First Internet Bancorp (the “Company”) (Nasdaq: INBK), the
parent company of First Internet Bank (the “Bank”), announced today
financial and operational results for the first quarter ended March
31, 2023.
Addressing Recent Market
Events
- Deposit growth of $181.0 million in the first quarter, a
5.3% increase from the fourth quarter of 2022
- Estimated uninsured deposits represented 26% of total
deposits at March 31, 2023, and 19% of total deposits after
adjusting for insured/collateralized public funds and contractual
deposits
- No additional borrowing from either the FHLB or the Federal
Reserve during the first quarter; total borrowing availability of
$628 million across all facilities at quarter end
- Office commercial real estate exposure represents less than
1% of total loan balances and is primarily limited to suburban and
medical offices
- Total after-tax unrealized securities losses in both the
available-for-sale and held-to-maturity portfolios represented
13.3% of tangible shareholders’ equity at quarter end
- Tangible common equity to tangible assets of 7.47%; CET1
ratio of 10.35%; tangible book value per share of $39.43
First Quarter 2023 Financial
Highlights
- Net loss of $1.3 million and a diluted loss per share of
$0.14
- Net loss was impacted by a partial charge-off of $4.7
million related to one C&I participation loan
- Adjusted net income of $4.8 million, or $0.53 adjusted
diluted earnings per share, when excluding (i) net pre-tax costs of
$3.0 million incurred as a result of the previously announced exit
of the Bank's consumer mortgage operations and (ii) the
aforementioned $4.7 million partial charge-off of the C&I
participation loan
- Net interest margin of 1.76% and fully-taxable equivalent
net interest margin of 1.89%, compared to 2.09% and 2.22%,
respectively, for the fourth quarter of 2022
- Repurchased 161,691 shares
“Our active management of liquidity, capital and revenue streams
in preparation for a dynamic economic environment positioned us to
effectively withstand the recent challenges to the banking system,”
said David Becker, Chairman and Chief Executive Officer. “Early in
the first quarter, we focused on growing deposits and building
liquidity, which we successfully accomplished despite intense
competition amid the overall decline in system-wide deposits. While
we experienced a modest decline in deposits from mid-March through
quarter-end, balances have rebounded and are up $135 million thus
far in April.
“We remain focused on our strategies to bolster the resilience
of our balance sheet and our revenue channels. We continue to
improve the composition of the loan portfolio towards a more
favorable mix of variable rate and higher yielding loans. New
origination yields were up significantly during the quarter,
positioning us to achieve stronger earnings and profitability once
deposit costs stabilize. In addition, our SBA lending team
generated a very strong quarter with gain on sale revenue up over
40% compared to the fourth quarter.”
Mr. Becker concluded, “Despite an issue late in the quarter on
one commercial participation loan, our exposure to similar-type
loans is very limited and all others are performing well. Our
overall asset quality remains solid, and our capital levels are
strong.”
Net Interest Income and Net Interest Margin
Net interest income for the first quarter of 2023 was $19.6
million, compared to $21.7 million for the fourth quarter of 2022,
and $25.8 million for the first quarter of 2022. On a fully-taxable
equivalent basis, net interest income for the first quarter of 2023
was $21.0 million, compared to $23.1 million for the fourth quarter
of 2022, and $27.1 million for the first quarter of 2022.
Total interest income for the first quarter of 2023 was $52.0
million, an increase of 13.9% compared to the fourth quarter of
2022, and an increase of 44.4% compared to the first quarter of
2022. On a fully-taxable equivalent basis, total interest income
for the first quarter of 2023 was $53.4 million, an increase of
13.5% compared to the fourth quarter of 2022, and an increase of
43.0% compared to the first quarter of 2022. The increase from the
linked quarter was due primarily to growth in interest income
earned on loans, other earning assets and securities. The yield on
average interest-earning assets for the first quarter of 2023
increased to 4.69% from 4.40% for the fourth quarter of 2022 due
primarily to a 24 basis point (“bp”) increase in the average loan
yield, a 94 bp increase in the yield earned on other earning assets
and a 36 bp increase in the yield earned on securities. Compared to
the linked quarter, average loan balances increased $191.9 million,
or 5.7%, while the average balance of other earning assets
increased $181.4 million, or 121.0%, and the average balance of
securities increased $6.7 million, or 1.2%.
Interest income earned on commercial loans was higher due to
increased average balances and the positive impact of higher rates
in the variable rate SBA, construction and investor commercial real
estate portfolios, as well as strong growth and higher new
origination yields in the franchise finance portfolio. This was
partially offset by lower average balances and prepayment fees in
the healthcare finance portfolio, as well as lower prepayment fees
in the single tenant lease financing portfolio.
