Market Overview

First Internet Bancorp Reports Record Quarterly Net Income

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Quarterly net income up 113% year-over-year; diluted EPS increased
65%

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 first quarter
2018.

David Becker, Chairman, President and Chief Executive Officer,
commented, "We are off to a strong start in 2018, with record quarterly
net income and earnings per share.  Our results reflect solid
contributions from all of our lending teams; we grew loan balances
nearly 6% in the first quarter and 54% compared to this period last year.

"Even in this intensely competitive environment, we have stayed true to
our credit discipline. We will not sacrifice price or credit for the
sake of loan growth. As we move into the second quarter, our loan
pipelines remain healthy."

First quarter net income was $6.0 million and diluted earnings per share
were $0.71. This compares with fourth quarter 2017 net income of $3.5
million and diluted earnings per share of $0.41 and first quarter 2017
net income of $2.8 million and diluted earnings per share of $0.43.

As a result of the Tax Cuts and Jobs Act 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 2017. Consequently, this revaluation decreased fourth quarter
2017 diluted earnings per share by $0.22. Adjusted for the net DTA
revaluation, fourth quarter 2017 net income was $5.3 million and diluted
earnings per share were $0.63.

Highlights for the first quarter include:

  • Record net income of $6.0 million, increasing $2.5 million, or 72.3%,
    compared to the linked quarter and $3.2 million, or 112.9%, compared
    to first quarter 2017
  • Diluted earnings per share of $0.71, increasing $0.30, or 73.2%,
    compared to the linked quarter and $0.28, or 65.1%, compared to first
    quarter 2017
  • Diluted earnings per share increased $0.08, or 12.7%, and net income
    increased $0.7 million, or 12.8%, compared to fourth quarter 2017
    results adjusted for the net DTA revaluation
  • Total loan growth of $118.2 million, or 5.7%, compared to December 31,
    2017 and $776.2 million, or 54.2%, compared to March 31, 2017
  • Net interest income of $15.4 million, increasing $0.1 million, or
    0.4%, compared to the linked quarter and $4.0 million, or 34.5%,
    compared to first quarter 2017
  • Solid quarterly performance
    • Return on average assets of 0.87%
    • Return on average shareholders' equity of 10.96%
    • Return on average tangible common equity of 11.19%
  • Capital levels continued to support the strong balance sheet growth
  Company   Bank
 
Total shareholders' equity to assets 7.85% 8.22%
Tangible common equity to tangible assets 7.70% 8.07%
Tier 1 leverage ratio 8.09% 8.46%
Common equity tier 1 capital ratio 11.31% 11.84%
Tier 1 capital ratio 11.31% 11.84%
Total risk-based capital ratio 13.89% 12.61%
  • Asset quality remained strong
    • Nonperforming loans to total loans declined to 0.03%
    • Nonperforming assets to total assets declined to 0.20%
    • Net charge-offs to average loans of 0.05%

Net Interest Income and Net Interest Margin

Net interest income for the first quarter was $15.4 million compared to
$15.4 million for the fourth quarter 2017 and $11.5 million for the
first quarter 2017. Total interest income for the first quarter was
$26.0 million, increasing $1.3 million, or 5.4%, compared to the fourth
quarter 2017 and $8.6 million, or 49.4%, compared to the first quarter
2017. The increase in total interest income compared to the linked
quarter was driven primarily by a $183.9 million, or 9.3%, increase in
average loan balances. The growth in average loan balances was partially
offset by a decline of 4 bps in the yield earned on the loan portfolio
to 4.13% in the first quarter from 4.17% for the fourth quarter 2017.
While the yield earned on most loan types increased during the first
quarter, the total portfolio yield declined compared to the linked
quarter as the fourth quarter 2017 benefitted from the collection of
back interest and prepayment fees on a nonaccrual loan that paid down in
full during the quarter. In total, the Company's yield on
interest-earning assets increased 3 bps during the first quarter to
3.81% from 3.78% for the fourth quarter 2017.

