First Internet Bancorp (the “Company”) (Nasdaq: INBK), the
parent company of First Internet Bank (the “Bank”), announced today
financial and operational results for the second quarter ended June
30, 2023.
Second Quarter 2023 Financial
Highlights
- Net income of $3.9 million and diluted earnings per share of
$0.44
- Deposit growth of $232.0 million, a 6.4% increase from the
first quarter of 2023
- Loan growth of $39.6 million, a 1.1% increase from the first
quarter of 2023
- The loans to deposits ratio was 94.6%, compared to 99.6% in
the first quarter of 2023
- Net interest margin of 1.53% and fully-taxable equivalent
net interest margin of 1.64%, compared to 1.76% and 1.89%,
respectively, for the first quarter of 2023
- Nonperforming loans declined to 0.17% of total
loans
- Repurchased 203,000 common shares at an average price of
$13.52 per share
- Tangible common equity to tangible assets of 7.07%; CET1
ratio of 10.10%; tangible book value per share of $39.85, a
1.6% increase from the first quarter of 2023
“Following the events in the banking sector that occurred in
March, we responded quickly to further enhance our balance sheet
liquidity,” said David Becker, Chairman and Chief Executive
Officer. “These actions resulted in higher deposit costs and cash
balances, which impacted our earnings, but further solidified our
strong foundation. Moreover, credit measures improved during the
second quarter, asset quality overall remains sound, and our
capital position is strong, leaving us well-positioned for the road
ahead. At the same time, we continued to execute our strategy of
optimizing the loan portfolio composition through funding high
quality variable rate and higher yielding loans. New origination
yields continued to meaningfully improve during the quarter, and
our SBA team delivered strong results, setting the stage for us to
achieve stronger earnings and profitability as deposit costs
stabilize.”
Net Interest Income and Net Interest Margin
Net interest income for the second quarter of 2023 was $18.1
million, compared to $19.6 million for the first quarter of 2023,
and $25.7 million for the second quarter of 2022. On a
fully-taxable equivalent basis, net interest income for the second
quarter of 2023 was $19.5 million, compared to $21.0 million for
the first quarter of 2023, and $27.1 million for the second quarter
of 2022.
Total interest income for the second quarter of 2023 was $58.1
million, an increase of 11.7% compared to the first quarter of
2023, and an increase of 61.0% compared to the second quarter of
2022. On a fully-taxable equivalent basis, total interest income
for the second quarter of 2023 was $59.5 million, an increase of
11.3% compared to the first quarter of 2023 and an increase of
58.7% compared to the second 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 second quarter of 2023
increased to 4.89% from 4.69% for the first quarter of 2023 due
primarily to a 19 basis point (“bp”) increase in the average loan
yield, a 49 bp increase in the yield earned on other earning
assets, and a 7 bp increase in the yield earned on securities.
Compared to the linked quarter, average loan balances increased
$72.9 million, or 2.0%, while the average balance of other earning
assets increased $180.0 million, or 54.3%, and the average balance
of securities increased $18.9 million, or 3.2%.
Interest income earned on commercial loans was higher due to
increased average balances and the positive impact of higher rates
in the variable rate small business lending, construction and
investor commercial real estate portfolios, as well as growth and
higher yields on new originations in the franchise finance
portfolio. This was partially offset by lower average balances in
the healthcare finance and public finance portfolios.
In the consumer portfolio, interest income was up due to higher
yields on new originations and growth in the average balances of
the trailers, recreational vehicles and other consumer loans
portfolios. Additionally, the average balance in the residential
mortgage portfolio increased due to draws on existing
construction/perm loans.
The yield on funded portfolio originations was 8.42% in the
second quarter of 2023, an increase of 66 bps compared to the first
quarter of 2023, and an increase of 366 bps compared to the second
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 earning asset balances
increased $2.7 million, or 72.2%, during the quarter due to the
impact of higher short-term interest rates on cash balances as well
as a $180.0 million, or 60.0%, increase in average cash balances.
Furthermore, interest income earned on securities increased $0.3
million, or 6.6%, during the second quarter of 2023 due to an
increase in the yield earned on the portfolio and an increase in
average balances. The yield on the portfolio increased 7 bps to
3.12%, driven primarily by variable rate securities resetting
higher and higher yields on new purchases.