In the consumer portfolio, interest income was up due to higher
new origination yields, increases in the average balance of
residential mortgage, trailers and recreational vehicles
portfolios, and higher rates in the variable rate home equity
portfolio.
The yield on funded portfolio originations was 7.76% in the
first quarter, an increase of 161 bps compared to the fourth
quarter of 2022 and an increase of 297 basis points compared to the
first quarter of 2022. Because of the fixed-rate nature of certain
larger portfolios, there is a lagging impact of origination yields
on the portfolio, which are expected to increase over time.
Interest earned on cash and other interest-earning balances
increased $2.4 million, or 171.6%, during the quarter due to the
impact of higher short-term interest rates on cash balances as well
as a $181.4 million increase, or 152.5%, in average cash balances.
Furthermore, interest income earned on securities increased $0.5
million, or 12.3%, during the first quarter of 2023 as the yield on
the portfolio increased 36 bps to 3.05% driven primarily by
variable rate securities resetting higher, slower prepayment speeds
and an increase in the average balance of the portfolio.
Total interest expense for the first quarter was $32.5 million,
an increase of $8.5 million, or 35.2%, compared to the linked
quarter, due to increases in both market interest rates and average
interest-bearing deposit balances throughout the quarter. Interest
expense related to interest-bearing deposits increased $8.5
million, or 45.0%, driven primarily by higher costs on CD and
brokered deposits and money market accounts. Average CD balances
increased $261.4 million, or 32.9%, while the cost of funds
increased 108 bps, as the Company took advantage of strong consumer
and small business demand during the quarter and pulled forward
origination activity planned for later in the year. The average
balance of brokered deposits increased $165.1 million, or 38.6%,
driven by a full quarter’s impact of brokered CD issuances in late
2022, and the cost of funds increased 71 bps. Additionally, while
average money market balances decreased $64.0 million, or 4.4%,
during the quarter, the cost of these deposits increased 73 bps due
to the impact of continued Federal Reserve rate increases.
The average balance of BaaS – brokered deposits increased by
$10.2 million, reaching $25.7 million by quarter-end. In total,
BaaS deposits were $82.4 million as of March 31, 2023 as Fintech
programs were onboarded and existing programs grew during the
quarter.
Net interest margin (“NIM”) was 1.76% for the first quarter of
2023, down from 2.09% for the fourth quarter of 2022 and 2.56% for
the first quarter of 2022. Fully-taxable equivalent NIM (“FTE NIM”)
was 1.89% for the first quarter of 2023, down from 2.22% for the
fourth quarter of 2022 and 2.69% for the first quarter of 2022. The
decreases in NIM and FTE NIM compared to the linked quarter were
driven primarily by the effect of higher interest-bearing deposit
costs, partially offset by higher yields on loans, other earning
assets and securities.
Noninterest Income
Noninterest income for the first quarter of 2023 was $5.4
million, down $0.4 million, or 6.2%, from the fourth quarter of
2022, and down $1.4 million, or 20.1%, from the first quarter of
2022. Gain on sale of loans totaled $4.1 million for the first
quarter of 2023, up $1.2 million, or 41.9%, from the linked
quarter. Gain on sale revenue in the quarter consisted entirely of
gain on the sales of U.S. Small Business Administration (“SBA”)
7(a) guaranteed loans, which increased due to a higher volume of
loan sales, as well as higher net premiums. Other income totaled
$0.4 million for the first quarter of 2023, down $1.2 million
compared to the linked quarter due to distributions received on
certain Small Business Investment Company and venture capital fund
investments in the fourth quarter. Mortgage banking revenue totaled
only $0.1 million for the first quarter as the Company immediately
began winding down its existing pipeline following its announced
exit from the consumer mortgage business in January 2023.
Noninterest Expense
Noninterest expense for the first quarter of 2023 was $21.0
million, up $2.4 million, or 13.2%, from the fourth quarter of 2022
and up $2.2 million, or 11.6%, from the first quarter of 2022.
Excluding $3.1 million of mortgage operations and exit costs,
adjusted noninterest expense totaled $17.9 million for the first
quarter, declining $0.6 million, or 3.3%, compared to the linked
quarter. Excluding the mortgage operations and exit costs, salaries
and employee benefits expense decreased by $0.8 million compared to
the linked quarter due to lower incentive compensation and bonus
accruals. Also, marketing, advertising and promotion expense,
consulting and professional fees, premises and equipment costs and
other expenses decreased from the linked quarter, while loan
expenses and deposit insurance premiums were higher. The increase
in loan expenses reflects higher third party loan servicing costs
related to franchise finance loan volume. The increase in deposit
insurance premium was due primarily to asset growth, as well as the
composition of loans and deposits.