Total interest expense for the first quarter was $10.6 million,
increasing $1.3 million, or 13.9%, compared to the fourth quarter 2017
and $4.6 million, or 78.1%, compared to the first quarter 2017. The
increase in total interest expense compared to the linked quarter was
due primarily to an increase of $141.7 million, or 7.2%, in average
interest-bearing deposit balances as well as an increase in the cost of
funds related to interest-bearing deposits, which increased 10 bps
during the first quarter to 1.59% from 1.49% for the fourth quarter
2017. Also contributing to the growth in total interest expense was an
increase of $30.7 million, or 8.2%, in the average balance of Federal
Home Loan Bank ("FHLB") advances outstanding compared to the fourth
quarter 2017. Additionally, the cost of funds related to FHLB advances
increased 30 bps during the first quarter to 1.66% from 1.36% for the
fourth quarter 2017. The cost of funds related to both interest-bearing
deposits and FHLB advances were impacted by the rapid increase in short
term interest rates during the first quarter. The cost of FHLB advances
was also affected by a $50.0 million borrowing that converted from its
initial one year sub-3M LIBOR rate to a fixed rate of 2.00%. Overall,
the total cost of interest-bearing liabilities increased 13 bps during
the first quarter to 1.68% from 1.55% for the fourth quarter 2017.

Net interest margin ("NIM") was 2.26% for the first quarter compared to
2.35% for the fourth quarter 2017 and 2.50% for the first quarter 2017.
On a fully-taxable equivalent basis, NIM decreased to 2.41% for the
first quarter compared to 2.59% for the fourth quarter 2017 and 2.57%
for the first quarter 2017. The decline of 18 bps in the fully-taxable
equivalent NIM was due primarily to the reduction in the federal
corporate tax rate from 35% to 21% effective January 1, 2018.

Noninterest Income

Noninterest income for the first quarter was $2.5 million compared to
$2.5 million for the fourth quarter 2017 and $2.1 million for the first
quarter 2017. Compared to the linked quarter, noninterest income was
essentially unchanged as mortgage banking revenue increased modestly to
$1.6 million for the first quarter from $1.5 million for the fourth
quarter 2017. Related to mortgage banking activities, origination
volumes declined during the first quarter but were offset by higher gain
on sale margins. The Company also completed two sales of single tenant
lease financing loans during the first quarter. The principal amount of
loans sold totaled $25.2 million and resulted in a gain of $0.4 million,
which was comparable to similar activity in the fourth quarter 2017. As
of March 31, 2018, there were no additional sales in process but the
Company may execute sales in future periods should market conditions
remain favorable for such transactions.

Noninterest Expense

Noninterest expense for the first quarter was $10.2 million compared to
$9.7 million for the fourth quarter 2017 and $8.7 million for the first
quarter 2017. The increase of $0.5 million, or 5.3%, compared to the
linked quarter was due primarily to increases in consulting and
professional fees, salaries and employee benefits and marketing
expenses, partially offset by a decline in other expenses. The increase
in consulting and professional fees was due to seasonally higher legal
expenses generally related to year-end reporting and the preparation of
proxy materials for our annual meeting of shareholders, which are
customarily incurred in the first quarter. The increase in salaries and
employee benefits was due primarily to higher equity compensation
expense, including $0.2 million of non-recurring accelerated vesting
recognition, and higher employee benefit expenses related to medical and
prescription drug claims experience and seasonal resets on payroll taxes
and other employee benefits. The increase in marketing expenses was due
to advertising campaigns to increase brand awareness. The decrease in
other expenses was driven by gains on sales of residential other real
estate owned properties.

Income Taxes

Income tax expense was $0.9 million for the first quarter, resulting in
an effective tax rate of 12.5%, compared to $3.5 million and an
effective tax rate of 50.2% for the linked quarter and $1.0 million and
an effective tax rate of 26.5% for the first quarter 2017. Included in
the fourth quarter 2017 income tax expense was the $1.8 million net DTA
revaluation discussed above. Excluding the net DTA revaluation, income
tax expense for the fourth quarter 2017 was $1.7 million and the
effective tax rate was 23.9%.

