First Internet Bancorp Reports Second Quarter 2020 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 second quarter of 2020. Net income for the second quarter of 2020 was $3.9 million, or $0.40 diluted earnings per share. This compares to net income of $6.0 million, or $0.62 diluted earnings per share, for the first quarter of 2020, and net income of $6.1 million, or $0.60 diluted earnings per share, for the second quarter of 2019.
“Throughout the COVID-19 pandemic, we have focused on our customers whose families and businesses have been impacted by the virus,” said David Becker, Chairman, President and Chief Executive Officer. “For many borrowers, we were able to provide peace of mind in uncertain times by deferring loan payments for 60-90 days. And, because we have always served our nationwide customer base remotely, we were able to assist our customers when they needed us most, without missing a beat, even as we worked to transition our associates to telework. We have already seen a significant reduction in deferrals, and all of our borrowers coming off deferrals have resumed normal payment schedules.
“In the second quarter, our overall credit quality remained solid. Our direct-to-consumer mortgage business produced another quarter of strong results and has a healthy pipeline as we begin the third quarter. We continue to expand our national SBA platform, adding to our already strong and talented team of professionals, and we are excited about the near-term outlook for this government-guaranteed lending business.
“In addition, our efforts on the deposit side of our balance sheet continued to produce results as we shifted the mix of our deposits while reducing interest expense. We believe that we still have significant opportunities to reprice our deposits lower while maintaining relatively stable asset yields, and these bode well for our net interest income and net interest margin in future periods.
“We are well-capitalized and have the financial strength to serve our clients during this public health crisis. I would like to thank the entire First Internet team for their resilience and hard work during this challenging time,” Becker concluded.
Net Interest Income and Net Interest Margin
Net interest income for the second quarter of 2020 was $14.4 million, compared to $15.0 million for the first quarter of 2020 and $16.1 million for the second quarter of 2019. On a fully-taxable equivalent basis, net interest income for the second quarter was $15.9 million, compared to $16.6 million for the first quarter of 2020 and $17.7 million for the second quarter of 2019.
Total interest income for the second quarter of 2020 was $34.2 million, a decrease of 5.6%, compared to the first quarter of 2020, and a decrease of 7.1% compared to the second quarter of 2019. On a fully-taxable equivalent basis, total interest income for the second quarter was $35.7 million, a decrease of 5.6% compared to the first quarter of 2020, and a decrease of 7.3% compared to the second quarter of 2019.
Pandemic Impact: Interest income declined during the second quarter following the Federal Reserve rate cuts in the first quarter of 2020, which negatively impacted the yields earned on variable rate loans and securities as well as cash balances. Furthermore, market uncertainty encouraged a continued flight to safety for consumers and small businesses. Rapid growth in deposit balances led to an increase in average cash balances of $152.8 million quarter-over-quarter.
The decline in short term interest rates reduced the yield earned on the loan portfolio by 11 bps to 4.00% as compared to the prior quarter. In total, the yield on interest-earning assets for the second quarter of 2020 declined to 3.24% from 3.62% in the prior quarter.
Total interest expense for the second quarter of 2020 was $19.8 million, a decrease of 6.7% compared to the first quarter of 2020 and a decrease of 4.5% compared to the second quarter of 2019. The decrease compared to the linked quarter was due mainly to a decline of 30 bps in the cost of interest-bearing deposits, partially offset by an increase in the average balance of these deposits. The decrease in deposit costs reflects a continued decline in the rates paid on deposits as well as a shift in the deposit mix.
During the second quarter of 2020, the cost of money market deposits decreased by 43 bps while the average balance of these deposits grew $222.5 million, or 25.7%. The Company lowered money market rates 60-70 bps throughout the quarter.
Furthermore, the cost of certificates and brokered deposits decreased 18 bps while balances decreased by $62.2 million, or 3.0%. During the second quarter, new certificates and brokered deposits were originated at a weighted average cost of 1.08% while maturing deposits had a weighted average cost of 2.64%.
Net interest margin (“NIM”) was 1.37% for the second quarter of 2020, compared to 1.50% for the first quarter of 2020 and 1.73% for the second quarter of 2019. On a fully-taxable equivalent basis, NIM decreased 15 bps to 1.50% for the second quarter of 2020, from 1.65% for the first quarter of 2020, and was down 41 bps from 1.91% for the second quarter of 2019. The decrease in fully-taxable equivalent NIM compared to the linked quarter was due mainly to the decline in loan yields, which had a negative impact of 24 bps, as well as lower yields earned on securities and cash balances, which each had a negative impact of 7 bps. These were partially offset by deposit costs, which had a positive impact of 23 bps.
