INBK
$28.20
First Internet Bcp
$1.93
7.35%
Earnings Details
3rd Quarter September 2020
Wednesday, October 21, 2020 4:14:00 PM
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Summary

First Internet Bcp (INBK) Recent Earnings

First Internet Bcp (INBK) reported 3rd Quarter September 2020 earnings of $1.03 per share on revenue of $45.2 million. The consensus earnings estimate was $0.40 per share on revenue of $21.8 million. Revenue grew 4.6% on a year-over-year basis.

Results
Reported Earnings
$1.03
Earnings Whisper
-
Consensus Estimate
$0.40
Reported Revenue
$45.2 Mil
Revenue Estimate
$21.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

First Internet Bancorp Reports Third Quarter 2020 Results

Highlights for the third quarter include:

  • Record quarterly net income of $8.4 million, and adjusted net income of $10.0 million when excluding a $2.1 million pre-tax write-down of legacy other real estate owned (“OREO”)
  • Record quarterly diluted earnings per share of $0.86 and $1.03 adjusted diluted earnings per share, excluding the OREO write-down
  • Total revenue of $28.7 million, a 48.1% increase from the second quarter, driven by record mortgage banking revenue, higher net interest income and increased SBA loan sales
  • Net interest margin and fully-taxable equivalent net interest margin increased 16 and 17 basis points (“bps”), respectively, from the second quarter, driven by a 43 bp decrease in the cost of interest-bearing deposits
  • As of October 16, 2020, loan balances of $20.8 million, or 0.7% of total loans, remained on deferral programs, down significantly from $365.8 million on July 17, 2020

FISHERS, Ind.--(BUSINESS WIRE)--First Internet Bancorp (the “Company”) (Nasdaq: INBK), the parent company of First Internet Bank (the “Bank”), announced today financial and operational results for the third quarter of 2020. Net income for the third quarter of 2020 was a record $8.4 million, or $0.86 diluted earnings per share. This compares to net income of $3.9 million, or $0.40 diluted earnings per share, for the second quarter of 2020, and net income of $6.3 million, or $0.63 diluted earnings per share, for the third quarter of 2019.

“We generated record net income in the quarter, driven by very strong revenue growth, an improvement in net interest margin, and moderate loan growth. We are very pleased with our ability to navigate the challenges imposed by the pandemic and deliver for our customers and shareholders,” said David Becker, Chairman, President and Chief Executive Officer. “Additionally, we continued to experience a significant reduction in loan deferrals, and by quarter-end, over 99% of our borrowers who needed payment relief early in the pandemic had resumed making payments. We are proud to support our customers in their time of need and are glad that nearly all have been able to return to their normal payment schedules in such short order.

“Our direct-to-consumer mortgage business had a record quarter, almost tripling revenue compared to the second quarter. We capitalized on the ongoing market strength created by historically low mortgage rates, and our mortgage pipeline remains strong heading into the fourth quarter. Furthermore, our SBA business gained additional traction during the quarter, as our accelerated national expansion contributed to increased loan production and higher gain-on-sale revenue. Our SBA pipeline is robust, and we anticipate driving increased fee income in the quarters to come as this government-guaranteed lending business continues to ramp-up.”

Mr. Becker concluded, “As always, I would like to thank the entire First Internet team for their very hard work in delivering record revenue and earnings performance during these challenging times. Our employees are the key to our success, and we are proud of the strong culture and workplace environment we have created. First Internet was recognized for the seventh consecutive year on The Indianapolis Star’s 'Top Workplaces in Central Indiana' list, placing in the top ten in the medium-sized company category.”

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2020 was $16.2 million, compared to $14.4 million for the second quarter of 2020, and $15.2 million for the third quarter of 2019. On a fully-taxable equivalent basis, net interest income for the third quarter of 2020 was $17.7 million, compared to $15.9 million for the second quarter of 2020, and $16.8 million for the third quarter of 2019.

Total interest income for the third quarter of 2020 was $32.8 million, a decrease of 4.3%, compared to the second quarter of 2020, and a decrease of 13.1% compared to the third quarter of 2019. On a fully-taxable equivalent basis, total interest income for the third quarter of 2020 was $34.2 million, a decrease of 4.2% compared to the second quarter of 2020, and a decrease of 13.0% compared to the third quarter of 2019. The decline in total interest income compared to the second quarter of 2020 was driven primarily by a decrease in income from the securities portfolio due to accelerated premium amortization and continued declines in short term interest rate indices.

Total interest expense for the third quarter of 2020 was $16.5 million, a decrease of 16.6%, compared to the second quarter of 2020, and a decrease of 26.4% compared to the third quarter of 2019. The decrease in total interest expense compared to the linked quarter was due primarily to a 43 bp decline in the cost of interest-bearing deposits. The decrease in deposit costs reflects a continued decline in the rates paid on interest-bearing deposits as well as a shift in the deposit mix due to the growth in money market accounts.

During the third quarter of 2020, the cost of money market deposits decreased by 56 bps while the average balance of these deposits grew $206.2 million, or 18.9%. Furthermore, the cost of certificates and brokered deposits decreased 22 bps and average balances decreased $222.3 million, or 11.1%. During the third quarter, new certificates and brokered deposits were originated at a weighted average cost of 84 bps while maturing deposits had a weighted average cost of 225 bps; a difference of 141 bps.