Compared to the linked quarter, the declines in income tax expense and
the effective tax rate were driven primarily by the reduction in the
federal corporate tax rate from 35% to 21%. The Company also recognized
a $0.1 million tax benefit associated with equity compensation vesting
events that occurred during the first quarter. Additionally, income
taxes were positively impacted by the strong growth in the public
finance portfolio during the fourth quarter 2017, which increased the
proportion of tax-exempt income relative to overall total pre-tax income.

Loans and Credit Quality

Total loans as of March 31, 2018 were $2.2 billion, increasing $118.2
million, or 5.7%, compared to December 31, 2017 and $776.2 million, or
54.2%, compared to March 31, 2017. Total commercial loan balances were
$1.6 billion as of March 31, 2018, increasing $91.9 million, or 6.0%,
compared to December 31, 2017 and $658.4 million, or 68.5%, compared to
March 31, 2017. 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 $43.6 million, or 9.9%, compared
to December 31, 2017 and $403.9 million, or 517.9%, compared to March
31, 2017. Single tenant lease financing balances increased $31.0
million, or 3.9%, compared to December 31, 2017 and $169.0 million, or
25.4%, compared to March 31, 2017. Healthcare finance balances,
originated through the partnership with Lendeavor, Inc., increased $17.3
million, or 54.9%, compared to December 31, 2017 and totaled $48.9
million at quarter end. Commercial and industrial and owner-occupied
commercial real estate balances increased $3.2 million, or 1.6%, on a
combined basis compared to December 31, 2017 and $41.5 million, or
25.9%, compared to March 31, 2017. During the first quarter, new
commercial and industrial activity was offset by elevated prepayment
activity.

Total consumer loan balances were $583.8 million as of March 31, 2018,
increasing $25.8 million, or 4.6%, compared to December 31, 2017 and
$114.6 million, or 24.4%, compared to March 31, 2017. Residential
mortgage balances increased $18.4 million, or 6.1%, compared to December
31, 2017 and $72.3 million, or 29.4%, compared to March 31, 2017.
Trailer portfolio balances increased $6.3 million, or 6.3%, compared to
December 31, 2017 and $21.0 million, or 24.2%, compared to March 31,
2017. Recreational vehicle balances increased $3.8 million, or 5.5%,
compared to December 31, 2017 and $15.8 million, or 27.6%, compared to
March 31, 2017. Additionally, other consumer loan balances decreased
$1.5 million, or 2.6%, compared to December 31, 2017 and increased $11.2
million, or 25.3%, compared to March 31, 2017.

Credit quality continued to remain sound as total delinquencies 30 days
or more past due were 0.04% of total loans as of March 31, 2018, down
from 0.05% as of December 31, 2017 and 0.12% as of March 31, 2017.
Nonperforming loans to total loans was 0.03% as of March 31, 2018
compared to 0.04% as of December 31, 2017 and 0.24% as of March 31,
2017. Nonperforming assets to total assets was 0.20% as of March 31,
2018 compared to 0.21% as of December 31, 2017 and 0.39% as of March 31,
2017.

The allowance for loan losses was $15.6 million as of March 31, 2018
compared to $15.0 million as of December 31, 2017 and $11.9 million as
of March 31, 2017. The allowance as a percentage of total nonperforming
loans was 2,361.2% as of March 31, 2018 compared to 1,784.3% as of
December 31, 2017 and 348.7% as of March 31, 2017. The allowance as a
percentage of total loans was 0.70% as of March 31, 2018 compared to
0.72% as of December 31, 2017 and 0.83% as of March 31, 2017. The
decline in the allowance as a percentage of total loans was due
primarily to the continued 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 first
quarter, resulting in net charge-offs to average loans of 0.05% compared
to 0.06% for the fourth quarter 2017 and 0.04% for the first quarter
2017. The provision for loan losses in the first quarter was $0.9
million compared to $1.2 million for the fourth quarter 2017 and $1.0
million for the first quarter 2017. Compared to the linked quarter, the
decrease in the provision for loan losses of $0.3 million, or 27.9%, was
due primarily to lower loan growth during the first quarter than what
was experienced during fourth quarter 2017.