Noninterest Income
Noninterest income for the second quarter of 2020 was $5.0 million, down from $6.2 million for the first quarter of 2020, and up from $3.5 million for the second quarter of 2019. The decrease compared to the first quarter of 2020 was driven primarily by lower gain on sale of loans sold during the quarter and a modest decrease in revenue from mortgage banking activities.
Pandemic Impact: Due to market conditions, the Company did not sell any public finance, single tenant lease financing or portfolio residential mortgage loans in the second quarter. Secondary market volatility early in the quarter led to a modest decrease in mortgage banking revenue; however, the secondary market has stabilized and origination activity is strong going into the third quarter.
The Company sold $11.5 million of U.S. Small Business Administration (“SBA”) 7(a) guaranteed loans at a net gain of $0.8 million in the second quarter of 2020, representing continued growth in this line of business with a robust pipeline heading into the third quarter.
Noninterest Expense
Noninterest expense for the second quarter of 2020 was $13.2 million, compared to $13.5 million for the first quarter of 2020 and $11.7 million for the second quarter of 2019. The decrease from the first quarter of 2020 was due primarily to lower consulting and professional fees, loan expenses and deposit insurance premium, partially offset by an increase in other expense.
Pandemic Impact: In an effort to prevent the spread of COVID-19 in its facilities, the Company incurred costs in the second quarter to enable its employees to work remotely and to promote social distancing and enhanced disinfection for those employees who continued to work from the Company’s offices. The majority of these costs will be amortized over future periods. The Company also made a $250,000 charitable contribution to assist small businesses and nonprofits address the economic challenges of the COVID-19 pandemic.
Income Taxes
The Company reported an income tax benefit of $0.3 million for the second quarter of 2020 compared to income tax expense of $0.3 million and an effective tax rate of 4.2% for the first quarter of 2020 and income tax expense of $0.3 million and an effective tax rate of 5.3% for the second quarter of 2019. The income tax benefit was primarily due to the decrease in pre-tax earnings compared to the linked quarter.
Loans and Credit Quality
Total loans as of June 30, 2020 were $3.0 billion, an increase of $81.6 million, or 2.8%, compared to March 31, 2020, and an increase of $112.5 million, or 3.9%, compared to June 30, 2019. Total commercial loan balances were $2.4 billion as of June 30, 2020, an increase of $98.8 million, or 4.3%, compared to March 31, 2020, and an increase of $203.5 million, or 9.3%, compared to June 30, 2019.
Pandemic Impact: The Company originated 449 SBA Paycheck Protection Plan (“PPP”) loans totaling $58.9 million in the second quarter, accounting for a significant portion of the quarterly growth. Pursuant to terms in the CARES Act and the PPP Flexibility Act, payments on these loans are currently deferred. PPP loans are fully guaranteed by the SBA.
Total consumer loan balances were $523.0 million as of June 30, 2020, a decrease of $16.2 million, or 3.0%, compared to March 31, 2020, and a decrease of $116.8 million, or 18.3%, compared to June 30, 2019. The decline in consumer loan balances from March 31, 2020 was due primarily to increased prepayment activity in the residential mortgage loan portfolio.
Total delinquencies 30 days or more past due decreased to 0.25% of total loans as of June 30, 2020, down from 0.32% as of March 31, 2020 and up slightly from 0.24% as of June 30, 2019. The decrease in delinquencies compared to the linked quarter was due primarily to a decline in delinquent residential mortgage loans. Overall credit quality remained relatively stable as nonperforming loans to total loans was 0.28% as of June 30, 2020, compared to 0.26% at March 31, 2020 and 0.19% as of June 30, 2019.
The allowance for loan losses as a percentage of total loans was 0.82% as of June 30, 2020, or 0.84% when excluding SBA PPP loans, compared to 0.79% as of March 31, 2020 and 0.70% as of June 30, 2019.
Pandemic Impact: During the quarter, the Company made additional adjustments to qualitative factors in its allowance model to reflect the continued economic uncertainty resulting from the COVID-19 pandemic. As a result, both the amount of the allowance for loan losses and the allowance as a percentage of total loans increased compared to March 31, 2020.