Net interest margin (“NIM”) improved to 1.53% for the third quarter of 2020, up from 1.37% for the second quarter of 2020 and relatively stable with 1.54% for the third quarter of 2019. Fully-taxable equivalent NIM (“FTE NIM”) increased by 17 bps to 1.67% for the third quarter of 2020, up from 1.50% for the second quarter of 2020 and relatively stable with 1.70% for the third quarter of 2019. The increases in NIM and FTE NIM compared to the linked quarter were driven primarily by lower interest-bearing deposit costs, which more than offset the impact of the lower interest rate environment on interest-earning asset yields and the continued effect of elevated cash balances.

Noninterest Income

Noninterest income for the third quarter of 2020 was $12.5 million, compared to $5.0 million for the second quarter of 2020 and $5.6 million for the third quarter of 2019. The increase compared to the linked quarter was driven primarily by an increase in revenue from mortgage banking activities and gain on sale of loans. Mortgage banking revenue totaled $9.6 million for the third quarter of 2020, increasing $6.2 million, or 182.6%, compared to the prior quarter on increased loan sale volume and higher margins as mortgage interest rates continued to decline during the quarter. Gain on sale of loans totaled $2.0 million for the quarter, increasing $1.3 million compared to the second quarter of 2020 driven by a higher amount of U.S. Small Business Administration (“SBA”) 7(a) guaranteed loan sales in the quarter as well as a gain on the sale of a portfolio of single tenant lease financing loans.

Noninterest Expense

Noninterest expense for the third quarter of 2020 was $16.4 million, compared to $13.2 million for the second quarter of 2020 and $11.2 million for the third quarter of 2019. The increase from the second quarter of 2020 was due primarily to a $2.1 million write-down of two legacy commercial OREO properties and a $1.7 million increase in salaries and employee benefits but was partially offset by a $0.4 million decrease in other expense and a $0.3 million decrease in consulting and professional fees. The higher salaries and employee benefits expense was due mainly to higher incentive compensation related to the increased mortgage production as well as an increase in headcount and incentive compensation in the Company’s small business lending division.

Income Taxes

Income tax expense was $1.4 million, reflecting an effective tax rate of 14.2%, for the third quarter of 2020, compared to an income tax benefit of $0.3 million for the second quarter of 2020 and a $0.4 million expense and an effective tax rate of 6.6% for the third quarter of 2019. The increase in income taxes during the quarter was due primarily to the increase in pre-tax earnings driven by a higher proportion of taxable revenue from mortgage banking and gain on sale of loans.

Loans and Credit Quality

Total loans as of September 30, 2020 were $3.0 billion, an increase of $39.2 million, or 1.3%, compared to June 30, 2020, and an increase of $131.6 million, or 4.6%, compared to September 30, 2019. Total commercial loan balances were $2.4 billion as of September 30, 2020, an increase of $56.2 million, or 2.4%, compared to June 30, 2020 and an increase of $248.7 million, or 11.3%, compared to September 30, 2019. Compared to the linked quarter, the growth in commercial loan balances was driven largely by production in healthcare finance and construction lending as businesses resumed operations following limited activity in the second quarter.

Total consumer loan balances were $507.7 million as of September 30, 2020, a decrease of $15.3 million, or 2.9%, compared to June 30, 2020 and a decrease of $134.4 million, or 20.9%, compared to September 30, 2019. The decline in consumer loan balances from June 30, 2020 was due primarily to increased prepayment activity across the portfolio.

Total delinquencies 30 days or more past due decreased to 0.22% of total loans as of September 30, 2020, down from 0.25% as of June 30, 2020 and up from 0.13% as of September 30, 2019. Overall credit quality remained relatively stable as nonperforming loans to total loans was 0.32% as of September 30, 2020, compared to 0.28% at June 30, 2020 and 0.20% as of September 30, 2019.

The allowance for loan losses as a percentage of total loans was 0.89% as of September 30, 2020, or 0.91% when excluding SBA PPP loans, compared to 0.82% as of June 30, 2020 and 0.75% as of September 30, 2019. During the quarter, the Company continued to make 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 June 30, 2020.

Net charge-offs of $0.1 million were recognized during the third quarter of 2020, resulting in net charge-offs to average loans of 0.01%, as compared to 0.12% in the second quarter of 2020 and 0.15% in the third quarter of 2019. The provision for loan losses in the third quarter of 2020 was $2.5 million, consistent with the second quarter of 2020 and down from $2.8 million for the third quarter of 2019.

Capital

As of September 30, 2020, total shareholders’ equity was $318.1 million, an increase of $10.4 million, or 3.4%, compared to June 30, 2020, due primarily to the net income earned during the quarter and an increase in the after-tax valuations of the Company’s available-for-sale securities portfolio and cash flow hedges. Book value per common share increased to $32.46 as of September 30, 2020, up from $31.40 as of June 30, 2020 and $30.30 as of September 30, 2019. Tangible book value per common share increased to $31.98, up from $30.92 and $29.82, 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 September 30, 2020.