Capital

During the first quarter, total shareholders' equity increased $0.7
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 March 31, 2018,
the Company's tier 1 leverage, common equity tier 1, tier 1 and total
risk-based capital ratios were 8.09%, 11.31%, 11.31% and 13.89% compared
to 8.45%, 11.43%, 11.43% and 14.07% as of December 31, 2017,
respectively. The declines in regulatory capital ratios were due
primarily to increases in average and risk-weighted assets resulting
from the quarterly loan growth. Tangible common equity to tangible
assets decreased 24 bps during the first quarter to 7.70% as of March
31, 2018 as asset growth outpaced tangible equity growth. Tangible book
value per share was $26.05 as of March 31, 2018, decreasing from $26.09
as of December 31, 2017 but increasing year-over-year from $23.52 as of
March 31, 2017. The decreases in both tangible common equity to tangible
assets and tangible book value per share were negatively impacted by the
change in the unrealized gain/loss related to the investment portfolio
resulting from the increase in interest rates during the first quarter.

About First Internet Bancorp

First Internet Bancorp is a bank holding company with assets of $2.9
billion as of March 31, 2018. 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, trends in lending
policies, 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, net interest margin – FTE,
adjusted net income, adjusted diluted earnings per share, 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
March 31, December 31, March 31,
2018 2017 2017
Net income $ 6,028 $ 3,498 $ 2,832
Per share and share information
Earnings per share - basic $ 0.71 $ 0.41 $ 0.43
Earnings per share - diluted 0.71 0.41 0.43
Dividends declared per share 0.06 0.06 0.06
Book value per common share 26.60 26.65 24.24
Tangible book value per common share 26.05 26.09 23.52
Common shares outstanding 8,450,925 8,411,077 6,497,662
Average common shares outstanding:
Basic 8,499,196 8,490,951 6,547,807
Diluted 8,542,363 8,527,599 6,602,200
Performance ratios
Return on average assets 0.87 % 0.52 % 0.60 %
Return on average shareholders' equity 10.96 % 6.23 % 7.42 %
Return on average tangible common equity 11.19 % 6.37 % 7.65 %
Net interest margin 2.26 % 2.35 % 2.50 %
Net interest margin - FTE 1 2.41 % 2.59 % 2.57 %
Capital ratios 2
Total shareholders' equity to assets 7.85 % 8.10 % 7.67 %
Tangible common equity to tangible assets 7.70 % 7.94 % 7.46 %
Tier 1 leverage ratio 8.09 % 8.45 % 8.41 %
Common equity tier 1 capital ratio

11.31

%

11.43 % 10.88 %
Tier 1 capital ratio

11.31

%

11.43 % 10.88 %
Total risk-based capital ratio

13.89

%

14.07 % 14.16 %
Asset quality
Nonperforming loans $ 659 $ 839 $ 3,411
Nonperforming assets 5,710 5,892 7,992
Nonperforming loans to loans 0.03 % 0.04 % 0.24 %
Nonperforming assets to total assets 0.20 % 0.21 % 0.39 %
Allowance for loan losses to:
Loans 0.70 % 0.72 % 0.83 %
Nonperforming loans 2,361.2 % 1,784.3 % 348.7 %
Net charge-offs to average loans 0.05 % 0.06 % 0.04 %
Average balance sheet information
Loans $ 2,154,876 $ 1,970,994 $ 1,320,065
Total securities 485,173 500,627 474,845
Other earning assets 104,685 95,049 45,392
Total interest-earning assets 2,762,620 2,588,677 1,858,931
Total assets 2,823,790 2,650,583 1,905,736
Noninterest-bearing deposits 43,976 40,618 31,463
Interest-bearing deposits 2,105,092 1,963,405 1,450,677
Total deposits 2,149,068 2,004,023 1,482,140
Shareholders' equity 223,131 222,670 154,798

1

 

On a fully-taxable equivalent ("FTE") basis assuming a 21% tax
rate in 2018 and a 35% tax rate in 2017

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, 2017)
Amounts in thousands
   