Net charge-offs of $0.9 million were recognized during the second quarter of 2020, resulting in net charge-offs to average loans of 0.12%, compared to 0.06% for the first quarter of 2020 and 0.04% for the second quarter of 2019. Compared to the prior quarter, the increase in net charge-offs was due primarily to a $0.7 million charge-off in the healthcare finance portfolio, partially offset by an increase in recoveries.
The provision for loan losses in the second quarter of 2020 was $2.5 million, compared to $1.5 million for the first quarter of 2020 and $1.4 million for the second quarter of 2019. The increase of $1.0 million, or 70.5%, compared to the linked quarter was due primarily to the adjustments to the qualitative factors in the allowance model discussed above and, to a lesser extent, the charge-off in the healthcare finance portfolio.
Capital
As of June 30, 2020, total shareholders’ equity was $307.7 million, an increase of $2.6 million, or 0.8%, compared to March 31, 2020, primarily due to the net income earned during the quarter, partially offset by an increase in accumulated other comprehensive loss. Book value per common share increased to $31.40 as of June 30, 2020, up from $31.13 as of March 31, 2020, and up from $29.56 as of June 30, 2019. Tangible book value per share at June 30, 2020 was $30.92, up from $30.65 and up from $29.10, 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 June 30, 2020.
As of June 30, 2020
Company
Bank
Total shareholders' equity to assets
7.12%
7.85%
Tangible common equity to tangible assets 1
7.01%
7.75%
Tier 1 leverage ratio 2
7.50%
8.22%
Common equity tier 1 capital ratio 2
10.97%
12.05%
Tier 1 capital ratio 2
10.97%
12.05%
Total risk-based capital ratio 2
14.16%
12.88%
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, July 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 August 23, 2020 by dialing (877) 344-7529; passcode: 10145915.
Additionally, interested parties can listen to a live webcast of the call on the 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 $4.3 billion as of June 30, 2020. 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, 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,” “outlook,” “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. The COVID-19 pandemic crisis is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects remains uncertain. Continued deterioration in general business and economic conditions, including further increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Other 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; 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, tangible common equity to tangible assets, average tangible common equity and return on average tangible common equity, total interest income – FTE, net interest income – FTE, net interest margin – FTE and allowance for loan losses to loans, excluding PPP loans, 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
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2020
2020
2019
2020
2019
Net income
$
3,932
$
6,019
$
6,121
$
9,951
$
11,817
Per share and share information Earnings per share - basic
$
0.40
$
0.62
$
0.60
$
1.02
$
1.16
Earnings per share - diluted
0.40
0.62
0.60
1.02
1.16
Dividends declared per share
0.06
0.06
0.06
0.12
0.12
Book value per common share
31.40
31.13
29.56
31.40
29.56
Tangible book value per common share 1
30.92
30.65
29.10
30.92
29.10
Common shares outstanding
9,799,047
9,801,825
10,016,458
9,799,047
10,016,458
Average common shares outstanding: Basic
9,768,227
9,721,485
10,148,285
9,798,528
10,182,770
