First Internet Bancorp Reports Fourth Quarter and Full Year 2019 Results
First Internet Bancorp (the “Company”) (Nasdaq: INBK), the parent company of First Internet Bank (the “Bank”), announced today financial and operational results for the fourth quarter and full year ended December 31, 2019. Net income for the fourth quarter of 2019 was a record $7.1 million, or $0.72 diluted earnings per share. This compares to net income of $6.3 million, or $0.63 diluted earnings per share, for the third quarter of 2019, and net income of $3.6 million, or $0.35 diluted earnings per share, for the fourth quarter of 2018. The fourth quarter of 2018 results included a $2.4 million pre-tax write-down of commercial other real estate owned (“OREO”). Excluding this charge, adjusted net income for the quarter was $5.5 million, or $0.53 adjusted diluted earnings per share.
For the twelve month period ended December 31, 2019, net income was a record $25.2 million and diluted earnings per share were a record $2.51 compared to net income of $21.9 million and diluted earnings per share of $2.30 for the twelve month period ended December 31, 2018. Excluding the OREO write-down described above, adjusted net income for the full year 2018 was $23.8 million, or $2.50 adjusted diluted earnings per share.
“First Internet Bancorp produced strong 2019 results, highlighted by record annual net income that was driven by full-year revenue growth of 12%, well-managed expenses and disciplined balance sheet management,” said David Becker, Chairman, President and Chief Executive Officer. “We generated strong production in both commercial and consumer loans, particularly in a number of our specialty lending areas, including single-tenant lease financing, healthcare finance and horse trailer and recreational vehicle lending. Additionally, we capitalized on the lower interest rate environment to drive strong origination growth in our direct-to-consumer mortgage business.
“Looking to 2020, we continue to see opportunities for growth within our collection of lending franchises and to further implement strategies to diversify our revenue and enhance margins in a capital efficient manner,” Becker added. “In 2019, we made significant progress with our expansion into small business banking, capitalizing on attractive opportunities on both sides of our balance sheet. During the fourth quarter, we completed our acquisition of the small business lending division of First Colorado National Bank. This transaction, combined with the experienced professionals we brought on board during the year, positions us to accelerate our efforts to build a nationwide platform that offers a full suite of services to small business entrepreneurs.”
Mr. Becker concluded, “As always, I would like to thank the entire First Internet team for their very hard work to deliver record revenue and earnings performance again in 2019. Their dedication and efforts are the key to our ongoing growth and success.”
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2019 was $15.4 million, compared to $15.2 million for the third quarter of 2019. On a fully-taxable equivalent basis, net interest income for the fourth quarter was $16.9 million, compared to $16.8 million for the third quarter. Net interest income on both a reported and fully-taxable equivalent basis, was consistent with the fourth quarter of 2018.
Total interest income for the fourth quarter of 2019 was $37.9 million, an increase of 0.5%, compared to the third quarter of 2019, and an increase of 18.9% compared to the fourth quarter of 2018. On a fully-taxable equivalent basis, total interest income for the fourth quarter was $39.4 million, an increase of 0.4% compared to the third quarter, and an increase of 18.4% compared to the fourth quarter of 2018. The slight increase in total interest income compared to the third quarter of 2019 was driven primarily by a $98.0 million, or 2.5%, increase in average interest-earning assets, partially offset by a 7 basis point (“bp”) decrease in the yield on those assets. The yield on interest-earning assets for the fourth quarter of 2019 declined to 3.73% from 3.80% in the prior quarter due primarily to the decline in short term rates during the quarter following Federal Reserve rate cuts in September and October, which negatively impacted the yields earned on cash balances, securities and other earning assets. Additionally, cash balances remained elevated as time deposit renewal rates exceeded expectations, which also negatively affected the yield on earning assets. Partially offsetting this was a 2 bp increase in the yield earned on the loan portfolio, including loans held for sale, which benefitted from the acquisition of Small Business Administration (“SBA”) loans and strong healthcare finance production during the quarter.