Income Taxes
The Company recognized an income tax benefit of $1.8 million for
the first quarter of 2023, compared to an income tax expense of
$0.5 million and an effective tax rate of 7.3% for the fourth
quarter of 2022 and an income tax expense of $1.8 million and an
effective tax rate of 13.8% for the first quarter of 2022. The
income tax benefit in the first quarter of 2023 reflects the net
loss resulting from the partial charge-off of the participation
loan and the recognition of mortgage exit costs described
above.
Loans and Credit Quality
Total loans as of March 31, 2023 were $3.6 billion, an increase
of $110.1 million, or 3.1%, compared to December 31, 2022, and an
increase of $728.7 million, or 25.3%, compared to March 31, 2022.
Total commercial loan balances were $2.8 billion as of March 31,
2023, an increase of $88.7 million, or 3.3%, compared to December
31, 2022, and an increase of $468.0 million, or 20.0%, compared to
March 31, 2022. Compared to the linked quarter, the increase in
commercial loan balances was driven primarily by growth in
franchise finance, single tenant lease financing and small business
lending balances, as well as combined growth in investor commercial
real estate and construction balances. These items were partially
offset by a decrease in the public finance portfolio as well as
continued runoff in the healthcare finance portfolio.
Total consumer loan balances were $756.4 million as of March 31,
2023, an increase of $23.1 million, or 3.1%, compared to December
31, 2022, and an increase of $267.6 million, or 54.7%, compared to
March 31, 2022. The increase compared to the linked quarter was due
primarily to higher balances in the recreational vehicles and
trailers loan portfolios as well as funded residential mortgages
that were in the pipeline prior to the announced exiting of the
business.
Total delinquencies 30 days or more past due were 0.13% of total
loans as of March 31, 2023, compared to 0.17% at December 31, 2022
and 0.03% as of March 31, 2022. The decrease in delinquencies
during the first quarter of 2023 was due primarily to a
construction loan that became current in the first quarter of 2023.
Nonperforming loans to total loans was 0.32% as of March 31, 2023,
compared to 0.22% at December 31, 2022 and 0.25% as of March 31,
2022. Nonperforming loans totaled $11.4 million at March 31, 2023,
up from $7.5 million at December 31, 2022. The increase was due
primarily to one commercial and industrial (“C&I”) credit with
a balance of $9.8 million that was moved to nonaccrual status late
in the quarter. The Company subsequently recognized a partial
charge-off of $4.7 million related to this loan due to negative
developments following quarter end.
The allowance for credit losses (“ACL”) as a percentage of total
loans was 1.02% as of March 31, 2023, compared to 0.91% as of
December 31, 2022 and 0.98% as of March 31, 2022. The increase in
the ACL reflects the day one Current Expected Credit Losses
(“CECL”) adjustment of $3.0 million, as well as overall growth in
the loan portfolio and changes in certain economic forecasts that
impacted quantitative factors for certain portfolios.
Net charge-offs were $5.0 million in the first quarter of 2023,
compared to net charge-offs of $0.2 million in the fourth quarter
2022. The increase was due almost wholly to the C&I
participation loan discussed above. Net charge-offs to average
loans totaled 57 bps in the first quarter.
The provision for loan losses in the first quarter was $7.2
million, compared to $2.1 million for the fourth quarter of 2022.
The increase in provision for the quarter reflects the partial
charge-off of the C&I participation loan discussed above as
well as growth in the loan portfolio and the impact of economic
forecasts on certain portfolios mentioned above.
Capital
As of March 31, 2023, total shareholders’ equity was $357.3
million, a decrease of $7.7 million, or 2.1%, compared to December
31, 2022, and a decrease of $17.4 million, or 4.6%, compared to
March 31, 2022. The decrease in shareholders’ equity during the
first quarter of 2023 was due primarily to stock repurchase
activity, the day one CECL adjustment and the net loss during the
quarter, partially offset by a decrease in accumulated other
comprehensive loss. Book value per common share was $39.95 as of
March 31, 2023, down from $40.26 as of December 31, 2022 and up
from $38.69 as of March 31, 2022. Tangible book value per share was
$39.43, down from $39.74 as of December 31, 2022 and up from $38.21
as of March 31, 2022.
In connection with its previously announced stock repurchase
program, the Company repurchased 161,691 shares of its common stock
during the first quarter of 2023 at an average price of $24.50 per
share. The Company has repurchased $36.2 million of stock under its
authorized programs to-date.
The following table presents the Company’s and the Bank’s
regulatory and other capital ratios as of March 31, 2023.
