Market Overview

First Internet Bancorp Reports Record Annual Net Income for 2017

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Total loans increased 67% and assets increased 49% year-over-year

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 fourth quarter
2017 and for the twelve month period ended December 31, 2017.

David Becker, Chairman, President and Chief Executive Officer,
commented, "I am proud to report our teams produced another year of
balance sheet and earnings growth. Our lending efforts, including the
additions of public finance and healthcare finance in 2017, had a solid
year, which fueled record net interest income. In total, we grew loans
by $840 million, or 67%, on a year-over-year basis.

"Credit quality remains very strong. Additionally, our capital,
following a common stock offering completed in the third quarter,
positions us well to continue to win new customer relationships across
the organization in 2018."

Fourth quarter net income was $3.5 million and diluted earnings per
share were $0.41. This compares with third quarter net income of $4.9
million and diluted earnings per share of $0.71 and fourth quarter 2016
net income of $3.7 million and diluted earnings per share of $0.64.

For the twelve month period ended December 31, 2017, net income was a
record $15.2 million and diluted earnings per share were $2.13 compared
to net income of $12.1 million and diluted earnings per share of $2.30
for the twelve month period ended December 31, 2016.

As a result of the "Tax Cuts and Jobs Act Bill of 2017," the Company's
net deferred tax asset ("net DTA") was revalued as of December 31, 2017.
The value of the net DTA was reduced by $1.8 million with the amount of
the reduction recognized as additional income tax expense in the fourth
quarter. Consequently, this revaluation decreased fourth quarter diluted
earnings per share by $0.22 and full year 2017 diluted earnings per
share by $0.26.

Adjusted for the net DTA revaluation, fourth quarter net income was $5.3
million and diluted earnings per share were $0.63 and full year 2017 net
income was $17.1 million and diluted earnings per share were $2.39.

The Company completed its first sale of single tenant lease financing
loans during the fourth quarter which included $24.7 million of loans.
The Company is in the process of executing additional single tenant
lease financing loan sales with approximately $27.8 million of loans
transferred to loans-held-for-sale as of December 31, 2017 in
anticipation of these transactions closing during the first quarter
2018. The loan sales provide the Company an additional strategy to
manage balance sheet growth and capital while providing additional
liquidity and further diversifying revenue channels.

Highlights for the fourth quarter include:

  • Total loan growth of $222.7 million, or 11.9%, compared to September
    30, 2017 and $840.4 million, or 67.2%, compared to December 31, 2016
  • Net interest income of $15.4 million, increasing $1.2 million, or
    8.2%, compared to the linked quarter and $4.5 million, or 40.9%,
    compared to the fourth quarter 2016
  • Solid profitability after eliminating the impact of the net DTA
    revaluation
      As Reported       Adjusted
 
Return on average assets 0.52% 0.80%
Return on average shareholders' equity 6.23% 9.52%
Return on average tangible common equity 6.37% 9.73%
  • Capital levels continued to support the strong balance sheet growth
      Company       Bank
 
Total shareholders' equity to assets 8.10% 8.07%
Tangible common equity to tangible assets 7.94% 7.91%
Tier 1 leverage ratio 8.45% 8.42%
Common equity tier 1 capital ratio

11.43%

11.40%

Tier 1 capital ratio

11.43%

11.40%

Total risk-based capital ratio

14.07%

12.16%

  • Asset quality remained strong
    • Nonperforming loans to total loans declined to 0.04%
    • Nonperforming assets to total assets declined to 0.21%

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter was $15.4 million compared to
$14.2 million for the third quarter and $10.9 million for the fourth
quarter 2016. Total interest income for the fourth quarter was $24.6
million, increasing $1.9 million, or 8.6%, compared to the third quarter
and $7.9 million, or 47.0%, compared to the fourth quarter 2016. The
increase in total interest income compared to the linked quarter was
driven primarily by a $175.9 million, or 9.8%, increase in average loan
balances. Additionally, the yield earned on the loan portfolio increased
4 bps to 4.17% in the fourth quarter from 4.13% for the third quarter.
The increase in the yield earned on the loan portfolio was driven by
yield expansion in several loan types and also benefitted from the
collection of back interest on a nonaccrual loan that paid down in full
during the quarter. In total, the Company's yield on interest-earning
assets increased 8 bps during the fourth quarter to 3.78% from 3.70% for
the third quarter.