Total interest expense for the fourth quarter of 2019 was $22.5 million, relatively consistent with the third quarter of 2019, and an increase of 37.0% compared to the fourth quarter of 2018. During the fourth quarter, average interest-bearing deposit balances increased by $79.4 million, compared to the third quarter, while the cost of funds related to those deposits declined 5 bps. The increase in average interest-bearing deposit balances was due primarily to a $113.8 million, or 17.8%, increase in average money market account balances but was partially offset by a $32.1 million, or 1.4%, decrease in the average balance of certificates and brokered deposits. The decrease in deposit costs reflects a decrease in the rates paid on money market accounts and certificates of deposit (“CDs”) as well as a shift in the deposit mix from CDs to money market accounts. During the fourth quarter, the cost of money market deposits decreased by 10 bps and the cost of certificates and brokered deposits decreased 3 bps as rates paid on new CD production and renewals were below the rates paid on maturing CDs.
Net interest margin (“NIM”) was 1.51% for the fourth quarter of 2019, compared to 1.54% for the third quarter of 2019 and 1.89% for the fourth quarter of 2018. On a fully-taxable equivalent basis, NIM decreased 3 basis points to 1.67% for the fourth quarter of 2019, from 1.70% for the third quarter of 2019, and was down from 2.07% for the fourth quarter of 2018. Compared to the linked quarter, deposit costs had a positive impact of 4 bps on NIM while loan yields provided a benefit of 2 bps. However, these benefits were offset by the lower yields earned on elevated cash balances, which had a negative impact of 7 bps, and on other interest-earning assets, which had a negative impact of 2 bps.
Noninterest Income
Noninterest income for the fourth quarter of 2019 was $5.4 million, down from $5.6 million for the third quarter of 2019, and up from $2.0 million for the fourth quarter of 2018. Compared to the linked quarter, a decline in mortgage banking revenue was essentially offset by higher gain on sale of loans and loan servicing revenue. Mortgage banking revenue decreased $1.4 million, or 31.4%, as mandatory pipeline volumes and margins declined due to seasonal factors following an extraordinarily strong third quarter. The increase of $1.2 million in gain on sale of loans was driven by sales of $53.7 million of single tenant lease financing and public finance loans and the Company’s first sales of SBA 7(a) guaranteed loans, which included $9.2 million of balances. The Company also began earning loan servicing revenue from the acquired SBA servicing portfolio, recognizing $0.2 million during the fourth quarter.
Noninterest Expense
Noninterest expense for the fourth quarter of 2019 was $12.6 million, compared to $11.2 million for the third quarter of 2019 and $12.7 million for the fourth quarter of 2018. The increase from the third quarter was due primarily to a $0.6 million increase in deposit insurance premium, a $0.5 million increase in consulting and professional fees and a $0.3 million increase in salaries and employee benefits. Deposit insurance premium expense resumed in the fourth quarter after not incurring any expense in the third quarter of 2019 as a result of the small bank assessment credit applied by the Federal Deposit Insurance Corporation. The increase in consulting and professional fees was due to higher recruiting fees and third party loan review fees while salaries and employee benefits expense increased due to the headcount growth in the Company’s SBA lending business.
Income Taxes
The Company reported an income tax expense of $0.6 million for the fourth quarter of 2019 and an effective tax rate of 7.8%, compared to income tax expense of $0.4 million and an effective tax rate of 6.6% for the third quarter of 2019 and an income tax benefit of $0.3 million for the fourth quarter of 2018. The income tax benefit reported in the fourth quarter of 2018 primarily related to the write-down of the OREO property and the continued growth in the public finance portfolio, which increased the proportion of tax-exempt income relative to overall total pre-tax income. When excluding the income tax benefit related to the OREO write-down, the Company’s adjusted effective income tax rate for the fourth quarter of 2018 was 3.1%.
Loans and Credit Quality
Total loans as of December 31, 2019 were $3.0 billion, an increase of $82.3 million, or 2.9%, compared to September 30, 2019 and an increase of $247.3 million, or 9.1%, compared to December 31, 2018. Total commercial loan balances were $2.3 billion as of December 31, 2019, an increase of $93.5 million, or 4.3%, compared to September 30, 2019 and an increase of $296.9 million, or 14.9%, compared to December 31, 2018. Compared to the linked quarter, the growth in commercial loan balances was driven largely by production in healthcare finance and the acquisition of the SBA loan portfolio. These increases were partially offset by the sale of $53.7 million of single tenant lease financing and public finance loans discussed above.