As of March 31, 2023
Company
Bank
Total shareholders' equity to assets
7.56%
9.32%
Tangible common equity to tangible assets
1
7.47%
9.23%
Tier 1 leverage ratio 2
8.14%
9.92%
Common equity tier 1 capital ratio 2
10.35%
12.63%
Tier 1 capital ratio 2
10.35%
12.63%
Total risk-based capital ratio 2
14.17%
13.62%
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 2:00 p.m.
Eastern Time on Thursday, April 27, 2023 to discuss its quarterly
financial results. The call can be accessed via telephone at (833)
470-1428; access code: 192191. A recorded replay can be accessed
through May 27, 2023 by dialing (866) 813-9403; access code:
451912.
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 financial holding company with
assets of $4.7 billion as of March 31, 2023. The Company’s
subsidiary, First Internet Bank, opened for business in 1999 as an
industry pioneer in the branchless delivery of banking services.
First Internet Bank provides consumer and small business deposit,
SBA financing, franchise finance, consumer loans, and specialty
finance services nationally as well as commercial real estate
loans, construction loans, commercial and industrial loans, and
treasury management services on a regional basis. 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 First
Internet Bank, including its products and services, is available at
www.firstib.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, including statements with respect to
the financial condition, results of operations, trends in lending
policies and loan programs, plans and prospective business
partnerships, objectives, future performance and business of the
Company. Forward-looking statements are generally identifiable by
the use of words such as “achieve,” “anticipate,” “believe,”
“build,” “continue,” “could,” “estimate,” “expect,” “growth,”
“help,” “improve,” “may,” “opportunities,” “pending,” “plan,”
“position,” “preliminary,” “remain,” “should,” “stabilize,”
“strategies,” “thereafter,” “well-positioned,” “will,” 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. Such statements are subject to certain
risks and uncertainties including: our business and operations and
the business and operations of our vendors and customers: general
economic conditions, whether national or regional, and conditions
in the lending markets in which we participate that may have an
adverse effect on the demand for our loans and other products; our
credit quality and related levels of nonperforming assets and loan
losses, and the value and salability of the real estate that is the
collateral for our loans. 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
and industrial, construction, SBA, and franchise finance loan
portfolios; competition with national, regional and community
financial institutions; the loss of any key members of senior
management; the anticipated impacts of inflation and rising
interest rates on the general economy; 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, adjusted total revenue, adjusted noninterest
income, adjusted noninterest expense, adjusted income before income
taxes, adjusted income tax (benefit) provision, adjusted net
income, adjusted diluted earnings per share, adjusted return on
average assets, adjusted return on average shareholders’ equity,
adjusted return on average tangible common equity and adjusted
effective income tax rate are used by the Company’s management to
measure the strength of its capital and analyze profitability,
including its ability to generate earnings on tangible capital
invested by its shareholders. Although management believes these
non-GAAP measures are useful to investors by providing a greater
understanding of its business, they should not be considered a
substitute for financial measures determined in accordance with
GAAP, nor are they necessarily comparable to non-GAAP performance
measures that may be presented by other companies. Reconciliations
of these non-GAAP financial measures to the most directly
comparable GAAP financial measures are included in the table at the