Diluted
9,768,227
9,750,528
10,148,285
9,802,427
10,186,833
Performance ratios Return on average assets
0.37
%
0.59
%
0.65
%
0.47
%
0.64
%
Return on average shareholders' equity
5.15
%
7.78
%
8.26
%
6.48
%
8.09
%
Return on average tangible common equity 1
5.23
%
7.90
%
8.39
%
6.58
%
8.22
%
Net interest margin
1.37
%
1.50
%
1.73
%
1.43
%
1.79
%
Net interest margin - FTE 1,2
1.50
%
1.65
%
1.91
%
1.58
%
1.97
%
Capital ratios 3 Total shareholders' equity to assets
7.12
%
7.32
%
7.48
%
7.12
%
7.48
%
Tangible common equity to tangible assets 1
7.01
%
7.22
%
7.37
%
7.01
%
7.37
%
Tier 1 leverage ratio
7.50
%
7.82
%
8.06
%
7.50
%
8.06
%
Common equity tier 1 capital ratio
10.97
%
10.78
%
11.08
%
10.97
%
11.08
%
Tier 1 capital ratio
10.97
%
10.78
%
11.08
%
10.97
%
11.08
%
Total risk-based capital ratio
14.16
%
13.90
%
14.31
%
14.16
%
14.31
%
Asset quality Nonperforming loans$
8,195
$
7,443
$
5,386
$
8,195
$
5,386
Nonperforming assets
10,304
9,622
8,041
10,304
8,041
Nonperforming loans to loans
0.28
%
0.26
%
0.19
%
0.28
%
0.19
%
Nonperforming assets to total assets
0.24
%
0.23
%
0.20
%
0.24
%
0.20
%
Allowance for loan losses to: Loans
0.82
%
0.79
%
0.70
%
0.82
%
0.70
%
Loans, excluding PPP loans
0.84
%
0.79
%
0.70
%
0.84
%
0.70
%
Nonperforming loans
298.5
%
307.1
%
370.9
%
298.5
%
370.9
%
Net charge-offs to average loans
0.12
%
0.06
%
0.04
%
0.09
%
0.04
%
Average balance sheet information Loans$
2,943,165
$
2,931,108
$
2,889,478
$
2,937,136
$
2,825,178
Total securities
657,622
630,879
558,352
644,251
540,905
Other earning assets
594,296
415,927
248,996
505,111
247,871
Total interest-earning assets
4,241,690
4,024,800
3,723,424
4,133,245
3,634,630
Total assets
4,330,174
4,099,932
3,805,021
4,215,053
3,716,755
Noninterest-bearing deposits
73,758
60,456
42,566
67,107
42,558
Interest-bearing deposits
3,270,720
3,089,045
2,879,007
3,179,882
2,804,257
Total deposits
3,344,478
3,149,501
2,921,573
3,246,989
2,846,815
Shareholders' equity
306,868
311,005
297,148
308,937
294,530
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) Amounts in thousands
June 30,
March 31,
June 30,
2020
2020
2019
Assets Cash and due from banks
$
7,016
$
5,726
$
5,638
Interest-bearing deposits
491,603
345,542
342,660
Securities available-for-sale, at fair value
589,017
608,682
522,334
Securities held-to-maturity, at amortized cost
68,295
66,331
35,826
Loans held-for-sale
38,813
52,394
30,642
Loans
2,973,674
2,892,093
2,861,156
Allowance for loan losses
(24,465
)
(22,857
)
(19,976
)
Net loans
2,949,209
2,869,236
2,841,180
Accrued interest receivable
21,093
16,960
18,887
Federal Home Loan Bank of Indianapolis stock
25,650
25,650
25,650
Cash surrender value of bank-owned life insurance
37,474
37,238
36,527
Premises and equipment, net
23,939
18,883
14,405
Goodwill
4,687
4,687
4,687
Servicing asset
2,522
2,415
-
Other real estate owned
2,065
2,065
2,619
Accrued income and other assets
63,217
112,337
77,774
Total assets
$
4,324,600
$
4,168,146
$
3,958,829
Liabilities Noninterest-bearing deposits
$
82,864
$
70,562
$
44,040
Interest-bearing deposits
3,297,925
3,107,944
2,962,223
Total deposits
3,380,789
3,178,506
3,006,263
Advances from Federal Home Loan Bank
514,913
514,911
514,906
Subordinated debt
69,681
69,605
69,375
Accrued interest payable
1,073
3,293
2,930
Accrued expenses and other liabilities
50,433
96,704
69,235
Total liabilities
4,016,889
3,863,019
3,662,709
Shareholders' equity Voting common stock
220,418
219,893
224,244
Retained earnings
108,431
105,100
87,454
Accumulated other comprehensive loss
(21,138
)
(19,866
)
(15,578
)
Total shareholders' equity