Total consumer loan balances were $633.5 million as of December 31, 2019, a decrease of $8.6 million, or 1.3%, compared to September 30, 2019 and a decrease of $74.9 million, or 10.6%, compared to December 31, 2018. The decline in consumer loan balances from September 30, 2019 was driven primarily by increased early payoffs on portfolio residential mortgage loans.
Total delinquencies 30 days or more past due increased to 0.24% of total loans as of December 31, 2019, up from 0.13% as of September 30, 2019 and 0.15% as of December 31, 2018. The increase in delinquencies compared to the linked and prior year quarters was due primarily to the single tenant lease financing relationship that was placed on nonaccrual status in the third quarter of 2019 becoming past due. Overall credit quality remained solid as nonperforming loans to total loans remained low at 0.23% as of December 31, 2019, compared to 0.20% at September 30, 2019 and 0.03% as of December 31, 2018.
The allowance for loan losses as a percentage of total loans was 0.74% as of December 31, 2019, compared to 0.75% as of September 30, 2019 and 0.66% as of December 31, 2018. The slight decline in the coverage ratio compared to the linked quarter was due primarily to lower specific reserves in the commercial and industrial portfolio.
Net charge-offs of $0.3 million were recognized during the fourth quarter of 2019, resulting in net charge-offs to average loans of 0.04%, compared to 0.15% for the third quarter and 0.05% for the fourth quarter of 2018. The provision for loan losses in the fourth quarter was $0.5 million, compared to $2.8 million for the third quarter and $1.5 million for the fourth quarter of 2018. The third quarter’s results included a specific reserve of $1.7 million recognized on the single tenant lease financing relationship mentioned above and a $0.8 million commercial loan charge-off. The provision for the fourth quarter was driven primarily by growth in the healthcare finance portfolio and net charge-offs, partially offset by the loan sale activity.
Capital
As of December 31, 2019, total shareholders’ equity was $304.9 million, an increase of $9.8 million, or 3.3%, compared to September 30, 2019, primarily due to the net income earned during the quarter and a decrease in accumulated other comprehensive loss. Book value per common share increased to $31.30 as of December 30, 2019, up from $30.30 as of September 30, 2019 and $28.39 as of December 31, 2018. Tangible book value per share increased to $30.82, up from $29.82 and $27.93, each as of the same reference dates.
The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of December 31, 2019.
As of December 31, 2019
Company
Bank
Total shareholders' equity to assets
7.44%
8.11%
Tangible common equity to tangible assets 1
7.33%
8.01%
Tier 1 leverage ratio 2
7.64%
8.32%
Common equity tier 1 capital ratio 2
10.84%
11.80%
Tier 1 capital ratio 2
10.84%
11.80%
Total risk-based capital ratio 2
14.00%
12.55%
1 This information represents a non-GAAP financial measure. For a discussion of non-GAAP financial measures, see the section below entitled "Non-GAAP Financial Measures."
2 Regulatory capital ratios are preliminary pending filing of the Company's and the Bank's regulatory reports.
Conference Call and Webcast
The Company will host a conference call and webcast at 12:00 p.m. Eastern Time on Thursday, January 23, 2020 to discuss its quarterly financial results. The call can be accessed via telephone at (888) 348-3664. A recorded replay can be accessed through February 23, 2020 by dialing (877) 344-7529; passcode: 10138147.
Additionally, interested parties can listen to a live webcast of the call on Company's website at www.firstinternetbancorp.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.
About First Internet Bancorp
First Internet Bancorp is a bank holding company with assets of $4.1 billion as of December 31, 2019. 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 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, SBA financing 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.