end of this release under the caption “Reconciliation of Non-GAAP
Financial Measures.”
First Internet Bancorp Summary Financial Information
(unaudited) Dollar amounts in thousands, except per share data
Three Months Ended March 31,
December 31, March 31,
2023
2022
2022
Net (loss) income
$
(1,305
)
$
6,351
$
11,209
Per share and share information (Loss) earnings per
share - basic
$
(0.14
)
$
0.68
$
1.14
(Loss) earnings per share - diluted
(0.14
)
0.68
1.14
Dividends declared per share
0.06
0.06
0.06
Book value per common share
39.95
40.26
38.69
Tangible book value per common share 1
39.43
39.74
38.21
Common shares outstanding
8,943,477
9,065,883
9,683,727
Average common shares outstanding: Basic
9,024,072
9,281,309
9,790,122
Diluted
9,051,890
9,343,533
9,870,394
Performance ratios Return on average assets
(0.11
%)
0.59
%
1.08
%
Return on average shareholders' equity
(1.46
%)
6.91
%
11.94
%
Return on average tangible common equity 1
(1.48
%)
7.00
%
12.09
%
Net interest margin
1.76
%
2.09
%
2.56
%
Net interest margin - FTE 1,2
1.89
%
2.22
%
2.69
%
Capital ratios 3 Total shareholders' equity to assets
7.56
%
8.03
%
8.87
%
Tangible common equity to tangible assets 1
7.47
%
7.94
%
8.77
%
Tier 1 leverage ratio
8.14
%
9.06
%
9.26
%
Common equity tier 1 capital ratio
10.35
%
10.93
%
13.16
%
Tier 1 capital ratio
10.35
%
10.93
%
13.16
%
Total risk-based capital ratio
14.17
%
14.75
%
17.62
%
Asset quality Nonperforming loans
$
11,432
$
7,529
$
7,084
Nonperforming assets
11,557
7,571
7,085
Nonperforming loans to loans
0.32
%
0.22
%
0.25
%
Nonperforming assets to total assets
0.24
%
0.17
%
0.17
%
Allowance for credit losses - loans to: Loans
1.02
%
0.91
%
0.98
%
Nonperforming loans
322.6
%
421.5
%
398.8
%
Net charge-offs to average loans
0.57
%
0.03
%
0.05
%
Average balance sheet information Loans
$
3,573,852
$
3,382,212
$
2,947,924
Total securities
585,270
578,608
648,728
Other earning assets
331,294
149,910
455,960
Total interest-earning assets
4,499,806
4,119,897
4,080,725
Total assets
4,647,175
4,263,246
4,214,918
Noninterest-bearing deposits
134,988
135,702
112,248
Interest-bearing deposits
3,411,969
3,041,022
3,071,420
Total deposits
3,546,957
3,176,724
3,183,668
Shareholders' equity
363,292
364,657
380,767
1 Refer to "Non-GAAP Financial Measures" section above and
"Reconciliation of Non-GAAP Financial Measures" below 2 On a
fully-taxable equivalent ("FTE") basis assuming a 21% tax rate 3
Regulatory capital ratios are preliminary pending filing of the
Company's regulatory reports
First Internet Bancorp
Condensed Consolidated Balance Sheets (unaudited, except for
December 31, 2022) Dollar amounts in thousands
March 31, December 31, March 31,
2023
2022
2022
Assets Cash and due from banks
$
27,741
$
17,426
$
20,976
Interest-bearing deposits
276,231
239,126
496,573
Securities available-for-sale, at fair value
395,833
390,384
465,288
Securities held-to-maturity, at amortized cost, net of allowance
for credit losses
210,761
189,168
163,370
Loans held-for-sale
18,144
21,511
33,991
Loans
3,609,454
3,499,401
2,880,780
Allowance for credit losses - loans
(36,879
)
(31,737
)
(28,251
)
Net loans
3,572,575
3,467,664
2,852,529
Accrued interest receivable
22,322
21,069
15,263
Federal Home Loan Bank of Indianapolis stock
28,350
28,350
25,219
Cash surrender value of bank-owned life insurance
40,105
39,859
39,133
Premises and equipment, net
74,248
72,711
68,632
Goodwill
4,687
4,687
4,687
Servicing asset
7,312
6,255
5,249
Other real estate owned
106
-
-
Accrued income and other assets
44,616
44,894
34,487
Total assets
$
4,723,031
$
4,543,104
$
4,225,397
Liabilities Noninterest-bearing deposits
$
140,449
$
175,315
$
119,196
Interest-bearing deposits
3,481,841
3,265,930
3,098,783
Total deposits
3,622,290
3,441,245
3,217,979
Advances from Federal Home Loan Bank
614,929
614,928
514,923
Subordinated debt
104,608
104,532
104,306
Accrued interest payable
2,592
2,913
1,532
Accrued expenses and other liabilities
21,328
14,512
12,002
Total liabilities
4,365,747
4,178,130
3,850,742
Shareholders' equity Voting common stock