Total interest expense for the second quarter of 2023 was $40.0
million, an increase of $7.5 million, or 23.2%, 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
$7.4 million, or 27.2%, driven primarily by higher costs on CDs and
brokered deposits and, to a lesser extent, interest-bearing demand
deposits. The cost of interest-bearing deposits was 3.75% for the
second quarter, compared to 3.24% for the first quarter of 2023.
The pace of increase in deposit costs during the second quarter was
the slowest experienced by the Company in the past four
quarters.
Average CD balances increased $231.1 million, or 21.9%, while
the cost of funds increased 72 bps, as strong consumer and small
business demand resumed during the quarter. The average balance of
brokered deposits increased $147.3 million, or 24.9%, due in part
to funding early in the quarter to supplement on-balance sheet
liquidity, while the cost of funds increased 54 bps.
The average balance of BaaS deposits increased by $62.3 million,
or 137.3%, from the first quarter of 2023 and totaled $154.5
million at quarter-end as existing programs grew and other Fintech
programs were onboarded during the quarter.
Net interest margin (“NIM”) was 1.53% for the second quarter of
2023, down from 1.76% for the first quarter of 2023, and 2.60% for
the second quarter of 2022. Fully-taxable equivalent NIM (“FTE
NIM”) was 1.64% for the second quarter of 2023, down from 1.89% for
the first quarter of 2023, and 2.74% for the second 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. Additionally, given
the volatility in the banking industry over the last several
months, the Company carried higher cash balances during the
quarter, which were estimated to have negatively impacted NIM and
FTE NIM by 6 to 7 bps.
Noninterest Income
Noninterest income for the second quarter of 2023 was $5.9
million, up $0.4 million, or 7.8%, from the first quarter of 2023,
and up $1.6 million, or 36.1%, from the second quarter of 2022.
Gain on sale of loans totaled $4.9 million for the second quarter
of 2023, up $0.8 million, or 19.9%, 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 modestly higher net premiums. Net loan servicing revenue
declined $0.2 million during the quarter due to amortization and a
lower fair value adjustment to the loan servicing asset.
Noninterest Expense
Noninterest expense for the second quarter of 2023 was $18.7
million, down $2.3 million, or 10.9%, from the first quarter of
2023, and up $0.7 million, or 3.8%, from the second quarter of
2022. Excluding $3.1 million of mortgage operation and exit costs,
noninterest expense totaled $17.9 million for the first quarter of
2023. On a comparable basis, noninterest expense increased $0.8
million, or 4.3%, in the second quarter as compared to the adjusted
noninterest expense for the first quarter. Salaries and employee
benefits expense increased $1.1 million in the second quarter due
primarily to higher SBA incentive compensation driven by increased
origination activity. In addition, deposit insurance premiums
increased from the linked quarter due primarily to year-over-year
asset growth and changes in the composition of the loan and deposit
portfolios. These increases were partially offset by declines in
loan expenses, consulting and professional fees and data processing
expenses.
Income Taxes
The Company recognized an income tax benefit of $0.2 million for
the second quarter of 2023, compared to an income tax benefit of
$2.3 million for the first quarter of 2023, and an income tax
expense of $1.3 million and an effective tax rate of 11.8% for the
second quarter of 2022. The income tax benefit in the second
quarter of 2023 reflects the benefit of tax-exempt income relative
to the lower amount of stated pre-tax income.
Loans and Credit Quality
Total loans as of June 30, 2023 were $3.6 billion, an increase
of $39.6 million, or 1.1%, compared to March 31, 2023, and an
increase of $564.7 million, or 18.3%, compared to June 30, 2022.
Total commercial loan balances were $2.8 billion as of June 30,
2023, an increase of $25.2 million, or 0.9%, compared to March 31,
2023, and an increase of $393.3 million, or 16.1%, compared to June
30, 2022. Compared to the linked quarter, the increase in
commercial loan balances was driven primarily by growth in
construction and small business lending balances, as well as modest
growth in franchise finance balances. These items were partially
offset by decreases in the public finance and single tenant lease
financing portfolios as well as continued runoff in the healthcare
finance portfolio.