Forward-Looking Statements
This press release may contain forward-looking statements with respect to the financial condition, results of operations, trends in lending policies, timing of pending acquisitions, plans, objectives, future performance or business of the Company. Forward-looking statements are generally identifiable by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “pending,” “plan,” “position,” “preliminary,” “remain,” “should,” “will,” “would” 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, SBA 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; failure to close any pending acquisitions; failure to satisfy or waive closing condition; 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 adjusted net income, adjusted diluted earnings per share, tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, total interest income – FTE, net interest income – FTE, net interest margin – FTE, adjusted income before income taxes, adjusted income tax provision, 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 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) Dollar amounts in thousands, except per share dataThree Months Ended
Twelve Months Ended
December 31,
September 30,
December 30,
December 31,
December 30,
2019
2019
2018
2019
2018
Net income$
7,096
$
6,326
$
3,576
$
25,239
$
21,900
Per share and share information Earnings per share - basic
$
0.72
$
0.63
$
0.35
$
2.51
$
2.31
Earnings per share - diluted
0.72
0.63
0.35
2.51
2.30
Dividends declared per share
0.06
0.06
0.06
0.24
0.24
Book value per common share
31.30
30.30
28.39
31.30
28.39
Tangible book value per common share 1
30.82
29.82
27.93
30.82
27.93
Common shares outstanding
9,741,800
9,741,800
10,170,778
9,741,800
10,170,778
Average common shares outstanding: Basic
9,825,784
9,979,603
10,263,086
10,041,581
9,490,506
Diluted
9,843,829
9,980,612
10,275,040
10,044,483
9,508,653
Performance ratios Return on average assets
0.69
%
0.63
%
0.43
%
0.65
%
0.72
%
Return on average shareholders' equity
9.46
%
8.40
%
4.89
%
8.52
%
8.44
%
Return on average tangible common equity 1
9.61
%
8.53
%
4.98
%
8.65
%
8.60
%
Net interest margin
1.51
%
1.54
%
1.89
%
1.65
%
2.09
%
Net interest margin - FTE 1,2
1.67
%
1.70
%
2.07
%
1.82
%
2.25
%
Capital ratios 3 Total shareholders' equity to assets
7.44
%
7.21
%
8.15
%
7.44
%
8.15
%
Tangible common equity to tangible assets 1
7.33
%
7.10
%
8.03
%
7.33
%
8.03
%
Tier 1 leverage ratio
7.64
%
7.66
%
9.00
%
7.64
%
9.00
%
Common equity tier 1 capital ratio 10.84%
10.93
%
12.39
%
10.84%
12.39
%
Tier 1 capital ratio 10.84%
10.93
%
12.39
%
10.84%
12.39
%
Total risk-based capital ratio 14.00%
14.17
%
14.53
%
14.00%
14.53
%
Asset quality Nonperforming loans$
6,732
$
5,783
$
889
$
6,732
$
889
Nonperforming assets
8,872
8,497
3,508
8,872
3,508
Nonperforming loans to loans
0.23
%
0.20
%
0.03
%
0.23
%
0.03
%
Nonperforming assets to total assets
0.22
%
0.21
%
0.10
%
0.22
%
0.10
%
Allowance for loan losses to: Loans
0.74
%
0.75
%
0.66
%
0.74
%
0.66
%
Nonperforming loans
324.4
%
374.9
%
2,013.1
%
324.4
%
2,013.1
%
Net charge-offs to average loans
0.04
%
0.15
%
0.05
%
0.07
%
0.04
%
Average balance sheet information Loans$
2,936,144
$
2,865,258
$
2,577,584
$
2,863,250
$
2,364,336
Total securities
597,049
561,780
494,256
560,317
486,030
Other earning assets
452,945
469,454
148,311
355,412
116,074
Total interest-earning assets
4,031,327
3,933,315
3,236,144
3,809,903
2,984,608
Total assets
4,108,216
4,015,433
3,320,850
3,890,708
3,055,224
Noninterest-bearing deposits
49,570
43,972
48,779
44,682
45,562
Interest-bearing deposits
3,110,501
3,031,095
2,472,443
2,938,622
2,272,037