189,202
192,935
214,473
Retained earnings
199,335
205,675
183,043
Accumulated other comprehensive loss
(31,253
)
(33,636
)
(22,861
)
Total shareholders' equity
357,284
364,974
374,655
Total liabilities and shareholders' equity
$
4,723,031
$
4,543,104
$
4,225,397
First Internet Bancorp Condensed Consolidated
Statements of Income (unaudited) Dollar amounts in thousands,
except per share data
Three Months Ended
March 31, December 31, March 31,
2023
2022
2022
Interest income Loans
$
43,843
$
40,354
$
33,188
Securities - taxable
3,606
3,222
2,221
Securities - non-taxable
798
699
249
Other earning assets
3,786
1,394
376
Total interest income
52,033
45,669
36,034
Interest expense Deposits
27,270
18,807
6,097
Other borrowed funds
5,189
5,193
4,187
Total interest expense
32,459
24,000
10,284
Net interest income
19,574
21,669
25,750
Provision for credit losses
7,204
2,109
791
Net interest income after provision for credit losses
12,370
19,560
24,959
Noninterest income Service charges and fees
209
226
316
Loan servicing revenue
785
715
585
Loan servicing asset revaluation
(55
)
(539
)
(297
)
Mortgage banking activities
76
1,010
1,873
Gain on sale of loans
4,061
2,862
3,845
Other
370
1,533
498
Total noninterest income
5,446
5,807
6,820
Noninterest expense Salaries and employee benefits
11,794
10,404
9,878
Marketing, advertising and promotion
844
837
756
Consulting and professional fees
926
914
1,925
Data processing
659
567
449
Loan expenses
1,977
1,018
1,582
Premises and equipment
2,777
2,921
2,540
Deposit insurance premium
543
355
281
Other
1,434
1,497
1,369
Total noninterest expense
20,954
18,513
18,780
(Loss) income before income taxes
(3,138
)
6,854
12,999
Income tax (benefit) provision
(1,833
)
503
1,790
Net (loss) income
$
(1,305
)
$
6,351
$
11,209
Per common share data (Loss) earnings per share -
basic
$
(0.14
)
$
0.68
$
1.14
(Loss) earnings per share - diluted
$
(0.14
)
$
0.68
$
1.14
Dividends declared per share
$
0.06
$
0.06
$
0.06
All periods presented have been reclassified to conform to
the current period classification
First Internet
Bancorp Average Balances and Rates (unaudited) Dollar
amounts in thousands
Three Months Ended
March 31, 2023 December 31, 2022 March 31,
2022 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
$
3,583,242
$
43,843
4.96
%
$
3,391,379
$
40,354
4.72
%
$
2,976,037
$
33,188
4.52
%
Securities - taxable
511,923
3,606
2.86
%
508,725
3,222
2.51
%
567,776
2,221
1.59
%
Securities - non-taxable
73,347
798
4.41
%
69,883
699
3.97
%
80,952
249
1.25
%
Other earning assets
331,294
3,786
4.63
%
149,910
1,394
3.69
%
455,960
376
0.33
%
Total interest-earning assets
4,499,806
52,033
4.69
%
4,119,897
45,669
4.40
%
4,080,725
36,034
3.58
%
Allowance for credit losses - loans
(35,075
)
(30,543
)
(27,974
)
Noninterest-earning assets
182,444
173,892
162,167
Total assets
$
4,647,175
$
4,263,246
$
4,214,918
Liabilities Interest-bearing liabilities
Interest-bearing demand deposits
$
333,642
$
900
1.09
%
$
326,102
$
628
0.76
%
$
318,281
$
412
0.52
%
Savings accounts
38,482
82
0.86
%
47,799
104
0.86
%
60,616
53
0.35
%
Money market accounts
1,377,600
12,300
3.62
%
1,441,583
10,508
2.89
%
1,454,436
1,503
0.42
%
BaaS - brokered deposits
14,741
138
3.80
%
4,563
13
1.13
%
12,111
6
0.20
%
Certificates and brokered deposits
1,647,504
13,850
3.41
%
1,220,975
7,554
2.45
%
1,225,976
4,123
1.36
%
Total interest-bearing deposits
3,411,969
27,270
3.24
%
3,041,022
18,807
2.45
%
3,071,420
6,097
0.81
%
Other borrowed funds
719,499
5,189
2.92
%
712,465
5,193
2.89
%
619,191
4,187
2.74
%
Total interest-bearing liabilities
4,131,468
32,459
3.19
%
3,753,487
24,000
2.54
%
3,690,611
10,284
1.13
%
Noninterest-bearing deposits
134,988
135,702
112,248
Other noninterest-bearing liabilities
17,427
9,400
31,292
Total liabilities
4,283,883
3,898,589
3,834,151
Shareholders' equity
363,292
364,657
380,767
Total liabilities and shareholders' equity
$
4,647,175
$
4,263,246
$
4,214,918
Net interest income
$
19,574
$
21,669
$
25,750
Interest rate spread
1.50
%
1.86
%
2.45
%
Net interest margin
1.76
%
2.09
%
2.56
%