As of September 30, 2020

Company

Bank

 

Total shareholders' equity to assets

7.34%

8.12%

Tangible common equity to tangible assets 1

7.24%

8.02%

Tier 1 leverage ratio 2

7.72%

8.50%

Common equity tier 1 capital ratio 2

11.13%

12.27%

Tier 1 capital ratio 2

11.13%

12.27%

Total risk-based capital ratio 2

14.38%

13.17%

 

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, October 22, 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 November 22, 2020 by dialing (877) 344-7529; passcode: 10148690.

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 September 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. 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 has resulted in deterioration of general business and economic conditions and continued to impact us, our customers, counterparties, employees, and third-party service providers. Sustained deterioration in market conditions 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. The ultimate magnitude and duration of the pandemic is still unknown at this time, therefore, the extent of the impact on our business, financial position, results of operations, liquidity and prospects remains uncertain. 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, return on average tangible common equity, total interest income – FTE, net interest income – FTE, net interest margin – FTE, allowance for loan losses to loans, excluding PPP loans, adjusted income before income taxes, adjusted income tax provision (benefit), adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on 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 data
 
Three Months EndedNine Months Ended
 
September 30,
2020
June 30,
2020
September 30,
2019
September 30,
2020
September 30,
2019
 
Net income

$

8,411

 

$

3,932

 

$

6,326

 

$

18,362

 

$

18,143

 

Per share and share information
Earnings per share - basic

$

0.86

 

$

0.40

 

$

0.63

 

$

1.87

 

$

1.79

 

Earnings per share - diluted

 

0.86

 

 

0.40

 

 

0.63

 

 

1.87

 

 

1.79

 

Dividends declared per share

 

0.06

 

 

0.06

 

 

0.06

 

 

0.18

 

 

0.18

 

Book value per common share

 

32.46

 

 

31.40

 

 

30.30

 

 

32.46

 

 

30.30

 

Tangible book value per common share 1

 

31.98

 

 

30.92

 

 

29.82

 

 

31.98

 

 

29.82

 

Common shares outstanding

 

9,800,569

 

 

9,799,047

 

 

9,741,800

 

 

9,800,569

 

 

9,741,800

 

Average common shares outstanding:
Basic

 

9,773,175

 

 

9,768,227

 

 

9,979,603

 

 

9,825,683

 

 

10,114,303

 

Diluted

 

9,773,224

 

 

9,768,227

 

 

9,980,612

 

 

9,827,182

 

 

10,116,507

 

Performance ratios
Return on average assets

 

0.78

%

 

0.37

%

 

0.63

%

 

0.58

%

 

0.64

%

Return on average shareholders' equity

 

10.67

%

 

5.15

%

 

8.40

%

 

7.90

%

 

8.20

%

Return on average tangible common equity 1

 

10.83

%

 

5.23

%

 

8.53

%

 

8.02

%

 

8.33

%

Net interest margin

 

1.53

%

 

1.37

%

 

1.54

%

 

1.47

%

 

1.70

%

Net interest margin - FTE 1,2

 

1.67

%

 

1.50

%

 

1.70

%

 

1.61

%

 

1.87

%

Capital ratios 3
Total shareholders' equity to assets

 

7.34

%

 

7.12

%

 

7.21

%

 

7.34

%

 

7.21

%

Tangible common equity to tangible assets 1

 

7.24

%

 

7.01

%

 

7.10

%

 

7.24

%

 

7.10

%

Tier 1 leverage ratio

 

7.72

%

 

7.49

%

 

7.66

%

 

7.72

%

 

7.66

%

Common equity tier 1 capital ratio

 

11.13

%

 

10.94

%

 

10.93

%

 

11.13

%

 

10.93

%

Tier 1 capital ratio

 

11.13

%

 

10.94

%

 

10.93

%

 

11.13

%

 

10.93

%

Total risk-based capital ratio

 

14.38

%

 

14.13

%

 

14.17

%

 

14.38

%

 

14.17

%

Asset quality
Nonperforming loans

$

9,774

 

$

8,195

 

$

5,783

 

$

9,774

 

$

5,783

 

Nonperforming assets

 

9,782

 

 

10,304

 

 

8,497

 

 

9,782

 

 

8,497

 

Nonperforming loans to loans

 

0.32

%

 

0.28

%

 

0.20

%

 

0.32

%

 

0.20

%

Nonperforming assets to total assets

 

0.23

%

 

0.24

%

 

0.21

%

 

0.23

%

 

0.21

%

Allowance for loan losses to:
Loans

 

0.89

%

 

0.82

%

 

0.75

%

 

0.89

%

 

0.75

%

Loans, excluding PPP loans 1

 

0.91

%

 

0.84

%

 

0.75

%

 

0.91

%

 

0.75

%

Nonperforming loans

 

275.4

%

 

298.5

%

 

374.9

%

 

275.4

%

 

374.9

%

Net charge-offs to average loans

 

0.01

%

 

0.12

%

 

0.15

%

 

0.06

%

 

0.08

%

Average balance sheet information
Loans

$

2,996,641

 

$

2,943,165

 

$

2,865,258

 

$

2,957,116

 

$

2,838,685

 

Total securities

 

633,552

 

 

657,622

 

 

561,780

 

 

640,659

 

 

547,940

 

Other earning assets

 

552,058

 

 

594,296

 

 

469,454

 