Total deposits
3,160,071
3,075,067
2,521,222
2,983,304
2,317,599
Shareholders' equity
297,623
298,782
289,844
296,382
259,416
1 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below 2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate 3 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, 2018) Amounts in thousands
December 31,
September 30,
December 30,
2019
2019
2018
Assets Cash and due from banks$
5,061
$
6,283
$
7,080
Interest-bearing deposits
322,300
410,119
181,632
Securities available-for-sale, at fair value
540,852
544,742
481,345
Securities held-to-maturity, at amortized cost
61,878
46,807
22,750
Loans held-for-sale
56,097
41,119
18,328
Loans
2,963,547
2,881,272
2,716,228
Allowance for loan losses
(21,840
)
(21,683
)
(17,896
)
Net loans
2,941,707
2,859,589
2,698,332
Accrued interest receivable
18,607
16,652
16,822
Federal Home Loan Bank of Indianapolis stock
25,650
25,650
23,625
Cash surrender value of bank-owned life insurance
37,002
36,764
36,059
Premises and equipment, net
14,630
14,512
10,697
Goodwill
4,687
4,687
4,687
Servicing asset
2,481
-
-
Other real estate owned
2,065
2,619
2,619
Accrued income and other assets
67,066
85,948
37,716
Total assets
$
4,100,083
$
4,095,491
$
3,541,692
Liabilities Noninterest-bearing deposits
$
57,115
$
50,560
$
43,301
Interest-bearing deposits
3,096,848
3,097,682
2,628,050
Total deposits
3,153,963
3,148,242
2,671,351
Advances from Federal Home Loan Bank
514,910
514,908
525,153
Subordinated debt
69,528
69,452
33,875
Accrued interest payable
3,767
2,635
1,108
Accrued expenses and other liabilities
53,002
65,114
21,470
Total liabilities
3,795,170
3,800,351
3,252,957
Shareholders' equity Voting common stock
219,423
219,013
227,587
Retained earnings
99,681
93,182
77,689
Accumulated other comprehensive loss
(14,191
)
(17,055
)
(16,541
)
Total shareholders' equity
304,913
295,140
288,735
Total liabilities and shareholders' equity
$
4,100,083
$
4,095,491
$
3,541,692
First Internet Bancorp Condensed Consolidated Statements of Income (unaudited, except for the twelve months ended December 31, 2018) Amounts in thousands, except per share data
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2019
2019
2018
2019
2018
Interest income Loans$
31,574
$
30,594
$
27,249
$
122,228
$
99,082
Securities - taxable
3,475
3,468
2,927
13,807
10,630
Securities - non-taxable
604
639
701
2,595
2,810
Other earning assets
2,224
2,993
972
8,784
2,945
Total interest income
37,877
37,694
31,849
147,414
115,467
Interest expense Deposits
18,417
18,363
13,338
69,313
42,484
Other borrowed funds
4,086
4,087
3,090
15,134
10,716
Total interest expense
22,503
22,450
16,428
84,447
53,200
Net interest income
15,374
15,244
15,421
62,967
62,267
Provision for loan losses
468
2,824
1,487
5,966
3,892
Net interest income after provision for loan losses
14,906
12,420
13,934
57,001
58,375
Noninterest income Service charges and fees
213
211
237
885
934
Loan servicing revenue
166
-
-
166
-
Mortgage banking activities
2,953
4,307
1,141
11,541
5,718
Gain on sale of loans
1,721
523
89
2,074
503
Loss on sale of securities
-
-
-
(458
)
-
Other
352
517
580
2,581
1,605
Total noninterest income
5,405
5,558
2,047
16,789
8,760
Noninterest expense Salaries and employee benefits
7,168
6,883
5,738
27,014
23,174
Marketing, advertising and promotion
409
456
543
1,800
2,468
Consulting and professional fees
1,242
778
862
3,669
3,055
Data processing
312
381
320
1,338
1,233
Loan expenses
289
247
204
1,142
942
Premises and equipment
1,556
1,506
1,307
6,059
4,996
Deposit insurance premium
601
-
570
1,903
1,956
Write-down of other real estate owned
-
-
2,423
-
2,423