Net interest margin - FTE 2,3
1.89
%
2.22
%
2.69
%
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
March 31, 2023 December 31, 2022
March 31, 2022 Amount Percent
Amount Percent Amount Percent
Commercial loans Commercial and industrial
$
115,410
3.2
%
$
126,108
3.6
%
$
99,808
3.5
%
Owner-occupied commercial real estate
59,643
1.7
%
61,836
1.8
%
56,752
2.0
%
Investor commercial real estate
142,174
3.9
%
93,121
2.7
%
34,627
1.2
%
Construction
158,147
4.4
%
181,966
5.2
%
149,662
5.2
%
Single tenant lease financing
952,533
26.3
%
939,240
26.8
%
852,519
29.6
%
Public finance
604,898
16.8
%
621,032
17.7
%
587,817
20.4
%
Healthcare finance
256,670
7.1
%
272,461
7.8
%
354,574
12.3
%
Small business lending
136,382
3.8
%
123,750
3.5
%
97,040
3.4
%
Franchise finance
382,161
10.6
%
299,835
8.6
%
107,246
3.7
%
Total commercial loans
2,808,018
77.8
%
2,719,349
77.7
%
2,340,045
81.3
%
Consumer loans Residential mortgage
392,062
10.9
%
383,948
11.0
%
191,153
6.6
%
Home equity
26,160
0.7
%
24,712
0.7
%
18,100
0.6
%
Trailers
172,640
4.8
%
167,326
4.8
%
148,870
5.2
%
Recreational vehicles
128,307
3.6
%
121,808
3.5
%
93,458
3.2
%
Other consumer loans
37,186
1.0
%
35,464
1.0
%
28,002
1.0
%
Tax refund advance loans
-
0.0
%
-
0.0
%
9,177
0.3
%
Total consumer loans
756,355
21.0
%
733,258
21.0
%
488,760
16.9
%
Net deferred loan fees, premiums, discounts and other 1
45,081
1.2
%
46,794
1.3
%
51,975
1.8
%
Total loans
$
3,609,454
100.0
%
$
3,499,401
100.0
%
$
2,880,780
100.0
%
March 31, 2023 December 31, 2022
March 31, 2022 Amount Percent
Amount Percent Amount Percent
Deposits Noninterest-bearing deposits
$
140,449
3.9
%
$
175,315
5.1
%
$
119,197
3.7
%
Interest-bearing demand deposits
351,641
9.7
%
335,611
9.8
%
334,723
10.4
%
Savings accounts
32,762
0.9
%
44,819
1.3
%
66,320
2.1
%
Money market accounts
1,254,013
34.6
%
1,418,599
41.2
%
1,475,857
45.8
%
BaaS - brokered deposits
25,725
0.7
%
13,607
0.4
%
50,006
1.6
%
Certificates of deposits
1,170,094
32.3
%
874,490
25.4
%
889,789
27.6
%
Brokered deposits
647,606
17.9
%
578,804
16.8
%
282,087
8.8
%
Total deposits
$
3,622,290
100.0
%
$
3,441,245
100.0
%
$
3,217,979
100.0
%
1 Includes carrying value adjustments of $31.5 million,
$32.5 million and $36.4 million related to terminated interest rate
swaps associated with public finance loans as of March 31, 2023,
December 31, 2022 and March 31, 2022, respectively.
First Internet Bancorp Reconciliation of Non-GAAP
Financial Measures Dollar amounts in thousands, except per
share data
Three Months Ended March
31, December 31, March 31,
2023
2022
2022
Total equity - GAAP
$
357,284
$
364,974
$
374,655
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
Tangible common equity
$
352,597
$
360,287
$
369,968
Total assets - GAAP
$
4,723,031
$
4,543,104
$
4,225,397
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
Tangible assets
$
4,718,344
$
4,538,417
$
4,220,710
Common shares outstanding
8,943,477
9,065,883
9,683,727
Book value per common share
$
39.95
$
40.26
$
38.69
Effect of goodwill
(0.52
)
(0.52
)
(0.48
)
Tangible book value per common share
$
39.43
$
39.74
$
38.21
Total shareholders' equity to assets
7.56
%
8.03
%
8.87
%
Effect of goodwill
(0.09
%)
(0.09
%)
(0.10
%)
Tangible common equity to tangible assets
7.47
%
7.94
%
8.77
%
Total average equity - GAAP
$
363,292
$
364,657
$
380,767
Adjustments: Average goodwill
(4,687
)
(4,687
)
(4,687
)
Average tangible common equity
$
358,605
$
359,970
$
376,080
Return on average shareholders' equity
(1.46
%)
6.91
%
11.94
%
Effect of goodwill
(0.02
%)
0.09
%
0.15
%
Return on average tangible common equity
(1.48
%)
7.00
%
12.09
%
Total interest income
$
52,033
$
45,669
$
36,034
Adjustments: Fully-taxable equivalent adjustments 1
1,383
1,384
1,314
Total interest income - FTE
$
53,416
$
47,053
$
37,348
Net interest income
$
19,574
$
21,669
$
25,750
Adjustments: Fully-taxable equivalent adjustments 1
1,383
1,384
1,314
Net interest income - FTE
$
20,957
$
23,053
$
27,064
Net interest margin
1.76
%
2.09
%
2.56
%
Effect of fully-taxable equivalent adjustments 1
0.13
%
0.13
%
0.13
%