Total interest expense for the fourth quarter was $9.3 million,
increasing $0.8 million, or 9.1%, compared to the third quarter and $3.4
million, or 58.3%, compared to the fourth quarter 2016. The increase in
total interest expense compared to the linked quarter was due primarily
to an increase of $123.5 million, or 6.7%, in average interest-bearing
deposit balances as well as an increase in the cost of funds related to
interest-bearing deposits, which increased 7 bps during the fourth
quarter to 1.49% from 1.42% for the third quarter. Overall, the total
cost of interest-bearing liabilities increased 6 bps during the fourth
quarter to 1.55% from 1.49% for the third quarter.

Net interest margin ("NIM") was 2.35% for the fourth quarter compared to
2.31% for the third quarter and 2.42% for the fourth quarter 2016. On a
fully-taxable equivalent basis, NIM increased to 2.59% for the fourth
quarter compared to 2.52% for the third quarter and 2.48% for the fourth
quarter 2016.

Noninterest Income

Noninterest income for the fourth quarter was $2.5 million compared to
$3.1 million for the third quarter and $2.9 million for the fourth
quarter 2016. The decrease of $0.6 million, or 19.0%, compared to the
linked quarter was due primarily to a decline of $1.0 million, or 39.6%,
in mortgage banking revenue. The decrease in mortgage banking revenue
was driven by lower mortgage origination activity as well as a decline
in gain on sale margins related to mandatory commitments. The decrease
in mortgage banking revenue was partially offset by a gain of $0.4
million on the sale of single tenant lease financing loans as discussed
above.

Noninterest Expense

Noninterest expense for the fourth quarter was $9.7 million compared to
$9.4 million for the third quarter and $8.2 million for the fourth
quarter 2016. The increase of $0.3 million, or 3.2%, compared to the
linked quarter was due primarily to increases in salaries and employee
benefits and other expenses, offset by declines in marketing expenses
and consulting and professional fees. The increase in salaries and
benefits was due to higher incentive compensation related to loan
origination activities and employee benefit expenses. The increase in
other expenses was due primarily to costs associated with a residential
mortgage property classified as other real estate owned.

Income Taxes

Income tax expense was $3.5 million for the fourth quarter, resulting in
an effective tax rate of 50.2%, compared to $1.7 million and an
effective tax rate of 25.7% for the linked quarter and $1.7 million and
an effective tax rate of 31.1% for the fourth quarter 2016. The increase
of $1.8 million, or 107.9%, compared to the linked quarter was due
primarily to the net DTA revaluation discussed above. Excluding the net
DTA revaluation, income tax expense for the fourth quarter was $1.7
million and the effective tax rate declined to 23.9%. The decline in the
adjusted effective tax rate compared to the linked quarter was driven 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 December 31, 2017 were $2.1 billion, increasing $222.7
million, or 11.9%, compared to September 30, 2017 and $840.4 million, or
67.2%, compared to December 31, 2016. Total commercial loan balances
were $1.5 billion as of December 31, 2017, increasing $206.4 million, or
15.6%, compared to September 30, 2017 and $695.3 million, or 83.5%,
compared to December 31, 2016. The growth in commercial loan balances
was driven largely by production in public finance, single tenant lease
financing and healthcare finance.

The public finance portfolio increased $169.0 million, or 62.7%,
compared to September 30, 2017 with balances totaling $438.3 million at
quarter end. Single tenant lease financing ("STL") balances increased
$19.4 million, or 2.5%, compared to September 30, 2017 and $196.7
million, or 32.4%, compared to December 31, 2016. Growth in the STL
portfolio was impacted by the transfer of $27.8 million of balances to
loans held-for-sale as of December 31, 2017 pursuant to the expected
sales of STL loans discussed above. Healthcare finance balances,
originated through the partnership with Lendeavor, Inc., increased $19.2
million, or 155.4%, compared to September 30, 2017 and totaled $31.6
million at quarter end. Commercial and industrial and owner-occupied
commercial real estate balances increased slightly on a combined basis
compared to September 30, 2017 and $38.6 million, or 24.1%, compared to
December 31, 2016. During the fourth quarter, new commercial and
industrial and owner occupied commercial real estate production was
offset by elevated prepayment activity.