Total consumer loan balances were $772.7 million as of June 30,
2023, an increase of $16.3 million, or 2.2%, compared to March 31,
2023, and an increase of $178.6 million, or 30.1%, compared to June
30, 2022. The increase compared to the linked quarter was due
primarily to higher balances in the trailers, recreational vehicles
and other consumer loans portfolios, as well as draws on existing
residential mortgage construction/perm loans.
Total delinquencies 30 days or more past due were 0.09% of total
loans as of June 30, 2023, compared to 0.13% at March 31, 2023, and
0.06% as of June 30, 2022. Nonperforming loans to total loans was
0.17% as of June 30, 2023, compared to 0.26% at March 31, 2023, and
0.15% as of June 30, 2022. Nonperforming loans totaled $6.2 million
at June 30, 2023, down from $9.2 million at March 31, 2023. The
decrease was due primarily to the resolution of one C&I
participation loan that was placed on nonaccrual status in the
first quarter of 2023.
The allowance for credit losses (“ACL”) as a percentage of total
loans was 0.99% as of June 30, 2023, compared to 1.02% as of March
31, 2023, and 0.95% as of June 30, 2022. The decrease in the ACL
reflects the positive impact of economic data on forecasted loss
rates for certain portfolios.
Net charge-offs were $1.6 million in the second quarter of 2023,
compared to net charge-offs of $7.2 million in the first quarter of
2023. The linked quarter decline was due to the partial charge-off
of the aforementioned C&I participation loan in the first
quarter, which totaled $6.9 million. Net charge-offs in the second
quarter were driven primarily by small business lending, as well as
one franchise finance loan. As a result, net charge-offs to average
loans totaled 17 bps in the second quarter, down from 82 bps in the
first quarter.
The provision for credit losses in the second quarter was $1.7
million, compared to $9.4 million for the first quarter of 2023,
which included the charge-off of the C&I participation loan
mentioned above. The provision for the second quarter was driven
primarily by net charge-offs and an increase in the reserve for
unfunded commitments, partially offset by the positive impact of
economic forecasts on certain portfolios.
Capital
As of June 30, 2023, total shareholders’ equity was $354.3
million, a decrease of $1.2 million, or 0.3%, compared to March 31,
2023, and a decrease of $11.0 million, or 3.0%, compared to June
30, 2022. The decrease in shareholders’ equity during the second
quarter of 2023 was due primarily to stock repurchase activity and
an increase in accumulated other comprehensive loss, partially
offset by net income earned during the quarter. Book value per
common share was $40.38 as of June 30, 2023, up from $39.76 as of
March 31, 2023, and up from $38.85 as of June 30, 2022. Tangible
book value per share was $39.85, up from $39.23 as of March 31,
2023, and up from $38.35 as of June 30, 2022.
In connection with its previously announced stock repurchase
program, the Company repurchased 203,000 shares of its common stock
during the second quarter of 2023 at an average price of $13.52 per
share. The Company has repurchased $38.9 million of stock under its
authorized programs since November of 2021.
The following table presents the Company’s and the Bank’s
regulatory and other capital ratios as of June 30, 2023.
As of June 30, 2023
Company
Bank
Total shareholders' equity to assets
7.16%
8.86%
Tangible common equity to tangible assets
1
7.07%
8.77%
Tier 1 leverage ratio 2
7.63%
9.35%
Common equity tier 1 capital ratio 2
10.10%
12.39%
Tier 1 capital ratio 2
10.10%
12.39%
Total risk-based capital ratio 2
13.87%
13.37%
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, July 27, 2023 to discuss its quarterly
financial results. The call can be accessed via telephone at (888)
259-6580; access code: 24458732. A recorded replay can be accessed
through August 26, 2023 by dialing (877) 674-7070; access code:
458732.
