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
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 Ended Nine 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
BancorpCondensed 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 Ended Nine 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,
2020 June 30, 2020 September 30, 2019
AverageBalance Interest /Dividends
Yield /Cost AverageBalance Interest
/Dividends Yield /Cost
AverageBalance 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, 2020
September 30, 2019 AverageBalance
Interest /Dividends Yield /Cost
AverageBalance 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, 2020 June 30, 2020 September
30, 2019 Amount Percent Amount
Percent Amount Percent 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, 2020 June 30, 2020
September 30, 2019 Amount Percent
Amount Percent Amount Percent
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 MeasuresDollar amounts in thousands, except per share
data
Three Months Ended Nine 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 MeasuresAmounts in
thousands, except per share data
Three Months
Ended Nine 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
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201021005991/en/
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
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