Total consumer loan balances were $558.0 million as of December 31,
2017, increasing $14.5 million, or 2.7%, compared to September 30, 2017
and $144.0 million, or 34.8%, compared to December 31, 2016. Residential
mortgage balances increased $8.6 million, or 2.9%, compared to September
30, 2017 and $94.4 million, or 45.9%, compared to December 31, 2016.
Trailer portfolio balances increased $3.6 million, or 3.6%, compared to
September 30, 2017 and $20.2 million, or 24.9%, compared to December 31,
2016. Recreational vehicle balances increased $2.6 million, or 3.9%,
compared to September 30, 2017 and $16.8 million, or 32.2%, compared to
December 31, 2016. Additionally, other consumer loan balances increased
$0.5 million, or 0.8%, compared to September 30, 2017 and $17.1 million,
or 42.7%, compared to December 31, 2016.

Credit quality continued to remain sound as total delinquencies 30 days
or more past due were 0.05% of total loans as of December 31, 2017,
consistent with September 30, 2017 and down from 0.13% as of December
31, 2016. Nonperforming loans to total loans was 0.04% as of December
31, 2017 compared to 0.14% as of September 30, 2017 and 0.09% as of
December 31, 2016. Nonperforming assets to total assets was 0.21% as of
December 31, 2017 compared to 0.30% as of September 30, 2017 and 0.31%
as of December 31, 2016. The decline in both nonperforming loans and
nonperforming assets was driven primarily by a nonaccrual commercial and
industrial loan that paid down in full during the fourth quarter.

The allowance for loan losses was $15.0 million as of December 31, 2017
compared to $14.1 million as of September 30, 2017 and $11.0 million as
of December 31, 2016. The allowance as a percentage of total
nonperforming loans was 1,784.3% as of December 31, 2017 compared to
529.2% as of September 30, 2017 and 1,013.9% as of December 31, 2016.
The allowance as a percentage of total loans was 0.72% as of December
31, 2017 compared to 0.75% as of September 30, 2017 and 0.88% as of
December 31, 2016. The decline in the allowance as a percentage of total
loans was due primarily to the strong growth in the public finance
portfolio as this loan category has a lower loss reserve factor than
other loan types.

Net charge-offs of $0.3 million were recognized during the fourth
quarter, resulting in net charge-offs to average loans of 0.06% compared
to 0.10% for the third quarter and net recoveries to average loans of
0.05% for the fourth quarter 2016. The provision for loan losses in the
fourth quarter was $1.2 million compared to $1.3 million for the third
quarter and $0.3 million for the fourth quarter 2016.

Capital

During the fourth quarter, total shareholders' equity increased $3.3
million, due primarily to net income earned during the quarter,
partially offset by declared dividends. As of December 31, 2017, the
Company's tier 1 leverage, common equity tier 1, tier 1 and total
risk-based capital ratios were 8.45%, 11.43%, 11.43% and 14.07% compared
to 8.86%, 11.93%, 11.93% and 14.67% as of September 30, 2017,
respectively. The declines in 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 decreased 28 bps during the fourth quarter to 7.94% as
of December 31, 2017 due primarily to continued strong balance sheet
growth. Tangible book value per share increased to $26.09 as of December
31, 2017 from $25.70 as of September 30, 2017 and $23.04 as of December
31, 2016.

About First Internet Bancorp

First Internet Bancorp is a bank holding company with assets of $2.8
billion as of December 31, 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 or breaches of or interruptions in
the communications and information systems on which we rely to conduct
our business; failure of our plans to grow our commercial real estate,
commercial and industrial, public finance and healthcare finance loan
portfolios; competition with national, regional and community financial
institutions; the loss of any key members of senior management;
fluctuations in interest rates; general economic conditions; risks
relating to the regulation of financial institutions; and other factors
identified in reports we file with the U.S. Securities and Exchange
Commission. All statements in this press release, including
forward-looking statements, speak only as of the date they are made, and
the Company undertakes no obligation to update any statement in light of
new information or future events.