307,711
305,127
296,120
Total liabilities and shareholders' equity
$
4,324,600
$
4,168,146
$
3,958,829
First Internet Bancorp Condensed Consolidated Statements of Income (unaudited) Amounts in thousands, except per share data
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2020
2020
2019
2020
2019
Interest income Loans
$
29,730
$
30,408
$
30,842
$
60,138
$
60,060
Securities - taxable
3,276
3,619
3,540
6,895
6,864
Securities - non-taxable
457
572
668
1,029
1,352
Other earning assets
759
1,645
1,794
2,404
3,567
Total interest income
34,222
36,244
36,844
70,466
71,843
Interest expense Deposits
15,763
17,208
17,147
32,971
32,533
Other borrowed funds
4,033
4,018
3,592
8,051
6,961
Total interest expense
19,796
21,226
20,739
41,022
39,494
Net interest income
14,426
15,018
16,105
29,444
32,349
Provision for loan losses
2,491
1,461
1,389
3,952
2,674
Net interest income after provision for loan losses
11,935
13,557
14,716
25,492
29,675
Noninterest income Service charges and fees
182
212
225
394
461
Loan servicing revenue
255
251
-
506
-
Loan servicing asset revaluation
(90
)
(179
)
-
(269
)
-
Mortgage banking activities
3,408
3,668
2,664
7,076
4,281
Gain (loss) on sale of loans
762
1,801
(66
)
2,563
(170
)
Gain (loss) on sale of securities
-
41
(458
)
41
(458
)
Other
456
417
1,089
873
1,712
Total noninterest income
4,973
6,211
3,454
11,184
5,826
Noninterest expense Salaries and employee benefits
7,789
7,774
6,642
15,563
12,963
Marketing, advertising and promotion
411
375
466
786
935
Consulting and professional fees
932
1,177
835
2,109
1,649
Data processing
339
375
328
714
645
Loan expenses
399
599
292
998
606
Premises and equipment
1,602
1,625
1,497
3,227
2,997
Deposit insurance premium
435
485
747
920
1,302
Other
1,337
1,076
902
2,413
1,721
Total noninterest expense
13,244
13,486
11,709
26,730
22,818
Income before income taxes
3,664
6,282
6,461
9,946
12,683
Income tax (benefit) provision
(268
)
263
340
(5
)
866
Net income
$
3,932
$
6,019
$
6,121
$
9,951
$
11,817
Per common share data Earnings per share - basic
$
0.40
$
0.62
$
0.60
$
1.02
$
1.16
Earnings per share - diluted
$
0.40
$
0.62
$
0.60
$
1.02
$
1.16
Dividends declared per share
$
0.06
$
0.06
$
0.06
$
0.12
$
0.12
All periods presented have been reclassified to conform to the current period classification. First Internet Bancorp Average Balances and Rates (unaudited) Dollar amounts in thousands Three Months Ended
June 30, 2020
March 31, 2020
June 30, 2019
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$
2,989,772
$
29,730
4.00
%
$
2,977,994
$
30,408
4.11
%
$
2,916,076
$
30,842
4.24
%
Securities - taxable
560,947
3,276
2.35
%
531,046
3,619
2.74
%
460,816
$
3,540
3.08
%
Securities - non-taxable
96,675
457
1.90
%
99,833
572
2.30
%
97,536
$
668
2.75
%
Other earning assets
594,296
759
0.51
%
415,927
1,645
1.59
%
248,996
$
1,794
2.89
%
Total interest-earning assets
4,241,690
34,222
3.24
%
4,024,800
36,244
3.62
%
3,723,424
36,844
3.97
%
Allowance for loan losses
(23,388
)
(22,059
)
(19,275
)
Noninterest-earning assets
111,872
97,191
100,872
Total assets
$
4,330,174
$
4,099,932
$
3,805,021
Liabilities Interest-bearing liabilities Interest-bearing demand deposits
$
137,487
$
237
0.69
%
$
122,925
$
219
0.72
%
$
117,665
$
214
0.73
%
Savings accounts
37,204
92
0.99
%
30,345
78
1.03
%
37,507
106
1.13
%
Money market accounts
1,089,063
3,541
1.31
%
866,605
3,743
1.74
%
592,106
2,995
2.03
%
Certificates and brokered deposits
2,006,966
11,893
2.38
%
2,069,170
13,168
2.56
%
2,131,729
13,832
2.60
%
Total interest-bearing deposits
3,270,720
15,763
1.94
%
3,089,045
17,208
2.24
%