Other
1,036
952
772
3,709
2,936
Total noninterest expense
12,613
11,203
12,739
46,634
43,183
Income before income taxes
7,698
6,775
3,242
27,156
23,952
Income tax provision
602
449
(334
)
1,917
2,052
Net income$
7,096
$
6,326
$
3,576
$
25,239
$
21,900
Per common share data Earnings per share - basic$
0.72
$
0.63
$
0.35
$
2.51
$
2.31
Earnings per share - diluted$
0.72
$
0.63
$
0.35
$
2.51
$
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) Dollar amounts in thousandsThree Months Ended
December 31, 2019
September 30, 2019
December 31, 2018
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$
2,981,333
$
31,574
4.20
%
$
2,902,081
$
30,594
4.18
%
$
2,593,577
$
27,249
4.17
%
Securities - taxable
497,739
3,475
2.77
%
462,490
3,468
2.97
%
402,179
2,927
2.89
%
Securities - non-taxable
99,310
604
2.41
%
99,290
639
2.55
%
92,077
701
3.02
%
Other earning assets
452,945
2,224
1.95
%
469,454
2,993
2.53
%
148,311
972
2.60
%
Total interest-earning assets
4,031,327
37,877
3.73
%
3,933,315
37,694
3.80
%
3,236,144
31,849
3.90
%
Allowance for loan losses
(21,967
)
(20,050
)
(17,065
)
Noninterest-earning assets
98,856
102,168
101,771
Total assets
$
4,108,216
$
4,015,433
$
3,320,850
Liabilities Interest-bearing liabilities Interest-bearing demand deposits
$
122,031
$
223
0.73
%
$
126,130
$
233
0.73
%
$
89,234
$
182
0.81
%
Savings accounts
34,298
94
1.09
%
32,434
91
1.11
%
42,694
123
1.14
%
Money market accounts
752,941
3,653
1.92
%
639,181
3,261
2.02
%
518,421
2,575
1.97
%
Certificates and brokered deposits
2,201,231
14,447
2.60
%
2,233,350
14,778
2.63
%
1,822,094
10,458
2.28
%
Total interest-bearing deposits
3,110,501
18,417
2.35
%
3,031,095
18,363
2.40
%
2,472,443
13,338
2.14
%
Other borrowed funds
584,386
4,086
2.77
%
584,308
4,087
2.78
%
499,877
3,090
2.45
%
Total interest-bearing liabilities
3,694,887
22,503
2.42
%
3,615,403
22,450
2.46
%
2,972,320
16,428
2.19
%
Noninterest-bearing deposits
49,570
43,972
48,779
Other noninterest-bearing liabilities
66,136
57,276
9,907
Total liabilities
3,810,593
3,716,651
3,031,006
Shareholders' equity
297,623
298,782
289,844
Total liabilities and shareholders' equity
$
4,108,216
$
4,015,433
$
3,320,850
Net interest income
$
15,374
$
15,244
$
15,421
Interest rate spread1.31
%
1.34
%
1.71
%
Net interest margin1.51
%
1.54
%
1.89
%
Net interest margin - FTE 2,31.67
%
1.70
%
2.07
%
1 Includes nonaccrual loans 2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate 3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below First Internet Bancorp Average Balances and Rates (unaudited) Dollar amounts in thousandsTwelve Months Ended
December 31, 2019
December 31, 2018
Average
Interest /
Yield /
Average
Interest /
Yield /
Balance
Dividends
Cost
Balance
Dividends
Cost
Assets Interest-earning assets Loans, including loans held-for-sale 1$
2,894,174
$
122,228
4.22
%
$
2,382,504
$
99,082
4.16
%
Securities - taxable
462,704
13,807
2.98
%
391,958
10,630
2.71
%
Securities - non-taxable
97,613
2,595
2.66
%
94,072
2,810
2.99
%
Other earning assets
355,412
8,784
2.47
%
116,074
2,945
2.54
%
Total interest-earning assets
3,809,903
147,414
3.87
%
2,984,608
115,467
3.87
%
Allowance for loan losses
(19,891
)
(16,097
)
Noninterest-earning assets
100,696
86,713
Total assets
$
3,890,708
$
3,055,224
Liabilities Interest-bearing liabilities Interest-bearing demand deposits
$
118,874
$
882
0.74
%
$
90,229
$
583
0.65
%
Savings accounts
35,751
398
1.11
%
51,333
585
1.14
%
Money market accounts
637,360
12,661
1.99
%
544,802
8,803
1.62
%
Certificates and brokered deposits
2,146,637
55,372
2.58
%
1,585,673
32,513
2.05
%
Total interest-bearing deposits
2,938,622
69,313