Non-GAAP Financial Measures

This press release contains financial information determined by methods
other than in accordance with U.S. generally accepted accounting
principles ("GAAP"). Non-GAAP financial measures, specifically tangible
common equity, tangible assets, tangible book value per common share,
return on average tangible common equity and tangible common equity to
tangible assets, net interest income – FTE and net interest margin –
FTE, adjusted net income, adjusted diluted earnings per share, adjusted
return on average assets, adjusted return on average shareholders'
equity, adjusted return on average tangible common equity, adjusted
income tax expense and adjusted effective income tax rate are used by
the Company's management to measure the strength of its capital and
analyze profitability, including its ability to generate earnings on
tangible capital invested by its shareholders. Although management
believes these non-GAAP measures are useful to investors by providing a
greater understanding of its business, they should not be considered a
substitute for financial measures determined in accordance with GAAP,
nor are they necessarily comparable to non-GAAP performance measures
that may be presented by other companies. Reconciliations of these
non-GAAP financial measures to the most directly comparable GAAP
financial measures are included in the table at the end of this release
under the caption "Reconciliation of Non-GAAP Financial Measures."

         

First Internet Bancorp

Summary Financial Information (unaudited)
Amounts in thousands, except per share data
     
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2017 2017 2016 2017 2016
 
Net income $ 3,498 $ 4,895 $ 3,710 $ 15,226 $ 12,074
 
Per share and share information
Earnings per share - basic $ 0.41 $ 0.72 $ 0.65 $ 2.14 $ 2.32
Earnings per share - diluted 0.41 0.71 0.64 2.13 2.30
Dividends declared per share 0.06 0.06 0.06 0.24 0.24
Book value per common share 26.65 26.26 23.76 26.65 23.76
Tangible book value per common share 26.09 25.70 23.04 26.09 23.04
Common shares outstanding 8,411,077 8,411,077 6,478,050 8,411,077 6,478,050
Average common shares outstanding:
Basic 8,490,951 6,834,011 5,722,615 7,118,628 5,211,209
Diluted 8,527,599 6,854,614 5,761,931 7,149,302 5,239,082
Performance ratios
Return on average assets 0.52% 0.78% 0.81% 0.66% 0.74%
Return on average shareholders' equity 6.23% 11.20% 10.85% 8.54% 9.74%
Return on average tangible common equity 6.37% 11.51% 11.24% 8.77% 10.12%
Net interest margin 2.35% 2.31% 2.42% 2.39% 2.49%
Net interest margin - FTE 1 2.59% 2.52% 2.48% 2.57% 2.55%
Capital ratios 2
Total shareholders' equity to assets 8.10% 8.39% 8.30% 8.10% 8.30%
Tangible common equity to tangible assets 7.94% 8.22% 8.07% 7.94% 8.07%
Tier 1 leverage ratio 8.45% 8.86% 8.65% 8.45% 8.65%
Common equity tier 1 capital ratio

11.43%

11.93% 11.54%

11.43%

11.54%
Tier 1 capital ratio

11.43%

11.93% 11.54%

11.43%

11.54%
Total risk-based capital ratio

14.07%

14.67% 15.01%

14.07%

15.01%
Asset quality
Nonperforming loans $ 839 $ 2,662 $ 1,083 $ 839 $ 1,083
Nonperforming assets 5,892 7,855 5,701 5,892 5,701
Nonperforming loans to loans 0.04% 0.14% 0.09% 0.04% 0.09%
Nonperforming assets to total assets 0.21% 0.30% 0.31% 0.21% 0.31%
Allowance for loan losses to:
Loans 0.72% 0.75% 0.88% 0.72% 0.88%
Nonperforming loans 1,784.3% 529.2% 1,013.9% 1,784.3% 1,013.9%

Net charge-offs (recoveries) to average loans

0.06% 0.10% (0.05%) 0.05% 0.15%
Average balance sheet information
Loans $ 1,970,994 $ 1,795,118 $ 1,219,966 $ 1,661,813 $ 1,110,483
Total securities 500,627 507,873 479,330 496,143 380,560
Other earning assets 95,049 108,547 57,081 79,461 71,140
Total interest-earning assets 2,588,677 2,434,799 1,790,167 2,257,853 1,596,387
Total assets 2,650,583 2,492,751 1,831,549 2,313,469 1,629,800
Noninterest-bearing deposits 40,618 35,094 30,336 35,043 28,472
Interest-bearing deposits 1,963,405 1,839,943 1,445,737 1,713,603 1,288,031
Total deposits 2,004,023 1,875,037 1,476,073 1,748,646 1,316,503
Shareholders' equity 222,670 173,459 135,974 178,212 124,023
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, except for
December 31, 2016)
Amounts in thousands
   