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 $4.9 billion as of June 30, 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”. 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 “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “growth,” “help,” “may,”
“opportunities,” “pending,” “plan,” “position,” “preliminary,”
“remain,” “should,” “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 (loss) 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,
and adjusted return on average tangible common equity 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
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2023
2023
2022
2023
2022
Net income (loss)
$
3,882
$
(3,017
)
$
9,545
$
865
$
20,754
Per share and share information Earnings (loss) per
share - basic
$
0.44
$
(0.33
)
$
0.99
$
0.10
$
2.14
Earnings (loss) per share - diluted
0.44
(0.33
)
0.99
0.10
2.13
Dividends declared per share
0.06
0.06
0.06
0.12
0.12
Book value per common share
40.38
39.76
38.85
40.38
38.85
Tangible book value per common share 1
39.85
39.23
38.35
39.85
38.35
Common shares outstanding
8,774,507
8,943,477
9,404,000
8,774,507
9,404,000
Average common shares outstanding: Basic
8,903,213
9,024,072
9,600,383
8,963,308
9,694,729
Diluted
8,908,180
9,024,072
9,658,689
8,980,262
9,764,232
Performance ratios Return on average assets
0.32
%
(0.26
%)
0.93
%
0.04
%
1.01
%
Return on average shareholders' equity
4.35
%
(3.37
%)
10.23
%
0.48
%
11.09
%
Return on average tangible common equity 1
4.40
%
(3.41
%)
10.36
%
0.49
%
11.23
%
Net interest margin
1.53
%
1.76
%
2.60
%
1.64
%
2.58
%
Net interest margin - FTE 1,2
1.64
%
1.89
%
2.74
%
1.76
%
2.71
%
Capital ratios 3 Total shareholders' equity to assets
7.16
%
7.53
%
8.91
%
7.16
%
8.91
%
Tangible common equity to tangible assets 1
7.07
%
7.44
%
8.81
%
7.07
%
8.81
%
Tier 1 leverage ratio
7.63
%
8.10
%
9.45
%
7.63
%
9.45
%
Common equity tier 1 capital ratio
10.10
%
10.30
%
12.46
%
10.10
%
12.46
%
Tier 1 capital ratio
10.10
%
10.30
%
12.46
%
10.10
%
12.46
%
Total risk-based capital ratio
13.87
%
14.13
%
16.74
%
13.87
%
16.74
%
Asset quality Nonperforming loans
$
6,227
$
9,221
$
4,527
$
6,227
$
4,527
Nonperforming assets
6,397
9,346
4,550
6,397
4,550
Nonperforming loans to loans
0.17
%
0.26
%
0.15
%
0.17
%
0.15
%
Nonperforming assets to total assets
0.13
%
0.20
%
0.11
%
0.13
%
0.11
%
Allowance for credit losses - loans to: Loans
0.99
%
1.02
%
0.95
%
0.99
%
0.95
%
Nonperforming loans
579.1
%
400.0
%
644.0
%
579.1
%
644.0
%
Net charge-offs to average loans
0.17
%
0.82
%
0.04
%
0.49
%
0.05
%
Average balance sheet information Loans
$
3,653,839
$
3,573,827
$
2,998,144
$
3,614,054
$
2,973,173
Total securities
604,182
585,270
620,396
594,777
634,485
Other earning assets
511,295
331,294
322,302
421,793
388,760
Total interest-earning assets
4,771,623
4,499,782
3,962,589
4,636,453
4,021,330
Total assets
4,927,712
4,647,156
4,097,865
4,788,209
4,156,068
Noninterest-bearing deposits
117,496
134,988
108,980
126,194
110,605
Interest-bearing deposits
3,713,086
3,411,969
3,018,422
3,563,359
3,044,775
Total deposits
3,830,582
3,546,957
3,127,402
3,689,553
3,155,380
Shareholders' equity
358,312
363,273
374,274
360,779
377,504
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) Dollar
amounts in thousands
June 30,
March 31,
June 30,
2023
2023
2022
Assets Cash and due from banks
$
9,503
$
27,741