March 31, December 31, March 31,
2018 2017 2017
Assets
Cash and due from banks $ 5,675 $ 4,539 $ 4,137
Interest-bearing deposits 58,072 43,442 48,961
Interest-bearing time deposits - - 250
Securities available-for-sale, at fair value 463,652 473,275 470,065
Securities held-to-maturity, at amortized cost 19,206 19,209 19,218
Loans held-for-sale 17,067 51,407 13,202
Loans 2,209,405 2,091,193 1,433,190
Allowance for loan losses   (15,560 )   (14,970 )   (11,894 )
Net loans 2,193,845 2,076,223 1,421,296
Accrued interest receivable 11,898 11,944 6,868
Federal Home Loan Bank of Indianapolis stock 20,250 19,575 13,050
Cash surrender value of bank-owned life insurance 35,342 35,105 24,367
Premises and equipment, net 10,110 10,058 9,853
Goodwill 4,687 4,687 4,687
Other real estate owned 5,041 5,041 4,488
Accrued income and other assets   17,883     13,182     12,361  
Total assets $ 2,862,728   $ 2,767,687   $ 2,052,803  
 
Liabilities
Noninterest-bearing deposits $ 47,678 $ 44,686 $ 34,427
Interest-bearing deposits   2,129,443     2,040,255     1,522,692  
Total deposits 2,177,121 2,084,941 1,557,119
Advances from Federal Home Loan Bank 413,173 410,176 289,985
Subordinated debt 36,763 36,726 36,615
Accrued interest payable 410 311 148
Accrued expenses and other liabilities   10,437     11,406     11,445  
Total liabilities   2,637,904     2,543,560     1,895,312  
Shareholders' equity
Voting common stock 172,421 172,043 119,627
Retained earnings 61,414 57,103 46,139
Accumulated other comprehensive loss   (9,011 )   (5,019 )   (8,275 )
Total shareholders' equity   224,824     224,127     157,491  
Total liabilities and shareholders' equity $ 2,862,728   $ 2,767,687   $ 2,052,803  
 
     
First Internet Bancorp
Condensed Consolidated Statements of Income (unaudited)
Amounts in thousands, except per share data
     
Three Months Ended
March 31, December 31, March 31,
2018 2017 2017
Interest income
Loans $ 22,115 $ 20,971 $ 14,156
Securities - taxable 2,488 2,521 2,367
Securities - non-taxable 711 696 697
Other earning assets   665   450   170
Total interest income   25,979   24,638   17,390
Interest expense
Deposits 8,270 7,358 4,699
Other borrowed funds   2,294   1,920   1,234
Total interest expense   10,564   9,278   5,933
Net interest income 15,415 15,360 11,457
Provision for loan losses   850   1,179   1,035

Net interest income after provision for loan losses

  14,565   14,181   10,422
Noninterest income
Service charges and fees 230 231 211
Mortgage banking activities 1,578 1,530 1,616
Gain on sale of loans 414 395 -
Gain (loss) on sale of securities - - -
Other   320   383   304
Total noninterest income   2,542   2,539   2,131
Noninterest expense
Salaries and employee benefits 5,905 5,701 5,073
Marketing, advertising and promotion 716 590 518
Consulting and professional fees 851 617 813
Data processing 263 242 237
Loan expenses 237 303 214
Premises and equipment 1,214 1,125 953
Deposit insurance premium 465 420 315
Other   566   703   575
Total noninterest expense   10,217   9,701   8,698
Income before income taxes 6,890 7,019 3,855
Income tax provision   862   3,521   1,023
Net income $ 6,028 $ 3,498 $ 2,832
 
Per common share data
Earnings per share - basic $ 0.71 $ 0.41 $ 0.43
Earnings per share - diluted $ 0.71 $ 0.41 $ 0.43
Dividends declared per share $ 0.06 $ 0.06 $ 0.06
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
March 31, 2018 December 31, 2017 March 31, 2017
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 $ 2,172,762 $ 22,115 4.13 % $ 1,993,001 $ 20,971 4.17 % $ 1,338,694 $ 14,156 4.29 %
Securities - taxable 389,447 2,488 2.59 % 403,905 2,521 2.48 % 381,522 2,367 2.52 %
Securities - non-taxable 95,726 711 3.01 % 96,722 696 2.85 % 93,323 697 3.03 %
Other earning assets   104,685     665 2.58 %   95,049     450 1.88 %   45,392     170 1.52 %
Total interest-earning assets 2,762,620 25,979 3.81 % 2,588,677 24,638 3.78 % 1,858,931 17,390 3.79 %
 