 
December 31, September 30, December 31,
2017 2017 2016
 
Assets
Cash and due from banks $ 4,539 $ 4,509 $ 2,282
Interest-bearing deposits 43,442 121,195 37,170
Interest-bearing time deposits - - 250
Securities available-for-sale, at fair value 473,275 492,468 456,700
Securities held-to-maturity, at amortized cost 19,209 19,212 16,671
Loans held-for-sale 51,407 45,487 27,101
Loans 2,091,193 1,868,487 1,250,789
Allowance for loan losses   (14,970 )   (14,087 )   (10,981 )
Net loans 2,076,223 1,854,400 1,239,808
Accrued interest receivable 11,944 9,366 6,708
Federal Home Loan Bank of Indianapolis stock 19,575 19,575 8,910
Cash surrender value of bank-owned life insurance 35,105 34,856 24,195
Premises and equipment, net 10,058 9,739 10,044
Goodwill 4,687 4,687 4,687
Other real estate owned 5,041 5,136 4,533
Accrued income and other assets   13,182     12,792     15,276  
Total assets $ 2,767,687   $ 2,633,422   $ 1,854,335  
 
Liabilities
Noninterest-bearing deposits $ 44,686 $ 33,734 $ 31,166
Interest-bearing deposits   2,040,255     1,963,294     1,431,701  
Total deposits 2,084,941 1,997,028 1,462,867
Advances from Federal Home Loan Bank 410,176 365,180 189,981
Subordinated debt 36,726 36,689 36,578
Accrued interest payable 311 237 112
Accrued expenses and other liabilities   11,406     13,421     10,855  
Total liabilities   2,543,560     2,412,555     1,700,393  
Shareholders' equity
Voting common stock 172,043 171,783 119,506
Retained earnings 57,103 54,119 43,704
Accumulated other comprehensive loss   (5,019 )   (5,035 )   (9,268 )
Total shareholders' equity   224,127     220,867     153,942  
Total liabilities and shareholders' equity $ 2,767,687   $ 2,633,422   $ 1,854,335  
 
         
First Internet Bancorp
Condensed Consolidated Statements of Income (unaudited, except
for the twelve months ended December 31, 2016)
Amounts in thousands, except per share data
     
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2017 2017 2016 2017 2016
 
Interest income
Loans $ 20,971 $ 18,922 $ 13,660 $ 70,465 $ 49,054
Securities - taxable 2,521 2,582 2,262 10,036 7,326
Securities - non-taxable 696 697 686 2,786 1,856
Other earning assets   450   493     156   1,410     663
Total interest income   24,638   22,694     16,764   84,697     58,899
Interest expense
Deposits 7,358 6,594 4,667 23,975 15,853
Other borrowed funds   1,920   1,909     1,193   6,740     3,357
Total interest expense   9,278   8,503     5,860   30,715     19,210
Net interest income 15,360 14,191 10,904 53,982 39,689
Provision for loan losses   1,179   1,336     256   4,872     4,330

Net interest income after provision for loan losses

  14,181   12,855     10,648   49,110     35,359
Noninterest income
Service charges and fees 231 226 196 888 818
Mortgage banking activities 1,530 2,535 2,407 7,836 12,398
Gain on sale of loans 395 -

-

395

-

Gain (loss) on sale of securities

- (8 ) - (8 ) 177
Other   383   382     288   1,430     684
Total noninterest income   2,539   3,135     2,891   10,541     14,077
Noninterest expense
Salaries and employee benefits 5,701 5,197 4,610 21,164 17,387
Marketing, advertising and promotion 590 741 471 2,393 1,823
Consulting and professional fees 617 897 709 3,091 3,143
Data processing 242 247 292 971 1,127
Loan expenses 303 262 267 1,027 891
Premises and equipment 1,125 1,080 955 4,183 3,699
Deposit insurance premium 420 375 344 1,410 1,159
Other   703   602     510   2,484     2,222
Total noninterest expense   9,701   9,401     8,158   36,723     31,451
Income before income taxes 7,019 6,589 5,381 22,928 17,985
Income tax provision   3,521   1,694     1,671   7,702     5,911
Net income $ 3,498 $ 4,895   $ 3,710 $ 15,226   $ 12,074
 
Per common share data
Earnings per share - basic $ 0.41 $ 0.72 $ 0.65 $ 2.14 $ 2.32
Earnings per share - diluted $ 0.41 $ 0.71 $ 0.64 $ 2.13 $ 2.30
Dividends declared per share $ 0.06 $ 0.06 $ 0.06 $ 0.24 $ 0.24
 