2,879,007
17,147
2.39
%
Other borrowed funds
584,543
4,033
2.77
%
584,465
4,018
2.76
%
548,932
3,592
2.62
%
Total interest-bearing liabilities
3,855,263
19,796
2.07
%
3,673,510
21,226
2.32
%
3,427,939
20,739
2.43
%
Noninterest-bearing deposits
73,758
60,456
42,566
Other noninterest-bearing liabilities
94,285
54,961
37,368
Total liabilities
4,023,306
3,788,927
3,507,873
Shareholders' equity
306,868
311,005
297,148
Total liabilities and shareholders' equity
$
4,330,174
$
4,099,932
$
3,805,021
Net interest income
$
14,426
$
15,018
$
16,105
Interest rate spread1.17
%
1.30
%
1.54
%
Net interest margin1.37
%
1.50
%
1.73
%
Net interest margin - FTE 2,31.50
%
1.65
%
1.91
%
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 thousands Six Months Ended June 30, 2020 June 30, 2019 Average Interest / Yield / Average Interest / Yield / Balance Dividends Cost Balance Dividends Cost Assets Interest-earning assets Loans, including loans held-for-sale 1$
2,983,883
$
60,138
4.05
%
$
2,845,854
$
60,060
4.26
%
Securities - taxable
545,997
6,895
2.54
%
445,006
6,864
3.11
%
Securities - non-taxable
98,254
1,029
2.11
%
95,899
1,352
2.84
%
Other earning assets
505,111
2,404
0.96
%
247,871
3,567
2.90
%
Total interest-earning assets
4,133,245
70,466
3.43
%
3,634,630
71,843
3.99
%
Allowance for loan losses
(22,724
)
(18,755
)
Noninterest-earning assets
104,532
100,880
Total assets
$
4,215,053
$
3,716,755
Liabilities Interest-bearing liabilities Interest-bearing demand deposits
$
130,206
$
456
0.70
%
$
113,582
$
427
0.76
%
Savings accounts
33,774
170
1.01
%
38,177
213
1.13
%
Money market accounts
977,834
7,284
1.50
%
577,686
5,747
2.01
%
Certificates and brokered deposits
2,038,068
25,061
2.47
%
2,074,812
26,146
2.54
%
Total interest-bearing deposits
3,179,882
32,971
2.09
%
2,804,257
32,533
2.34
%
Other borrowed funds
584,504
8,051
2.77
%
544,841
6,961
2.58
%
Total interest-bearing liabilities
3,764,386
41,022
2.19
%
3,349,098
39,494
2.38
%
Noninterest-bearing deposits
67,107
42,558
Other noninterest-bearing liabilities
74,623
30,569
Total liabilities
3,906,116
3,422,225
Shareholders' equity
308,937
294,530
Total liabilities and shareholders' equity
$
4,215,053
$
3,716,755
Net interest income
$
29,444
$
32,349
Interest rate spread1.24
%
1.61
%
Net interest margin1.43
%
1.79
%
Net interest margin - FTE 2,31.58
%
1.97
%
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 thousands June 30, 2020 March 31, 2020 June 30, 2019 Amount Percent Amount Percent Amount Percent Commercial loans Commercial and industrial$
81,687
2.7
%
$
95,227
3.3
%
$
106,517
3.7
%
Owner-occupied commercial real estate
86,897
2.9
%
87,956
3.0
%
82,148
2.8
%
Investor commercial real estate
13,286
0.4
%
13,421
0.5
%
21,179
0.7
%
Construction
77,591
2.6
%
64,581
2.2
%
47,849
1.7
%
Single tenant lease financing
980,292
33.0
%
972,275
33.6
%
1,001,196
35.1
%
Public finance
647,107
21.8
%
627,678
21.7
%
706,161
24.7
%
Healthcare finance
380,956
12.8
%
372,266
12.9
%
212,351
7.4
%
Small business lending
118,526
4.0
%
54,056
1.9
%
5,457
0.2
%
Total commercial loans
2,386,342
80.2
%
2,287,460
79.1
%
2,182,858
76.3
%
Consumer loans Residential mortgage
208,728
7.0
%
218,730
7.6
%
318,678
11.1
%
Home equity
22,640
0.8
%
23,855
0.8
%
26,825
0.9
%
Trailers
147,326
5.0
%
148,700
5.1
%
144,704
5.1
%
Recreational vehicles
102,088
3.4
%
103,868
3.6
%
100,518
3.6
%
Other consumer loans
42,218
1.4
%
44,037
1.5
%
49,029
1.7
%
Total consumer loans
523,000
17.6
%
539,190
18.6
%
639,754
22.4
%
Net deferred loan fees, premiums, discounts and other 1
64,332
2.2
%
65,443
2.3
%
38,544
1.3
%
Total loans$