 

520,875

 

 

322,544

 

Total interest-earning assets

 

4,216,634

 

 

4,241,690

 

 

3,933,315

 

 

4,161,245

 

 

3,735,286

 

Total assets

 

4,307,819

 

 

4,330,174

 

 

4,015,433

 

 

4,246,201

 

 

3,817,408

 

Noninterest-bearing deposits

 

75,901

 

 

73,758

 

 

43,972

 

 

70,060

 

 

43,035

 

Interest-bearing deposits

 

3,279,621

 

 

3,270,720

 

 

3,031,095

 

 

3,213,372

 

 

2,880,701

 

Total deposits

 

3,355,522

 

 

3,344,478

 

 

3,075,067

 

 

3,283,432

 

 

2,923,736

 

Shareholders' equity

 

313,611

 

 

306,868

 

 

298,782

 

 

310,506

 

 

295,963

 

 
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
 
 
September 30,
2020
June 30,
2020
September 30,
2019
 
Assets
Cash and due from banks

$

5,804

 

$

7,016

 

$

6,283

 

Interest-bearing deposits

 

482,649

 

 

491,603

 

 

410,119

 

Securities available-for-sale, at fair value

 

528,311

 

 

589,017

 

 

544,742

 

Securities held-to-maturity, at amortized cost

 

68,254

 

 

68,295

 

 

46,807

 

Loans held-for-sale

 

76,208

 

 

38,813

 

 

41,119

 

Loans

 

3,012,914

 

 

2,973,674

 

 

2,881,272

 

Allowance for loan losses

 

(26,917

)

 

(24,465

)

 

(21,683

)

Net loans

 

2,985,997

 

 

2,949,209

 

 

2,859,589

 

Accrued interest receivable

 

17,768

 

 

21,093

 

 

16,652

 

Federal Home Loan Bank of Indianapolis stock

 

25,650

 

 

25,650

 

 

25,650

 

Cash surrender value of bank-owned life insurance

 

37,714

 

 

37,474

 

 

36,764

 

Premises and equipment, net

 

31,262

 

 

23,939

 

 

14,512

 

Goodwill

 

4,687

 

 

4,687

 

 

4,687

 

Servicing asset

 

2,818

 

 

2,522

 

 

-

 

Other real estate owned

 

-

 

 

2,065

 

 

2,619

 

Accrued income and other assets

 

66,502

 

 

63,217

 

 

85,948

 

Total assets

$

4,333,624

 

$

4,324,600

 

$

4,095,491

 

 
Liabilities
Noninterest-bearing deposits

$

86,088

 

$

82,864

 

$

50,560

 

Interest-bearing deposits

 

3,286,303

 

 

3,297,925

 

 

3,097,682

 

Total deposits

 

3,372,391

 

 

3,380,789

 

 

3,148,242

 

Advances from Federal Home Loan Bank

 

514,914

 

 

514,913

 

 

514,908

 

Subordinated debt

 

69,758

 

 

69,681

 

 

69,452

 

Accrued interest payable

 

1,249

 

 

1,073

 

 

2,635

 

Accrued expenses and other liabilities

 

57,210

 

 

50,433

 

 

65,114

 

Total liabilities

 

4,015,522

 

 

4,016,889

 

 

3,800,351

 

Shareholders' equity
Voting common stock

 

220,951

 

 

220,418

 

 

219,013

 

Retained earnings

 

116,241

 

 

108,431

 

 

93,182

 

Accumulated other comprehensive loss

 

(19,090

)

 

(21,138

)

 

(17,055

)

Total shareholders' equity

 

318,102

 

 

307,711

 

 

295,140

 

Total liabilities and shareholders' equity

$

4,333,624

 

$

4,324,600

 

$

4,095,491

 

First Internet Bancorp
Condensed Consolidated Statements of Income (unaudited)
Amounts in thousands, except per share data
 
Three Months EndedNine Months Ended
 
September 30,
2020
June 30,
2020
September 30,
2019
September 30,
2020
September 30,
2019
 
Interest income
Loans

$

29,560

 

$

29,730

 

$

30,594

$

89,698

 

$

90,654

 

Securities - taxable

 

2,240

 

 

3,276

 

 

3,468

 

9,135

 

 

10,332

 

Securities - non-taxable

 

381

 

 

457

 

 

639

 

1,410

 

 

1,991

 

Other earning assets

 

569

 

 

759

 

 

2,993

 

2,973

 

 

6,560

 

Total interest income

 

32,750

 

 

34,222

 

 

37,694

 

103,216

 

 

109,537

 

Interest expense
Deposits

 

12,428

 

 

15,763

 

 

18,363

 

45,399

 

 

50,896

 

Other borrowed funds

 

4,090

 

 

4,033

 

 

4,087

 

12,141

 

 

11,048

 

Total interest expense

 

16,518

 

 

19,796

 

 

22,450

 

57,540

 

 

61,944

 

Net interest income

 

16,232

 

 

14,426

 

 

15,244

 

45,676

 

 

47,593

 

Provision for loan losses

 

2,509

 

 

2,491

 

 

2,824

 

6,461

 

 

5,498

 

Net interest income after provision
for loan losses

 

13,723

 

 

11,935

 

 

12,420

 

39,215

 