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

 
                 
First Internet Bancorp
Average Balances and Rates (unaudited)
Amounts in thousands
     
Three Months Ended
December 31, 2017 September 30, 2017 December 31, 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 $ 1,993,001 $ 20,971 4.17 % $ 1,818,379 $ 18,922 4.13 % $ 1,253,756 $ 13,660 4.33 %
Securities - taxable 403,905 2,521 2.48 % 410,630 2,582 2.49 % 384,286 2,262 2.34 %
Securities - non-taxable 96,722 696 2.85 % 97,243 697 2.84 % 95,044 686 2.87 %
Other earning assets   95,049     450 1.88 %   108,547     493 1.80 %   57,081     156 1.09 %
Total interest-earning assets 2,588,677 24,638 3.78 % 2,434,799 22,694 3.70 % 1,790,167 16,764 3.73 %
 
Allowance for loan losses (14,486 ) (13,657 ) (10,711 )
Noninterest-earning assets   76,392     71,609     52,093  
Total assets $ 2,650,583   $ 2,492,751   $ 1,831,549  
 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 86,744 $ 119 0.54 % $ 88,633 $ 122 0.55 % $ 83,930 $ 116 0.55 %
Savings accounts 52,092 132 1.01 % 42,308 97 0.91 % 28,157 41 0.58 %
Money market accounts 479,201 1,428 1.18 % 440,293 1,187 1.07 % 360,166 648 0.72 %
Certificates and brokered deposits   1,345,368     5,679 1.67 %   1,268,709     5,188 1.62 %   973,484     3,862 1.58 %
Total interest-bearing deposits 1,963,405 7,358 1.49 % 1,839,943 6,594 1.42 % 1,445,737 4,667 1.28 %
Other borrowed funds   411,283     1,920 1.85 %   431,738     1,909 1.75 %   213,109     1,193 2.23 %
Total interest-bearing liabilities 2,374,688 9,278 1.55 % 2,271,681 8,503 1.49 % 1,658,846 5,860 1.41 %
 
Noninterest-bearing deposits 40,618 35,094 30,336
Other noninterest-bearing liabilities   12,607     12,517     6,393  
Total liabilities 2,427,913 2,319,292 1,695,575
 
Shareholders' equity   222,670     173,459     135,974  
Total liabilities and shareholders' equity $ 2,650,583   $ 2,492,751   $ 1,831,549  
     
Net interest income $ 15,360 $ 14,191 $ 10,904
 
Interest rate spread 2.23 % 2.21 % 2.32 %
 
Net interest margin 2.35 % 2.31 % 2.42 %
 
Net interest margin - FTE 1 2.59 % 2.52 % 2.48 %
 

1 On a fully-taxable equivalent ("FTE") basis assuming
a 35% tax rate

 
           
First Internet Bancorp
Average Balances and Rates (unaudited)
Amounts in thousands
     
Twelve Months Ended
December 31, 2017 December 31, 2016
Average Interest / Yield / Average Interest / Yield /
Balance Dividends Cost Balance Dividends Cost
Assets
Interest-earning assets
Loans, including loans held-for-sale $ 1,682,249 $ 70,465 4.19 % $ 1,144,687 $ 49,054 4.29 %
Securities - taxable 400,449 10,036 2.51 % 315,661 7,326 2.32 %
Securities - non-taxable 95,694 2,786 2.91 % 64,899 1,856 2.86 %
Other earning assets   79,461     1,410 1.77 %   71,140     663 0.93 %
Total interest-earning assets 2,257,853 84,697 3.75 % 1,596,387 58,899 3.69 %
 
Allowance for loan losses (12,964 ) (9,808 )
Noninterest-earning assets   68,580     43,221  
Total assets $ 2,313,469   $ 1,629,800  
 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 89,081 $ 488 0.55 % $ 82,533 $ 452 0.55 %
Savings accounts 39,393 342 0.87 % 27,174 158 0.58 %
Money market accounts 415,910 4,227 1.02 % 360,976 2,563 0.71 %
Certificates and brokered deposits   1,169,219     18,918 1.62 %   817,348     12,680 1.55 %
Total interest-bearing deposits 1,713,603 23,975 1.40 % 1,288,031 15,853 1.23 %
Other borrowed funds   376,470     6,740 1.79 %   183,410     3,357 1.83 %
Total interest-bearing liabilities 2,090,073 30,715 1.47 % 1,471,441 19,210 1.31 %
 