$
6,155
Interest-bearing deposits
456,128
276,231
201,798
Securities available-for-sale, at fair value
379,394
395,833
425,489
Securities held-to-maturity, at amortized cost, net of allowance
for credit losses
230,605
210,761
185,113
Loans held-for-sale
32,001
18,144
31,580
Loans
3,646,832
3,607,242
3,082,127
Allowance for credit losses - loans
(36,058
)
(36,879
)
(29,153
)
Net loans
3,610,774
3,570,363
3,052,974
Accrued interest receivable
24,101
22,322
17,466
Federal Home Loan Bank of Indianapolis stock
28,350
28,350
25,219
Cash surrender value of bank-owned life insurance
40,357
40,105
39,369
Premises and equipment, net
73,525
74,248
70,288
Goodwill
4,687
4,687
4,687
Servicing asset
8,252
7,312
5,345
Other real estate owned
106
106
-
Accrued income and other assets
49,266
45,116
34,323
Total assets
$
4,947,049
$
4,721,319
$
4,099,806
Liabilities Noninterest-bearing deposits
$
119,291
$
140,449
$
126,153
Interest-bearing deposits
3,735,017
3,481,841
3,025,948
Total deposits
3,854,308
3,622,290
3,152,101
Advances from Federal Home Loan Bank
614,931
614,929
464,925
Subordinated debt
104,684
104,608
104,381
Accrued interest payable
3,338
2,592
2,005
Accrued expenses and other liabilities
15,456
21,328
11,062
Total liabilities
4,592,717
4,365,747
3,734,474
Shareholders' equity Voting common stock
186,545
189,202
204,071
Retained earnings
200,973
197,623
192,011
Accumulated other comprehensive loss
(33,186
)
(31,253
)
(30,750
)
Total shareholders' equity
354,332
355,572
365,332
Total liabilities and shareholders' equity
$
4,947,049
$
4,721,319
$
4,099,806
First Internet Bancorp Condensed Consolidated Statements
of Income (unaudited) Dollar amounts in thousands, except per
share data
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2023
2023
2022
2023
2022
Interest income Loans
$
46,906
$
43,843
$
32,415
$
90,749
$
65,603
Securities - taxable
3,835
3,606
2,567
7,441
4,788
Securities - non-taxable
860
798
328
1,658
577
Other earning assets
6,521
3,786
796
10,307
1,172
Total interest income
58,122
52,033
36,106
110,155
72,140
Interest expense Deposits
34,676
27,270
6,408
61,946
12,505
Other borrowed funds
5,301
5,189
4,018
10,490
8,205
Total interest expense
39,977
32,459
10,426
72,436
20,710
Net interest income
18,145
19,574
25,680
37,719
51,430
Provision for credit losses
1,698
9,415
1,185
11,113
1,976
Net interest income after provision for credit losses
16,447
10,159
24,495
26,606
49,454
Noninterest income Service charges and fees
218
209
281
427
597
Loan servicing revenue
850
785
620
1,635
1,205
Loan servicing asset revaluation
(358
)
(55
)
(470
)
(413
)
(767
)
Mortgage banking activities
-
76
1,710
76
3,583
Gain on sale of loans
4,868
4,061
1,952
8,929
5,797
Other
293
370
221
663
719
Total noninterest income
5,871
5,446
4,314
11,317
11,134
Noninterest expense Salaries and employee benefits
10,706
11,794
10,832
22,500
20,710
Marketing, advertising and promotion
705
844
920
1,549
1,676
Consulting and professional fees
711
926
1,197
1,637
3,122
Data processing
520
659
490
1,179
939
Loan expenses
1,072
1,977
693
3,049
2,275
Premises and equipment
2,661
2,777
2,419
5,438
4,959
Deposit insurance premium
936
543
287
1,479
568
Other
1,359
1,434
1,147
2,793
2,516
Total noninterest expense
18,670
20,954
17,985
39,624
36,765
Income (loss) before income taxes
3,648
(5,349
)
10,824
(1,701
)
23,823