 

42,095

 

Noninterest income
Service charges and fees

 

224

 

 

182

 

 

211

 

618

 

 

672

 

Loan servicing revenue

 

274

 

 

255

 

 

-

 

780

 

 

-

 

Loan servicing asset revaluation

 

(103

)

 

(90

)

 

-

 

(372

)

 

-

 

Mortgage banking activities

 

9,630

 

 

3,408

 

 

4,307

 

16,706

 

 

8,588

 

Gain on sale of loans

 

2,033

 

 

762

 

 

523

 

4,596

 

 

353

 

Gain (loss) on sale of securities

 

98

 

 

-

 

 

-

 

139

 

 

(458

)

Other

 

339

 

 

456

 

 

517

 

1,212

 

 

2,229

 

Total noninterest income

 

12,495

 

 

4,973

 

 

5,558

 

23,679

 

 

11,384

 

Noninterest expense
Salaries and employee benefits

 

9,533

 

 

7,789

 

 

6,883

 

25,096

 

 

19,846

 

Marketing, advertising and promotion

 

426

 

 

411

 

 

456

 

1,212

 

 

1,391

 

Consulting and professional fees

 

614

 

 

932

 

 

778

 

2,723

 

 

2,427

 

Data processing

 

388

 

 

339

 

 

381

 

1,102

 

 

1,026

 

Loan expenses

 

408

 

 

399

 

 

247

 

1,406

 

 

853

 

Premises and equipment

 

1,568

 

 

1,602

 

 

1,506

 

4,795

 

 

4,503

 

Deposit insurance premium

 

440

 

 

435

 

 

-

 

1,360

 

 

1,302

 

Write-down of other real estate owned

 

2,065

 

 

-

 

 

-

 

2,065

 

 

-

 

Other

 

970

 

 

1,337

 

 

952

 

3,383

 

 

2,673

 

Total noninterest expense

 

16,412

 

 

13,244

 

 

11,203

 

43,142

 

 

34,021

 

Income before income taxes

 

9,806

 

 

3,664

 

 

6,775

 

19,752

 

 

19,458

 

Income tax provision (benefit)

 

1,395

 

 

(268

)

 

449

 

1,390

 

 

1,315

 

Net income

$

8,411

 

$

3,932

 

$

6,326

$

18,362

 

$

18,143

 

 
Per common share data
Earnings per share - basic

$

0.86

 

$

0.40

 

$

0.63

$

1.87

 

$

1.79

 

Earnings per share - diluted

$

0.86

 

$

0.40

 

$

0.63

$

1.87

 

$

1.79

 

Dividends declared per share

$

0.06

 

$

0.06

 

$

0.06

$

0.18

 

$

0.18

 

 
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
 
September 30, 2020June 30, 2020September 30, 2019
 
Average
Balance
Interest /
Dividends
Yield /
Cost
Average
Balance
Interest /
Dividends
Yield /
Cost
Average
Balance
Interest /
Dividends
Yield /
Cost
 
Assets
Interest-earning assets
Loans, including loans held-for-sale 1

$

3,031,024

 

$

29,560

3.88

%

$

2,989,772

 

$

29,730

4.00

%

$

2,902,081

 

$

30,594

4.18

%

Securities - taxable

 

539,154

 

 

2,240

1.65

%

 

560,947

 

 

3,276

2.35

%

 

462,490

 

$

3,468

2.97

%

Securities - non-taxable

 

94,398

 

 

381

1.61

%

 

96,675

 

 

457

1.90

%

 

99,290

 

$

639

2.55

%

Other earning assets

 

552,058

 

 

569

0.41

%

 

594,296

 

 

759

0.51

%

 

469,454

 

$

2,993

2.53

%

Total interest-earning assets

 

4,216,634

 

 

32,750

3.09

%

 

4,241,690

 

 

34,222

3.24

%

 

3,933,315

 

 

37,694

3.80

%

 
Allowance for loan losses

 

(25,347

)

 

(23,388

)

 

(20,050

)

Noninterest-earning assets

 

116,532

 

 

111,872

 

 

102,168

 

Total assets

$

4,307,819

 

$

4,330,174

 

$

4,015,433

 

 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits

$

154,275

 

$

228

0.59

%

$

137,487

 

$

237

0.69

%

$

126,130

 

$

233

0.73

%

Savings accounts

 

45,466

 

 

79

0.69

%

 

37,204

 

 

92

0.99

%

 

32,434

 

 

91

1.11

%

Money market accounts

 

1,295,249

 

 

2,442

0.75

%

 

1,089,063

 

 

3,541

1.31

%

 

639,181

 

 

3,261

2.02

%

Certificates and brokered deposits

 

1,784,631

 

 

9,679

2.16

%

 

2,006,966

 

 

11,893

2.38

%

 

2,233,350

 

 

14,778

2.63

%

Total interest-bearing deposits

 

3,279,621

 

 

12,428

1.51

%

 

3,270,720

 

 

15,763

1.94

%

 

3,031,095

 

 

18,363

2.40

%

Other borrowed funds

 

584,634

 

 

4,090

2.78

%

 

584,543

 

 

4,033

2.77

%

 

584,308

 

 

4,087

2.78

%

Total interest-bearing liabilities

 