Noninterest-bearing deposits 35,043 28,472
Other noninterest-bearing liabilities   10,141     5,864  
Total liabilities 2,135,257 1,505,777
 
Shareholders' equity   178,212     124,023  
Total liabilities and shareholders' equity $ 2,313,469   $ 1,629,800  
   
Net interest income $ 53,982 $ 39,689
 
Interest rate spread 2.28 % 2.38 %
 
Net interest margin 2.39 % 2.49 %
 
Net interest margin - FTE 1 2.57 % 2.55 %
 

1 On a fully-taxable equivalent ("FTE") basis assuming
a 35% tax rate.

 
           
First Internet Bancorp
Loans and Deposits (unaudited)
Amounts in thousands
     
December 31, 2017 September 30, 2017 December 31, 2016
Amount Percent Amount Percent Amount Percent
 
Commercial loans
Commercial and industrial $ 122,940 5.9% $ 122,587 6.5% $ 102,437 8.2%
Owner-occupied commercial real estate 75,768 3.6% 75,986 4.1% 57,668 4.6%
Investor commercial real estate 7,273 0.4% 7,430 0.4% 13,181 1.0%
Construction 49,213 2.4% 50,367 2.7% 53,291 4.3%
Single tenant lease financing 803,299 38.4% 783,918 41.9% 606,568 48.5%
Public finance 438,341 21.0% 269,347 14.4% - 0.0%
Healthcare finance   31,573 1.5%   12,363 0.7%   - 0.0%
Total commercial loans 1,528,407 73.2% 1,321,998 70.7% 833,145 66.6%
 
Consumer loans
Residential mortgage 299,935 14.3% 291,382 15.6% 205,554 16.4%
Home equity 30,554 1.5% 31,236 1.7% 35,036 2.8%
Trailers 101,369 4.8% 97,811 5.2% 81,186 6.5%
Recreational vehicles 69,196 3.3% 66,619 3.6% 52,350 4.2%
Other consumer loans   56,968 2.7%   56,490 3.0%   39,913 3.2%
Total consumer loans 558,022 26.6% 543,538 29.1% 414,039 33.1%
 
Net deferred loan fees, premiums and discounts 4,764 0.2% 2,951 0.2% 3,605 0.3%
           
Total loans $ 2,091,193 100.0% $ 1,868,487 100.0% $ 1,250,789 100.0%
 
 
December 31, 2017 September 30, 2017 December 31, 2016
Amount Percent Amount Percent Amount Percent
 
Deposits
Noninterest-bearing deposits $ 44,686 2.1% $ 33,734 1.7% $ 31,166 2.1%
Interest-bearing demand deposits 94,674 4.5% 89,748 4.5% 93,074 6.4%
Savings accounts 49,939 2.4% 49,913 2.5% 27,955 1.9%
Money market accounts 499,501 24.0% 499,160 25.0% 340,240 23.3%
Certificates of deposits 1,319,488 63.3% 1,300,952 65.1% 964,819 65.9%
Brokered deposits 76,653 3.7% 23,521 1.2% 5,613 0.4%
           
Total deposits $ 2,084,941 100.0% $ 1,997,028 100.0% $ 1,462,867 100.0%
 
         
First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Amounts in thousands, except per share data
   
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2017 2017 2016 2017 2016
 
Total equity - GAAP $ 224,127 $ 220,867 $ 153,942 $ 224,127 $ 153,942
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Tangible common equity $ 219,440   $ 216,180   $ 149,255   $ 219,440   $ 149,255  
 
Total assets - GAAP $ 2,767,687 $ 2,633,422 $ 1,854,335 $ 2,767,687 $ 1,854,335
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Tangible assets $ 2,763,000   $ 2,628,735   $ 1,849,648   $ 2,763,000   $ 1,849,648  
 
Common shares outstanding 8,411,077 8,411,077 6,478,050 8,411,077 6,478,050
 
Book value per common share $ 26.65 $ 26.26 $ 23.76 $ 26.65 $ 23.76
Effect of goodwill   (0.56 )   (0.56 )   (0.72 )   (0.56 )   (0.72 )
Tangible book value per common share $ 26.09   $ 25.70   $ 23.04   $ 26.09   $ 23.04  
 
