 17.3 % 246,014 17.2 % 202,107 18.2 %
Home equity 33,312 2.0 % 34,925 2.4 % 38,981 3.5 %
Trailers 94,036 5.5 % 86,692 6.0 % 74,777 6.7 %
Recreational vehicles 63,514 3.7 % 57,234 4.0 % 44,387 4.0 %
Other consumer loans   51,052 3.0 %   44,265 3.1 %   22,592 2.0 %
Total consumer loans 534,911 31.5 % 469,130 32.7 % 382,844 34.4 %
 
Net deferred loan fees, premiums and discounts   2,523 0.1 %   2,181 0.2 %   3,824 0.3 %
Total loans $ 1,698,421 100.0 % $ 1,433,190 100.0 % $ 1,111,622 100.0 %
 
 
June 30, 2017 March 31, 2017 June 30, 2016
 
Amount Percent Amount Percent Amount Percent
 
Deposits
Noninterest-bearing deposits $ 36,636 2.1 % $ 34,427 2.2 % $ 28,066 2.0 %
Interest-bearing demand deposits 94,726 5.5 % 94,461 6.1 % 83,031 6.0 %
Regular savings accounts 35,764 2.1 % 31,291 2.0 % 28,900 2.1 %
Money market accounts 386,224 22.3 % 371,115 23.8 % 373,932 26.9 %
Certificates of deposits 1,176,230 67.9 % 1,023,294 65.7 % 862,150 62.1 %
Brokered deposits   2,532 0.1 % 2,531 0.2 % 12,854 0.9 %
Total deposits $ 1,732,112 100.0 % $ 1,557,119 100.0 % $ 1,388,933 100.0 %
 
 
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,
2017 2017 2016 2017 2016
 
Total equity - GAAP $ 163,830 $ 157,491 $ 135,679 $ 163,830 $ 135,679
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Tangible common equity $ 159,143   $ 152,804   $ 130,992   $ 159,143   $ 130,992  
 
Total assets - GAAP $ 2,381,271 $ 2,052,803 $ 1,702,468 $ 2,381,271 $ 1,702,468
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Tangible assets $ 2,376,584   $ 2,048,116   $ 1,697,781   $ 2,376,584   $ 1,697,781  
 
Common shares outstanding 6,513,577 6,497,662 5,533,050 6,513,577 5,533,050
 
Book value per common share $ 25.15 $ 24.24 $ 24.52 $ 25.15 $ 24.52
Effect of goodwill   (0.72 )   (0.72 )   (0.85 )   (0.72 )   (0.85 )
Tangible book value per common share $ 24.43   $ 23.52   $ 23.67   $ 24.43   $ 23.67  
 
Total shareholders' equity to assets ratio 6.88 % 7.67 % 7.97 % 6.88 % 7.97 %
Effect of goodwill   (0.18 %)   (0.21 %)   (0.25 %)   (0.18 %)   (0.25 %)
Tangible common equity to tangible assets ratio   6.70 %   7.46 %   7.72 %   6.70 %   7.72 %
 
Total average equity - GAAP $ 161,228 $ 154,798 $ 117,913 $ 158,030 $ 112,096
Adjustments:
Average goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Average tangible common equity $ 156,541   $ 150,111   $ 113,226   $ 153,343   $ 107,409  
 
Return on average shareholders' equity 9.95 % 7.42 % 9.67 % 8.72 % 9.45 %
Effect of goodwill   0.30 %   0.23 %   0.40 %   0.27 %   0.41 %
Return on average tangible common equity   10.25 %   7.65 %   10.07 %   8.99 %   9.86 %
 
Net interest income $ 12,974 $ 11,457 $ 9,306 $ 24,431 $ 18,447
Adjustments:
Fully-taxable equivalent adjustments 1   543     306     144     849     213  
Net interest income - FTE $ 13,517   $ 11,763   $ 9,450   $ 25,280   $ 18,660  
 
Net interest margin 2.43 % 2.50 % 2.39 % 2.46 % 2.57 %
Effect of fully-taxable equivalent adjustments 1   0.10 %   0.07 %   0.04 %   0.09 %   0.03 %
Net interest margin - FTE   2.53 %   2.57 %   2.43 %   2.55 %   2.60 %
1 Assuming a 35% tax rate

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