2,973,674
100.0
%
$
2,892,093
100.0
%
$
2,861,156
100.0
%
June 30, 2020 March 31, 2020 June 30, 2019 Amount Percent Amount Percent Amount Percent Deposits Noninterest-bearing deposits$
82,864
2.5
%
$
70,562
2.2
%
$
44,040
1.5
%
Interest-bearing demand deposits
152,391
4.5
%
123,233
3.9
%
126,669
4.2
%
Savings accounts
43,366
1.3
%
32,485
1.0
%
31,445
1.0
%
Money market accounts
1,241,874
36.7
%
930,698
29.3
%
607,849
20.3
%
Certificates of deposits
1,470,905
43.5
%
1,493,644
47.0
%
1,629,886
54.2
%
Brokered deposits
389,389
11.5
%
527,884
16.6
%
566,374
18.8
%
Total deposits$
3,380,789
100.0
%
$
3,178,506
100.0
%
$
3,006,263
100.0
%
1 Includes carrying value adjustments of $46.0 million related to terminated interest rate swaps associated with public finance loans as of June 30, 2020, and $44.6 million and $22.2 million as of March 31, 2020 and June 30, 2019, 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
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2020
2020
2019
2020
2019
Total equity - GAAP
$
307,711
$
305,127
$
296,120
$
307,711
$
296,120
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible common equity$
303,024
$
300,440
$
291,433
$
303,024
$
291,433
Total assets - GAAP
$
4,324,600
$
4,168,146
$
3,958,829
$
4,324,600
$
3,958,829
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible assets$
4,319,913
$
4,163,459
$
3,954,142
$
4,319,913
$
3,954,142
Common shares outstanding
9,799,047
9,801,825
10,016,458
9,799,047
10,016,458
Book value per common share
$
31.40
$
31.13
$
29.56
$
31.40
$
29.56
Effect of goodwill
(0.48
)
(0.48
)
(0.46
)
(0.48
)
(0.46
)
Tangible book value per common share$
30.92
$
30.65
$
29.10
$
30.92
$
29.10
Total shareholders' equity to assets
7.12
%
7.32
%
7.48
%
7.12
%
7.48
%
Effect of goodwill
(0.11
%)
(0.10
%)
(0.11
%)
(0.11
%)
(0.11
%)
Tangible common equity to tangible assets
7.01
%
7.22
%
7.37
%
7.01
%
7.37
%
Total average equity - GAAP$
306,868
$
311,005
$
297,148
$
308,937
$
294,530
Adjustments: Average goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Average tangible common equity$
302,181
$
306,318
$
292,461
$
304,250
$
289,843
Return on average shareholders' equity
5.15
%
7.78
%
8.26
%
6.48
%
8.09
%
Effect of goodwill
0.08
%
0.12
%
0.13
%
0.10
%
0.13
%
Return on average tangible common equity
5.23
%
7.90
%
8.39
%
6.58
%
8.22
%
Total interest income$
34,222
$
36,244
$
36,844
$
70,466
$
71,843
Adjustments: Fully-taxable equivalent adjustments 1
1,437
1,535
1,612
2,972
3,169
Total interest income - FTE
$
35,659
$
37,779
$
38,456
$
73,438
$
75,012
Net interest income
$
14,426
$
15,018
$
16,105
$
29,444
$
32,349
Adjustments: Fully-taxable equivalent adjustments 1
1,437
1,535
1,612
2,972
3,169
Net interest income - FTE
$
15,863
$
16,553
$
17,717
$
32,416
$
35,518
Net interest margin
1.37
%
1.50
%
1.73
%
1.43
%
1.79
%
Effect of fully-taxable equivalent adjustments 1
0.13
%
0.15
%
0.18
%
0.15
%
0.18
%
Net interest margin - FTE
1.50
%
1.65
%
1.91
%
1.58
%
1.97
%
Allowance for loan losses$
24,465
$
22,857
$
19,976
$
24,465
$
19,976
Loans
$
2,973,674
$
2,892,093
$
2,861,156
$
2,973,674
$
2,861,156
Adjustments: PPP loans
(58,948
)
-
-
(58,948
)
-
Loans, excluding PPP loans
$
2,914,726
$
2,892,093
$
2,861,156
$
2,914,726
$
2,861,156
Allowance for loan losses to loans
0.82
%
0.79
%
0.70
%
0.82
%
0.70
%
Effect of PPP loans
0.02
%
0.00
%
0.00
%
0.02
%
0.00
%
Allowance for loan losses to loans, excluding PPP loans
0.84
%
0.79
%
0.70
%
0.84
%
0.70
%
1 Assuming a 21% tax rate
View source version on businesswire.com: https://www.businesswire.com/news/home/20200722005918/en/