3,864,255

 

 

16,518

1.70

%

 

3,855,263

 

 

19,796

2.07

%

 

3,615,403

 

 

22,450

2.46

%

 
Noninterest-bearing deposits

 

75,901

 

 

73,758

 

 

43,972

 

Other noninterest-bearing liabilities

 

54,052

 

 

94,285

 

 

57,276

 

Total liabilities

 

3,994,208

 

 

4,023,306

 

 

3,716,651

 

 
Shareholders' equity

 

313,611

 

 

306,868

 

 

298,782

 

Total liabilities and shareholders' equity

$

4,307,819

 

$

4,330,174

 

$

4,015,433

 

 
Net interest income

$

16,232

$

14,426

$

15,244

 
Interest rate spread

1.39

%

1.17

%

1.34

%

 
Net interest margin

1.53

%

1.37

%

1.54

%

 
Net interest margin - FTE 2,3

1.67

%

1.50

%

1.70

%

 
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
 
Nine Months Ended
 
September 30, 2020September 30, 2019
 
Average
Balance
Interest /
Dividends
Yield /
Cost
Average
Balance
Interest /
Dividends
Yield /
Cost
 
Assets
Interest-earning assets
Loans, including loans held-for-sale 1

$

2,999,711

 

$

89,698

3.99

%

$

2,864,802

 

$

90,654

4.23

%

Securities - taxable

 

543,699

 

 

9,135

2.24

%

 

450,898

 

 

10,332

3.06

%

Securities - non-taxable

 

96,960

 

 

1,410

1.94

%

 

97,042

 

 

1,991

2.74

%

Other earning assets

 

520,875

 

 

2,973

0.76

%

 

322,544

 

 

6,560

2.72

%

Total interest-earning assets

 

4,161,245

 

 

103,216

3.31

%

 

3,735,286

 

 

109,537

3.92

%

 
Allowance for loan losses

 

(23,605

)

 

(19,191

)

Noninterest-earning assets

 

108,561

 

 

101,313

 

Total assets

$

4,246,201

 

$

3,817,408

 

 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits

$

138,288

 

$

684

0.66

%

$

117,811

 

$

659

0.75

%

Savings accounts

 

37,700

 

 

249

0.88

%

 

36,241

 

 

304

1.12

%

Money market accounts

 

1,084,411

 

 

9,726

1.20

%

 

598,410

 

 

9,009

2.01

%

Certificates and brokered deposits

 

1,952,973

 

 

34,740

2.38

%

 

2,128,239

 

 

40,924

2.57

%

Total interest-bearing deposits

 

3,213,372

 

 

45,399

1.89

%

 

2,880,701

 

 

50,896

2.36

%

Other borrowed funds

 

584,547

 

 

12,141

2.77

%

 

558,141

 

 

11,048

2.65

%

Total interest-bearing liabilities

 

3,797,919

 

 

57,540

2.02

%

 

3,438,842

 

 

61,944

2.41

%

 
Noninterest-bearing deposits

 

70,060

 

 

43,035

 

Other noninterest-bearing liabilities

 

67,716

 

 

39,568

 

Total liabilities

 

3,935,695

 

 

3,521,445

 

 
Shareholders' equity

 

310,506

 

 

295,963

 

Total liabilities and shareholders' equity

$

4,246,201

 

$

3,817,408

 

 
Net interest income

$

45,676

$

47,593

 
Interest rate spread

1.29

%

1.51

%

 
Net interest margin

1.47

%

1.70

%

 
Net interest margin - FTE 2,3

1.61

%

1.87

%

 
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
 
 
September 30, 2020June 30, 2020September 30, 2019
 
AmountPercentAmountPercentAmountPercent
 
Commercial loans
Commercial and industrial

$

77,116

 

2.6

%

$

81,687

 

2.7

%

$

83,481

 

2.9

%

Owner-occupied commercial real estate

 

89,095

 

3.0

%

 

86,897

 

2.9

%

 

86,357

 

3.0

%

Investor commercial real estate

 

13,084

 

0.4

%

 

13,286

 

0.4

%

 

11,852

 

0.4

%

Construction

 

92,154

 

3.1

%

 

77,591

 

2.6

%

 

54,131

 

1.9

%

Single tenant lease financing

 

960,505

 

31.9

%

 

980,292

 

33.0

%

 

1,008,247

 

35.0

%

Public finance

 

625,638

 

20.8

%

 

647,107

 

21.8

%

 

686,622

 

23.8

%

Healthcare finance

 

461,740

 

15.3

%

 

380,956

 

12.8

%

 

251,530

 

8.6

%

Small business lending

 

123,168

 

4.1

%

 

118,526

 

4.0

%

 

11,597

 

0.4

%

Total commercial loans

 

2,442,500

 

81.2

%

 

2,386,342

 

80.2

%

 

2,193,817

 

76.0

%

 
Consumer loans
Residential mortgage

 

203,041

 

6.7

%

 

208,728

 

7.0

%

 

320,451

 

11.1

%

Home equity

 

22,169

 

0.7

%

 

22,640

 

0.8

%

 

25,042

 

0.9

%

Trailers

 

145,775

 

4.8

%

 

147,326

 

5.0

%

 

145,600

 

5.1

%

Recreational vehicles

 