Net interest margin - FTE
1.89
%
2.22
%
2.69
%
1 Assuming a 21% tax rate
First Internet
Bancorp Reconciliation of Non-GAAP Financial Measures
Dollar amounts in thousands, except per share data
Three Months Ended March 31, December
31, March 31,
2023
2022
2022
Total revenue - GAAP
$
25,020
$
27,476
$
32,570
Adjustments: Mortgage-related revenue
(65
)
-
-
Adjusted total revenue
$
24,955
$
27,476
$
32,570
Noninterest income - GAAP
$
5,446
$
5,807
$
6,820
Adjustments: Mortgage-related revenue
(65
)
-
-
Adjusted noninterest income
$
5,381
$
5,807
$
6,820
Noninterest expense - GAAP
$
20,954
$
18,513
$
18,780
Adjustments: Mortgage-related costs
(3,052
)
-
-
Acquisition-related expenses
-
-
(170
)
Nonrecurring consulting fee
-
-
(875
)
Adjusted noninterest expense
$
17,902
$
18,513
$
17,735
(Loss) income before income taxes - GAAP
$
(3,138
)
$
6,854
$
12,999
Adjustments:1 Mortgage-related revenue
(65
)
-
-
Mortgage-related costs
3,052
-
-
Acquisition-related expenses
-
-
170
Nonrecurring consulting fee
-
-
875
Partial charge-off of C&I participation loan
4,703
-
-
Adjusted income before income taxes
$
4,552
$
6,854
$
14,044
Income tax (benefit) provision - GAAP
$
(1,833
)
$
503
$
1,790
Adjustments:1 Mortgage-related revenue
(14
)
-
-
Mortgage-related costs
641
-
-
Acquisition-related expenses
-
-
36
Nonrecurring consulting fee
-
-
184
Partial charge-off of C&I participation loan
988
-
-
Adjusted income tax (benefit) provision
$
(218
)
$
503
$
2,010
Net (loss) income - GAAP
$
(1,305
)
$
6,351
$
11,209
Adjustments: Mortgage-related revenue
(51
)
-
-
Mortgage-related costs
2,411
-
-
Acquisition-related expenses
-
-
134
Nonrecurring consulting fee
-
-
691
Partial charge-off of C&I participation loan
3,715
-
-
Adjusted net income
$
4,770
$
6,351
$
12,034
1 Assuming a 21% tax rate
First Internet
Bancorp Reconciliation of Non-GAAP Financial Measures
Dollar amounts in thousands, except per share data
Three Months Ended March 31, December
31, March 31,
2023
2022
2022
Diluted average common shares outstanding
9,051,890
9,343,533
9,870,394
Diluted (loss) earnings per share - GAAP
$
(0.14
)
$
0.68
$
1.14
Adjustments: Effect of mortgage-related revenue
(0.01
)
-
-
Effect of mortgage-related costs
0.27
-
-
Effect of acquisition-related expenses
-
-
0.01
Effect of nonrecurring consulting fee
-
-
0.07
Effect of partial charge-off of C&I participation loan
0.41
-
-
Adjusted diluted (loss) earnings per share
$
0.53
$
0.68
$
1.22
Return on average assets
(0.11
%)
0.59
%
1.08
%
Effect of mortgage-related revenue
0.00
%
0.00
%
0.00
%
Effect of mortgage-related costs
0.21
%
0.00
%
0.00
%
Effect of acquisition-related expenses
0.00
%
0.00
%
0.01
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.07
%
Effect of partial charge-off of C&I participation loan
0.32
%
0.00
%
0.00
%
Adjusted return on average assets
0.42
%
0.59
%
1.16
%
Return on average shareholders' equity
(1.46
%)
6.91
%
11.94
%
Effect of mortgage-related revenue
(0.06
%)
0.00
%
0.00
%
Effect of mortgage-related costs
2.69
%
0.00
%
0.00
%
Effect of acquisition-related expenses
0.00
%
0.00
%
0.14
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.74
%
Effect of partial charge-off of C&I participation loan
4.15
%
0.00
%
0.00
%
Adjusted return on average shareholders' equity
5.32
%
6.91
%
12.82
%
Return on average tangible common equity
(1.48
%)
7.00
%
12.09
%
Effect of mortgage-related revenue
(0.06
%)
0.00
%
0.00
%
Effect of mortgage-related costs
2.73
%
0.00
%
0.00
%
Effect of acquisition-related expenses
0.00
%
0.00
%
0.14
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.75
%
Effect of partial charge-off of C&I participation loan
4.20
%
0.00
%
0.00
%
Adjusted return on average tangible common equity
5.39
%
7.00
%
12.98
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230424005810/en/
Investors/Analysts Paula Deemer
Director of Corporate Administration (317) 428-4628
investors@firstib.com
Media Nicole Lorch President &
Chief Operating Officer (317) 532-7906
nlorch@firstib.com Investors/Analysts
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