Allowance for loan losses (15,206 ) (14,486 ) (11,299 )
Noninterest-earning assets   76,376     76,392     58,104  
Total assets $ 2,823,790   $ 2,650,583   $ 1,905,736  
 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 91,034 $ 122 0.54 % $ 86,744 $ 119 0.54 % $ 88,295 $ 119 0.55 %
Savings accounts 55,952 158 1.15 % 52,092 132 1.01 % 28,333 47 0.67 %
Money market accounts 562,345 1,893 1.37 % 479,201 1,428 1.18 % 347,696 696 0.81 %
Certificates and brokered deposits   1,395,761     6,097 1.77 %   1,345,368     5,679 1.67 %   986,353     3,837 1.58 %
Total interest-bearing deposits 2,105,092 8,270 1.59 % 1,963,405 7,358 1.49 % 1,450,677 4,699 1.31 %
Other borrowed funds   441,970     2,294 2.10 %   411,283     1,920 1.85 %   262,573     1,234 1.91 %
Total interest-bearing liabilities 2,547,062 10,564 1.68 % 2,374,688 9,278 1.55 % 1,713,250 5,933 1.40 %
 
Noninterest-bearing deposits 43,976 40,618 31,463
Other noninterest-bearing liabilities   9,621     12,607     6,225  
Total liabilities 2,600,659 2,427,913 1,750,938
 
Shareholders' equity   223,131     222,670     154,798  
Total liabilities and shareholders' equity $ 2,823,790   $ 2,650,583   $ 1,905,736  
     
Net interest income $ 15,415 $ 15,360 $ 11,457
Interest rate spread 2.13 % 2.23 % 2.39 %
Net interest margin 2.26 % 2.35 % 2.50 %
Net interest margin - FTE 2 2.41 % 2.59 % 2.57 %

1

 

Includes nonaccrual loans

2

On a fully-taxable equivalent ("FTE") basis assuming a 21% tax
rate in 2018 and a 35% tax rate in 2017

 
           
First Internet Bancorp
Loans and Deposits (unaudited)
Amounts in thousands
     
March 31, 2018 December 31, 2017 March 31, 2017
Amount Percent Amount Percent Amount Percent
Commercial loans
Commercial and industrial $ 119,893 5.4 % $ 122,940 5.9 % $ 97,487 6.8 %
Owner-occupied commercial real estate 81,998 3.7 % 75,768 3.6 % 62,887 4.4 %
Investor commercial real estate 6,273 0.3 % 7,273 0.4 % 8,510 0.6 %
Construction 47,013 2.1 % 49,213 2.4 % 49,618 3.5 %
Single tenant lease financing 834,335 37.8 % 803,299 38.4 % 665,382 46.4 %
Public finance 481,923 21.8 % 438,341 21.0 % 77,995 5.4 %
Healthcare finance   48,891 2.2 %   31,573 1.5 %   - 0.0 %
Total commercial loans 1,620,326 73.3 % 1,528,407 73.2 % 961,879 67.1 %
Consumer loans
Residential mortgage 318,298 14.4 % 299,935 14.3 % 246,014 17.2 %
Home equity 29,296 1.3 % 30,554 1.5 % 34,925 2.4 %
Trailers 107,714 4.9 % 101,369 4.8 % 86,692 6.0 %
Recreational vehicles 73,005 3.3 % 69,196 3.3 % 57,234 4.0 %
Other consumer loans   55,466 2.5 %   56,968 2.7 %   44,265 3.1 %
Total consumer loans 583,779 26.4 % 558,022 26.6 % 469,130 32.7 %
Net deferred loan fees, premiums and discounts   5,300 0.3 %   4,764 0.2 %   2,181 0.2 %
Total loans $ 2,209,405 100.0 % $ 2,091,193 100.0 % $ 1,433,190 100.0 %
 