96,910

 

3.2

%

 

102,088

 

3.4

%

 

102,698

 

3.6

%

Other consumer loans

 

39,765

 

1.3

%

 

42,218

 

1.4

%

 

48,275

 

1.7

%

Total consumer loans

 

507,660

 

16.7

%

 

523,000

 

17.6

%

 

642,066

 

22.4

%

 
Net deferred loan fees, premiums, discounts and other 1

 

62,754

 

2.1

%

 

64,332

 

2.2

%

 

45,389

 

1.6

%

 
Total loans

$

3,012,914

 

100.0

%

$

2,973,674

 

100.0

%

$

2,881,272

 

100.0

%

 
 
September 30, 2020June 30, 2020September 30, 2019
 
AmountPercentAmountPercentAmountPercent
 
Deposits
Noninterest-bearing deposits

$

86,088

 

2.6

%

$

82,864

 

2.5

%

$

50,560

 

1.6

%

Interest-bearing demand deposits

 

155,054

 

4.6

%

 

152,391

 

4.5

%

 

122,551

 

3.9

%

Savings accounts

 

49,890

 

1.5

%

 

43,366

 

1.3

%

 

34,886

 

1.1

%

Money market accounts

 

1,359,178

 

40.3

%

 

1,241,874

 

36.7

%

 

698,077

 

22.2

%

Certificates of deposits

 

1,360,575

 

40.3

%

 

1,470,905

 

43.5

%

 

1,681,377

 

53.4

%

Brokered deposits

 

361,606

 

10.7

%

 

389,389

 

11.5

%

 

560,791

 

17.8

%

Total deposits

$

3,372,391

 

100.0

%

$

3,380,789

 

100.0

%

$

3,148,242

 

100.0

%

 
1 Includes carrying value adjustments of $44.3 million and $46.0 million related to terminated interest rate swaps associated with public finance loans as of September 30, 2020 and June 30, 2020, respectively, and $27.6 million as of September 30, 2019 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 data
 
Three Months EndedNine Months Ended
 
September 30,
2020
June 30,
2020
September 30,
2019
September 30,
2020
September 30,
2019
 
Total equity - GAAP

$

318,102

 

$

307,711

 

$

295,140

 

$

318,102

 

$

295,140

 

Adjustments:
Goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

Tangible common equity

$

313,415

 

$

303,024

 

$

290,453

 

$

313,415

 

$

290,453

 

 
Total assets - GAAP

$

4,333,624

 

$

4,324,600

 

$

4,095,491

 

$

4,333,624

 

$

4,095,491

 

Adjustments:
Goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

Tangible assets

$

4,328,937

 

$

4,319,913

 

$

4,090,804

 

$

4,328,937

 

$

4,090,804

 

 
Common shares outstanding

 

9,800,569

 

 

9,799,047

 

 

9,741,800

 

 

9,800,569

 

 

9,741,800

 

 
Book value per common share

$

32.46

 

$

31.40

 

$

30.30

 

$

32.46

 

$

30.30

 

Effect of goodwill

 

(0.48

)

 

(0.48

)

 

(0.48

)

 

(0.48

)

 

(0.48

)

Tangible book value per common share

$

31.98

 

$

30.92

 

$

29.82

 

$

31.98

 

$

29.82

 

 
Total shareholders' equity to assets

 

7.34

%

 

7.12

%

 

7.21

%

 

7.34

%

 

7.21

%

Effect of goodwill

 

(0.10

%)

 

(0.11

%)

 

(0.11

%)

 

(0.10

%)

 

(0.11

%)

Tangible common equity to tangible assets

 

7.24

%

 

7.01

%

 

7.10

%

 

7.24

%

 

7.10

%

 
Total average equity - GAAP

$

313,611

 

$

306,868

 

$

298,782

 

$

310,506

 

$

295,963

 

Adjustments:
Average goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

 

(4,687

)

Average tangible common equity

$

308,924

 

$

302,181

 

$

294,095

 

$

305,819

 

$

291,276

 

 
Return on average shareholders' equity

 

10.67

%

 

5.15

%

 

8.40

%

 

7.90

%

 

8.20

%

Effect of goodwill

 

0.16

%

 

0.08

%

 

0.13

%

 

0.12

%

 

0.13

%

Return on average tangible common equity

 

10.83

%

 

5.23

%

 

8.53

%

 

8.02

%

 

8.33

%

 
Total interest income

$

32,750

 

$

34,222

 

$

37,694

 

$

103,216

 

$

109,537

 

Adjustments:
Fully-taxable equivalent adjustments 1

 

1,424

 

 

1,437

 

 

1,595

 

 

4,396

 

 

4,764

 

Total interest income - FTE

$

34,174

 

$

35,659

 

$

39,289

 

$

107,612

 

$

114,301

 

 
Net interest income

$

16,232

 

$

14,426

 

$

15,244

 

$

45,676

 

$

47,593

 

Adjustments:
Fully-taxable equivalent adjustments 1

 

1,424

 

 

1,437

 

 

1,595

 

 

4,396

 

 

4,764

 

Net interest income - FTE

$

17,656

 

$

15,863

 

$

16,839

 

$

50,072

 

$

52,357

 

 
Net interest margin

 