Income tax (benefit) provision
(234
)
(2,332
)
1,279
(2,566
)
3,069
Net income (loss)
$
3,882
$
(3,017
)
$
9,545
$
865
$
20,754
Per common share data Earnings (loss) per share -
basic
$
0.44
$
(0.33
)
$
0.99
$
0.10
$
2.14
Earnings (loss) per share - diluted
$
0.44
$
(0.33
)
$
0.99
$
0.10
$
2.13
Dividends declared per share
$
0.06
$
0.06
$
0.06
$
0.12
$
0.12
All periods presented have been reclassified to conform to
the current period classification
First Internet Bancorp
Average Balances and Rates (unaudited) Dollar amounts in
thousands
Three Months Ended June 30,
2023 March 31, 2023 June 30, 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
$
3,656,146
$
46,906
5.15
%
$
3,583,218
$
43,843
4.96
%
$
3,019,891
$
32,415
4.31
%
Securities - taxable
531,040
3,835
2.90
%
511,923
3,606
2.86
%
543,422
2,567
1.89
%
Securities - non-taxable
73,142
860
4.72
%
73,347
798
4.41
%
76,974
328
1.71
%
Other earning assets
511,295
6,521
5.12
%
331,294
3,786
4.63
%
322,302
796
0.99
%
Total interest-earning assets
4,771,623
58,122
4.89
%
4,499,782
52,033
4.69
%
3,962,589
36,106
3.65
%
Allowance for credit losses - loans
(36,671
)
(35,075
)
(28,599
)
Noninterest-earning assets
192,760
182,449
163,875
Total assets
$
4,927,712
$
4,647,156
$
4,097,865
Liabilities Interest-bearing liabilities
Interest-bearing demand deposits
$
359,969
$
1,509
1.68
%
$
333,642
$
900
1.09
%
$
348,274
$
466
0.54
%
Savings accounts
29,915
64
0.86
%
38,482
82
0.86
%
66,657
68
0.41
%
Money market accounts
1,274,453
12,314
3.88
%
1,377,600
12,300
3.62
%
1,427,665
1,921
0.54
%
BaaS - brokered deposits
22,918
230
4.03
%
14,741
138
3.80
%
71,234
154
0.87
%
Certificates and brokered deposits
2,025,831
20,559
4.07
%
1,647,504
13,850
3.41
%
1,104,592
3,799
1.38
%
Total interest-bearing deposits
3,713,086
34,676
3.75
%
3,411,969
27,270
3.24
%
3,018,422
6,408
0.85
%
Other borrowed funds
719,577
5,301
2.95
%
719,499
5,189
2.92
%
583,553
4,018
2.76
%
Total interest-bearing liabilities
4,432,663
39,977
3.62
%
4,131,468
32,459
3.19
%
3,601,975
10,426
1.16
%
Noninterest-bearing deposits
117,496
134,988
108,980
Other noninterest-bearing liabilities
19,241
17,427
12,636
Total liabilities
4,569,400
4,283,883
3,723,591
Shareholders' equity
358,312
363,273
374,274
Total liabilities and shareholders' equity
$
4,927,712
$
4,647,156
$
4,097,865
Net interest income
$
18,145
$
19,574
$
25,680
Interest rate spread
1.27
%
1.50
%
2.49
%
Net interest margin
1.53
%
1.76
%
2.60
%
Net interest margin - FTE 2,3
1.64
%
1.89
%
2.74
%
1 Includes nonaccrual loans 2 On a fully-taxable equivalent
("FTE") basis assuming a 21% tax rate 3 Refer to "Non-GAAP
Financial Measures" section above and "Reconciliation of Non-GAAP
Financial Measures" below
First Internet Bancorp Average
Balances and Rates (unaudited) Dollar amounts in thousands
Six Months Ended June 30, 2023 June
30, 2022 Average Interest / Yield /
Average Interest / Yield / Balance
Dividends Cost Balance Dividends
Cost Assets Interest-earning assets Loans,
including loans held-for-sale 1
$
3,619,883
$
90,749
5.06
%
$
2,998,085
$
65,603
4.41
%
Securities - taxable
521,533
7,441
2.88
%
555,533
4,788
1.74
%
Securities - non-taxable
73,244
1,658
4.56
%
78,952
577
1.47
%
Other earning assets
421,793
10,307
4.93
%
388,760
1,172
0.61
%
Total interest-earning assets
4,636,453
110,155
4.79
%
4,021,330
72,140
3.62
%
-
Allowance for loan losses