March 31, 2018 December 31, 2017 March 31, 2017
Amount Percent Amount Percent Amount Percent
Deposits
Noninterest-bearing deposits $ 47,678 2.2 % $ 44,686 2.1 % $ 34,427 2.2 %
Interest-bearing demand deposits 99,006 4.5 % 94,674 4.5 % 94,461 6.1 %
Savings accounts 60,176 2.8 % 49,939 2.4 % 31,291 2.0 %
Money market accounts 592,113 27.2 % 499,501 24.0 % 371,115 23.8 %
Certificates of deposits 1,185,176 54.4 % 1,319,488 63.3 % 1,023,294 65.7 %
Brokered deposits 1   192,972 8.9 %   76,653 3.7 %   2,531 0.2 %
Total deposits $ 2,177,121 100.0 % $ 2,084,941 100.0 % $ 1,557,119 100.0 %

1 As of March 31, 2018, $116.3 million of public fund
deposits originated through an investment advisor who manages
fixed income portfolios for municipalities were reclassified from
certificates of deposit to brokered deposits per regulatory
guidance.

 
     
First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Amounts in thousands, except per share data
   
Three Months Ended
March 31, December 31, March 31,
2018 2017 2017
 
Total equity - GAAP $ 224,824 $ 224,127 $ 157,491
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )
Tangible common equity $ 220,137   $ 219,440   $ 152,804  
 
Total assets - GAAP $ 2,862,728 $ 2,767,687 $ 2,052,803
Adjustments:
Goodwill   (4,687 )   (4,687 )   (4,687 )
Tangible assets $ 2,858,041   $ 2,763,000   $ 2,048,116  
 
Common shares outstanding 8,450,925 8,411,077 6,497,662
 
Book value per common share $ 26.60 $ 26.65 $ 24.24
Effect of goodwill   (0.55 )   (0.56 )   (0.72 )
Tangible book value per common share $ 26.05   $ 26.09   $ 23.52  
 
Total shareholders' equity to assets ratio 7.85 % 8.10 % 7.67 %
Effect of goodwill   (0.15 %)   (0.16 %)   (0.21 %)
Tangible common equity to tangible assets ratio   7.70 %   7.94 %   7.46 %
 
Total average equity - GAAP $ 223,131 $ 222,670 $ 154,798
Adjustments:
Average goodwill   (4,687 )   (4,687 )   (4,687 )
Average tangible common equity $ 218,444   $ 217,983   $ 150,111  
 
Return on average shareholders' equity 10.96 % 6.23 % 7.42 %
Effect of goodwill   0.23 %   0.14 %   0.23 %
Return on average tangible common equity   11.19 %   6.37 %   7.65 %
 
Net interest income $ 15,415 $ 15,360 $ 11,457
Adjustments:
Fully-taxable equivalent adjustments 1   1,018     1,555     306  
Net interest income - FTE $ 16,433   $ 16,915   $ 11,763  
 
Net interest margin 2.26 % 2.35 % 2.50 %
Effect of fully-taxable equivalent adjustments 1   0.15 %   0.24 %   0.07 %
Net interest margin - FTE   2.41 %   2.59 %   2.57 %

1

 

Assuming a 21% tax rate in 2018 and a 35% tax rate in 2017

 
     
First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Amounts in thousands, except per share data
   
Three Months Ended
March 31, December 31, March 31,
2018 2017 2017
Net income - GAAP $ 6,028 $ 3,498 $ 2,832
Adjustments:
Net deferred tax asset revaluation   -     1,846     -  
Adjusted net income $ 6,028   $ 5,344   $ 2,832  
 
Diluted average common shares outstanding 8,542,363 8,527,599 6,602,200
 
Diluted earnings per share - GAAP $ 0.71 $ 0.41 $ 0.43
Adjustments:
Effect of net deferred tax asset revaluation   -     0.22     -  
Adjusted diluted earnings per share $ 0.71   $ 0.63   $ 0.43  
 
Income tax expense - GAAP $ 862 $ 3,521 $ 1,023
Adjustments:
Net deferred tax asset revaluation   -     (1,846 )   -  
Adjusted income tax expense $ 862   $ 1,675   $ 1,023  
 
Effective income tax rate 12.5 % 50.2 % 26.5 %
Effect of net deferred tax asset revaluation   0.0 %   (26.3 %)   0.0 %
Adjusted effective income tax rate   12.5 %   23.9 %   26.5 %
 

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