Total shareholders' equity to assets ratio 8.10 % 8.39 % 8.30 % 8.10 % 8.30 %
Effect of goodwill   (0.16 %)   (0.17 %)   (0.23 %)   (0.16 %)   (0.23 %)
Tangible common equity to tangible assets ratio   7.94 %   8.22 %   8.07 %   7.94 %   8.07 %
 
Total average equity - GAAP $ 222,670 $ 173,459 $ 135,974 $ 178,212 $ 124,023
Adjustments:
Average goodwill   (4,687 )   (4,687 )   (4,687 )   (4,687 )   (4,687 )
Average tangible common equity $ 217,983   $ 168,772   $ 131,287   $ 173,525   $ 119,336  
 
Return on average shareholders' equity 6.23 % 11.20 % 10.85 % 8.54 % 9.74 %
Effect of goodwill   0.14 %   0.31 %   0.39 %   0.23 %   0.38 %
Return on average tangible common equity   6.37 %   11.51 %   11.24 %   8.77 %   10.12 %
 
Net interest income $ 15,360 $ 14,191 $ 10,904 $ 53,982 $ 39,689
Adjustments:
Fully-taxable equivalent adjustments 1   1,555     1,280     256     4,053     1,090  
Net interest income - FTE $ 16,915   $ 15,471   $ 11,160   $ 58,035   $ 40,779  
 
Net interest margin 2.35 % 2.31 % 2.42 % 2.39 % 2.49 %
Effect of fully-taxable equivalent adjustments 1   0.24 %   0.21 %   0.06 %   0.18 %   0.06 %
Net interest margin - FTE   2.59 %   2.52 %   2.48 %   2.57 %   2.55 %
 

1 Assuming a 35% tax rate

 
         
First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Amounts in thousands, except per share data
   
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2017 2017 2016 2017 2016
 
Net income - GAAP $ 3,498 $ 4,895 $ 3,710 $ 15,226 $ 12,074
Adjustments:

Net deferred tax asset revaluation

  1,846     -     -     1,846     -  
Adjusted net income $ 5,344   $ 4,895   $ 3,710   $ 17,072   $ 12,074  
 
Diluted average common shares outstanding 8,527,599 6,854,614 5,761,931 7,149,302 5,239,082
 
Diluted earnings per share - GAAP $ 0.41 $ 0.71 $ 0.64 $ 2.13 $ 2.30

Adjustments:

Effect of net deferred tax asset revaluation

  0.22     -     -     0.26     -  
Adjusted diluted earnings per share $ 0.63   $ 0.71   $ 0.64   $ 2.39   $ 2.30  
 
Return on average assets 0.52 % 0.78 % 0.81 % 0.66 % 0.74 %

Effect of net deferred tax asset revaluation

  0.28 %   0.00 %   0.00 %   0.08 %   0.00 %
Adjusted return on average assets   0.80 %   0.78 %   0.81 %   0.74 %   0.74 %
 
Return on average shareholders' equity 6.23 % 11.20 % 10.85 % 8.54 % 9.74 %

Effect of net deferred tax asset revaluation

  3.29 %   0.00 %   0.00 %   1.04 %   0.00 %
Adjusted return on average shareholders' equity   9.52 %   11.20 %   10.85 %   9.58 %   9.74 %
 
Return on average tangible common equity 6.37 % 11.51 % 11.24 % 8.77 % 10.12 %

Effect of net deferred tax asset revaluation

  3.36 %   0.00 %   0.00 %   1.07 %   0.00 %
Adjusted return on average tangible common equity   9.73 %   11.51 %   11.24 %   9.84 %   10.12 %
 
Income tax expense - GAAP $ 3,521 $ 1,694 $ 1,671 $ 7,702 $ 5,911

Adjustments:

Net deferred tax asset revaluation

  (1,846 )   -     -     (1,846 )   -  
Adjusted income tax expense $ 1,675   $ 1,694   $ 1,671   $ 5,856   $ 5,911  
 
Effective income tax rate - GAAP 50.2 % 25.7 % 31.1 % 33.6 % 32.9 %

Effect of net deferred tax asset revaluation

  (26.3 %)   0.0 %   0.0 %   (8.1 %)   0.0 %
Adjusted effective income tax rate   23.9 %   25.7 %   31.1 %   25.5 %   32.9 %
 

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