1.53

%

 

1.37

%

 

1.54

%

 

1.47

%

 

1.70

%

Effect of fully-taxable equivalent adjustments 1

 

0.14

%

 

0.13

%

 

0.16

%

 

0.14

%

 

0.17

%

Net interest margin - FTE

 

1.67

%

 

1.50

%

 

1.70

%

 

1.61

%

 

1.87

%

 
Allowance for loan losses

$

26,917

 

$

24,465

 

$

21,683

 

$

26,917

 

$

21,683

 

 
Loans

$

3,012,914

 

$

2,973,674

 

$

2,881,272

 

$

3,012,914

 

$

2,881,272

 

Adjustments:
PPP loans

 

(58,337

)

 

(58,948

)

-

 

 

(58,337

)

-

 

Loans, excluding PPP loans

$

2,954,577

 

$

2,914,726

 

$

2,881,272

 

$

2,954,577

 

$

2,881,272

 

 
Allowance for loan losses to loans

 

0.89

%

 

0.82

%

 

0.75

%

 

0.89

%

 

0.75

%

Effect of PPP loans

 

0.02

%

 

0.02

%

 

0.00

%

 

0.02

%

 

0.00

%

Allowance for loan losses to loans, excluding PPP loans

 

0.91

%

 

0.84

%

 

0.75

%

 

0.91

%

 

0.75

%

 
1 Assuming a 21% tax rate
First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Amounts in thousands, except per share data
 
 
Three Months EndedNine Months Ended
 
September 30,
2020
June 30,
2020
September 30,
2019
September 30,
2020
September 30,
2019
 
Income before income taxes - GAAP

$

9,806

 

$

3,664

 

$

6,775

 

$

19,752

 

$

19,458

 

Adjustments:
Write-down of other real estate owned

 

2,065

 

 

-

 

 

-

 

 

2,065

 

 

-

 

Adjusted income before income taxes

$

11,871

 

$

3,664

 

$

6,775

 

$

21,817

 

$

19,458

 

 
Income tax provision (benefit) - GAAP

$

1,395

 

$

(268

)

$

449

 

$

1,390

 

$

1,315

 

Adjustments:
Write-down of other real estate owned

 

434

 

 

-

 

 

-

 

 

434

 

 

-

 

Adjusted income tax provision (benefit)

$

1,829

 

$

(268

)

$

449

 

$

1,824

 

$

1,315

 

 
Net income - GAAP

$

8,411

 

$

3,932

 

$

6,326

 

$

18,362

 

$

18,143

 

Adjustments:
Write-down of other real estate owned

 

1,631

 

 

-

 

 

-

 

 

1,631

 

 

-

 

Adjusted net income

$

10,042

 

$

3,932

 

$

6,326

 

$

19,993

 

$

18,143

 

 
Diluted average common shares outstanding

 

9,773,224

 

 

9,768,227

 

 

9,980,612

 

 

9,827,182

 

 

10,116,507

 

 
Diluted earnings per share - GAAP

$

0.86

 

$

0.40

 

$

0.63

 

$

1.87

 

$

1.79

 

Adjustments:
Effect of write-down of other real estate owned

 

0.17

 

 

-

 

 

-

 

 

0.16

 

 

-

 

Adjusted diluted earnings per share

$

1.03

 

$

0.40

 

$

0.63

 

$

2.03

 

$

1.79

 

 
Return on average assets

 

0.78

%

 

0.37

%

 

0.63

%

 

0.58

%

 

0.64

%

Effect of write-down of other real estate owned

 

0.15

%

 

0.00

%

 

0.00

%

 

0.05

%

 

0.00

%

Adjusted return on average assets

 

0.93

%

 

0.37

%

 

0.63

%

 

0.63

%

 

0.64

%

 
Return on average shareholders' equity

 

10.67

%

 

5.15

%

 

8.40

%

 

7.90

%

 

8.20

%

Effect of write-down of other real estate owned

 

2.07

%

 

0.00

%

 

0.00

%

 

0.70

%

 

0.00

%

Adjusted return on average shareholders' equity

 

12.74

%

 

5.15

%

 

8.40

%

 

8.60

%

 

8.20

%

 
Return on average tangible common equity

 

10.83

%

 

5.23

%

 

8.53

%

 

8.02

%

 

8.33

%

Effect of write-down of other real estate owned

 

2.10

%

 

0.00

%

 

0.00

%

 

0.71

%

 

0.00

%

Adjusted return on average tangible common equity

 

12.93

%

 

5.23

%

 

8.53

%

 

8.73

%

 

8.33

%

 
Effective income tax rate

 

14.2

%

 

(7.3

%)

 

6.6

%

 

7.0

%

 

6.8

%

Effect of write-down of other real estate owned

 

1.2

%

 

0.0

%

 

0.0

%

 

1.4

%

 

0.0

%

Adjusted effective income tax rate

 

15.4

%

 

(7.3

%)

 

6.6

%

 

8.4

%

 

6.8

%

 

Investors/Analysts
Paula Deemer
Director of Corporate Administration
(317) 428-4628
investors@firstib.com

Media
Nicole Lorch
Executive Vice President & Chief Operating Officer
(317) 532-7906
nlorch@firstib.com

Source: First Internet Bancorp