2.36
%
2,272,037
42,484
1.87
%
Other borrowed funds
564,757
15,134
2.68
%
468,411
10,716
2.29
%
Total interest-bearing liabilities
3,503,379
84,447
2.41
%
2,740,448
53,200
1.94
%
Noninterest-bearing deposits
44,682
45,562
Other noninterest-bearing liabilities
46,265
9,798
Total liabilities
3,594,326
2,795,808
Shareholders' equity
296,382
259,416
Total liabilities and shareholders' equity
$
3,890,708
$
3,055,224
Net interest income
$
62,967
$
62,267
Interest rate spread1.46
%
1.93
%
Net interest margin1.65
%
2.09
%
Net interest margin - FTE 2,31.82
%
2.25
%
1 Includes nonaccrual loans 2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate 3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below First Internet Bancorp Loans and Deposits (unaudited) Dollar amounts in thousandsDecember 31, 2019
September 30, 2019
December 31, 2018
Amount
Percent
Amount
Percent
Amount
Percent
Commercial loans Commercial and industrial$
96,420
3.3
%
$
82,791
2.9
%
$
107,405
4.0
%
Owner-occupied commercial real estate
73,392
2.5
%
76,197
2.6
%
77,569
2.9
%
Investor commercial real estate
12,567
0.4
%
11,852
0.4
%
5,391
0.2
%
Construction
60,274
2.0
%
54,131
1.9
%
39,916
1.5
%
Single tenant lease financing
995,879
33.6
%
1,008,247
35.0
%
919,440
33.8
%
Public finance
687,094
23.2
%
686,622
23.8
%
706,342
26.0
%
Healthcare finance
300,612
10.1
%
251,530
8.6
%
117,007
4.4
%
Small business lending
61,121
2.1
%
22,447
0.8
%
17,370
0.5
%
Total commercial loans
2,287,359
77.2
%
2,193,817
76.0
%
1,990,440
73.3
%
Consumer loans Residential mortgage
313,849
10.6
%
320,451
11.1
%
399,898
14.7
%
Home equity
24,306
0.8
%
25,042
0.9
%
28,735
1.1
%
Trailers
146,734
5.0
%
145,600
5.1
%
136,620
5.0
%
Recreational vehicles
102,702
3.5
%
102,698
3.6
%
91,912
3.4
%
Other consumer loans
45,873
1.5
%
48,275
1.7
%
51,239
1.9
%
Total consumer loans
633,464
21.4
%
642,066
22.4
%
708,404
26.1
%
Net deferred loan fees, premiums, discounts and other 1
42,724
1.4
%
45,389
1.6
%
17,384
0.6
%
Total loans$
2,963,547
100.0
%
$
2,881,272
100.0
%
$
2,716,228
100.0
%
December 31, 2019
September 30, 2019
December 31, 2018
Amount
Percent
Amount
Percent
Amount
Percent
Deposits Noninterest-bearing deposits$
57,115
1.8
%
$
50,560
1.6
%
$
43,301
1.6
%
Interest-bearing demand deposits
129,020
4.1
%
122,551
3.9
%
121,055
4.5
%
Savings accounts
29,616
0.9
%
34,886
1.1
%
38,489
1.4
%
Money market accounts
786,390
24.9
%
698,077
22.2
%
528,533
19.9
%
Certificates of deposits
1,613,453
51.2
%
1,681,377
53.4
%
1,292,883
48.4
%
Brokered deposits
538,369
17.1
%
560,791
17.8
%
647,090
24.2
%
Total deposits$
3,153,963
100.0
%
$
3,148,242
100.0
%
$
2,671,351
100.0
%
1 Includes carrying value adjustments of $21.4 million, $27.6 million and $5.0 million as of December 31, 2019, September 30, 2019 and December 31, 2018, respectively, related to interest rate swaps associated with public finance loans. First Internet Bancorp Reconciliation of Non-GAAP Financial Measures Dollar amounts in thousands, except per share dataThree Months Ended
Twelve Months Ended
December 31,
September 30,
December 30,
December 31,
December 30,
2019
2019
2018
2019
2018
Total equity - GAAP$
304,913
$
295,140
$
288,735
$
304,913
$
288,735
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible common equity$
300,226
$
290,453
$
284,048
$
300,226
$
284,048
Total assets - GAAP
$
4,100,083
$
4,095,491
$
3,541,692
$
4,100,083
$
3,541,692
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible assets$
4,095,396
$
4,090,804
$
3,537,005
$
4,095,396
$
3,537,005
Common shares outstanding
9,741,800
9,741,800
10,170,778
9,741,800
10,170,778
Book value per common share
$
31.30
$
30.30
$
28.39
$
31.30
$
28.39
Effect of goodwill
(0.48
)
(0.48
)
(0.46
)
(0.48
)
(0.46
)
Tangible book value per common share$
30.82
$
29.82
$
27.93
$
30.82
$
27.93
Total shareholders' equity to assets
7.44
%
7.21
%
8.15
%
7.44
%
8.15
%
Effect of goodwill
(0.11
%)
(0.11
%)
(0.12
%)
(0.11
%)
(0.12
%)
Tangible common equity to tangible assets
7.33
%
7.10
%
8.03
%
7.33
%
8.03
%
Total average equity - GAAP$
297,623
$
298,782
$
289,844
$
296,382
$
259,416
Adjustments: Average goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Average tangible common equity$
292,936
$
294,095
$
285,157
$
291,695
$
254,729
Return on average shareholders' equity
9.46
%
8.40
%
4.89
%
8.52
%
8.44
%
Effect of goodwill
0.15
%
0.13
%
0.09
%
0.13
%
0.16
%
Return on average tangible common equity
9.61
%
8.53
%
4.98
%
8.65
%
8.60
%
Total interest income$
37,877
$
37,694
$
31,849
$
147,414
$
115,467
Adjustments: Fully-taxable equivalent adjustments 1
1,570
1,595
1,477
6,334
5,010
Total interest income - FTE
$
39,447
$
39,289
$
33,326
$
153,748
$
120,477
Net interest income
$
15,374
$
15,244
$
15,421
$
62,967
$
62,267
Adjustments: Fully-taxable equivalent adjustments 1
1,570
1,595
1,477
6,334
5,010
Net interest income - FTE
$
16,944
$
16,839
$
16,898
$
69,301
$
67,277
Net interest margin
1.51
%
1.54
%
1.89
%
1.65
%
2.09
%
Effect of fully-taxable equivalent adjustments 1
0.16
%
0.16
%
0.18
%
0.17
%
0.16
%
Net interest margin - FTE
1.67
%
1.70
%
2.07
%
1.82
%
2.25
%
1 Assuming a 21% tax rate First Internet Bancorp Reconciliation of Non-GAAP Financial Measures Amounts in thousands, except per share dataThree Months Ended
Twelve Months Ended
December 31,
September 30,
December 30,
December 31,
December 30,
2019
2019
2018
2019
2018
Income before income taxes - GAAP$
7,698
$
6,775
$
3,242
$
27,156
$
23,952
Adjustments: Write-down of other real estate owned
-
-
2,423
-
2,423
Adjusted income before income taxes
$
7,698
$
6,775
$
5,665
$
27,156
$
26,375
Income tax provision (benefit) - GAAP
$
602
$
449
$
(334
)
$
1,917
$
2,052
Adjustments: Write-down of other real estate owned
-
-
509
-
509
Adjusted income tax provision
$
602
$
449
$
175
$
1,917
$
2,561
Net income - GAAP
$
7,096
$
6,326
$
3,576
$
25,239
$
21,900
Adjustments: Write-down of other real estate owned
-
-
1,914
-
1,914
Adjusted net income
$
7,096
$
6,326
$
5,490
$
25,239
$
23,814
Diluted average common shares outstanding
9,843,829
9,980,612
10,275,040
10,044,483
9,508,653
Diluted earnings per share - GAAP
$
0.72
$
0.63
$
0.35
$
2.51
$
2.30
Adjustments: Effect of write-down of other real estate owned
-
-
0.18
-
0.20
Adjusted diluted earnings per share
$
0.72
$
0.63
$
0.53
$
2.51
$
2.50
Return on average assets
0.69
%
0.63
%
0.43
%
0.65
%
0.72
%
Effect of write-down of other real estate owned
0.00
%
0.00
%
0.23
%
0.00
%
0.06
%
Adjusted return on average assets
0.69
%
0.63
%
0.66
%
0.65
%
0.78
%
Return on average shareholders' equity
9.46
%
8.40
%
4.89
%
8.52
%
8.44
%
Effect of write-down of other real estate owned
0.00
%
0.00
%
2.62
%
0.00
%
0.74
%
Adjusted return on average shareholders' equity
9.46
%
8.40
%
7.51
%
8.52
%
9.18
%
Return on average tangible common equity
9.61
%
8.53
%
4.98
%
8.65
%
8.60
%
Effect of write-down of other real estate owned
0.00
%
0.00
%
2.66
%
0.00
%
0.75
%
Adjusted return on average tangible common equity
9.61
%
8.53
%
7.64
%
8.65
%
9.35
%
Effective income tax rate
7.8
%
6.6
%
(10.3
%)
7.1
%
8.6
%
Effect of write-down of other real estate owned
0.0
%
0.0
%
13.4
%
0.0
%
1.1
%
Adjusted effective income tax rate
7.8
%
6.6
%
3.1
%
7.1
%
9.7
%
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