(35,877
)
(28,288
)
Noninterest-earning assets
187,633
163,026
Total assets
$
4,788,209
$
4,156,068
Liabilities Interest-bearing liabilities
Interest-bearing demand deposits
$
346,878
$
2,409
1.40
%
$
333,361
$
878
0.53
%
Savings accounts
34,175
145
0.86
%
63,653
121
0.38
%
Money market accounts
1,325,741
24,614
3.74
%
1,440,976
3,425
0.48
%
BaaS - brokered deposits
18,852
368
3.94
%
41,836
160
0.77
%
Certificates and brokered deposits
1,837,713
34,410
3.78
%
1,164,949
7,921
1.37
%
Total interest-bearing deposits
3,563,359
61,946
3.51
%
3,044,775
12,505
0.83
%
Other borrowed funds
719,538
10,490
2.94
%
601,274
8,205
2.75
%
Total interest-bearing liabilities
4,282,897
72,436
3.41
%
3,646,049
20,710
1.15
%
Noninterest-bearing deposits
126,194
110,605
Other noninterest-bearing liabilities
18,339
21,910
Total liabilities
4,427,430
3,778,564
Shareholders' equity
360,779
377,504
Total liabilities and shareholders' equity
$
4,788,209
$
4,156,068
Net interest income
$
37,719
$
51,430
Interest rate spread
1.38
%
2.47
%
Net interest margin
1.64
%
2.58
%
Net interest margin - FTE 2,3
1.76
%
2.71
%
1 Includes nonaccrual loans 2 On a fully-taxable equivalent
("FTE") basis assuming a 21% tax rate 3 Refer to "Non-GAAP
Financial Measures" section above and "Reconciliation of Non-GAAP
Financial Measures" below
First Internet Bancorp Loans
and Deposits (unaudited) Dollar amounts in thousands
June 30, 2023 March 31, 2023 June 30, 2022
Amount Percent Amount Percent
Amount Percent Commercial loans
Commercial and industrial
$
112,423
3.1
%
$
113,198
3.1
%
$
110,540
3.6
%
Owner-occupied commercial real estate
59,564
1.6
%
59,643
1.7
%
61,277
2.0
%
Investor commercial real estate
137,504
3.8
%
142,174
3.9
%
52,648
1.7
%
Construction
192,453
5.3
%
158,147
4.4
%
143,475
4.7
%
Single tenant lease financing
947,466
25.9
%
952,533
26.4
%
867,181
28.1
%
Public finance
575,541
15.8
%
604,898
16.8
%
613,759
19.9
%
Healthcare finance
245,072
6.7
%
256,670
7.1
%
317,180
10.3
%
Small business lending
170,550
4.7
%
136,382
3.8
%
102,724
3.3
%
Franchise finance
390,479
10.6
%
382,161
10.6
%
168,942
5.5
%
Total commercial loans
2,831,052
77.5
%
2,805,806
77.8
%
2,437,726
79.1
%
Consumer loans Residential mortgage
396,154
10.9
%
392,062
10.9
%
281,124
9.1
%
Home equity
24,375
0.7
%
26,160
0.7
%
19,928
0.6
%
Trailers
178,035
4.9
%
172,640
4.8
%
154,555
5.0
%
Recreational vehicles
133,283
3.7
%
128,307
3.6
%
105,876
3.4
%
Other consumer loans
40,806
1.1
%
37,186
1.0
%
32,524
1.2
%
Total consumer loans
772,653
21.3
%
756,355
21.0
%
594,007
19.3
%
Net deferred loan fees, premiums, discounts and other 1
43,127
1.2
%
45,081
1.2
%
50,394
1.6
%
Total loans
$
3,646,832
100.0
%
$
3,607,242
100.0
%
$
3,082,127
100.0
%
June 30, 2023 March 31, 2023 June
30, 2022 Amount Percent Amount
Percent Amount Percent Deposits
Noninterest-bearing deposits
$
119,291
3.1
%
$
140,449
3.9
%
$
126,153
4.0
%
Interest-bearing demand deposits
398,899
10.3
%
351,641
9.7
%
350,551
11.1
%
Savings accounts
28,239
0.7
%
32,762
0.9
%
65,365
2.1
%
Money market accounts
1,232,719
32.0
%
1,254,013
34.6
%
1,363,424
43.3
%
BaaS - brokered deposits
25,549
0.7
%
25,725
0.7
%
194,133
6.2
%
Certificates of deposits
1,366,409
35.5
%
1,170,094
32.3
%
800,598
25.3
%
Brokered deposits
683,202
17.7
%
647,606
17.9
%
251,877
8.0
%
Total deposits
$
3,854,308
100.0
%
$
3,622,290
100.0
%
$
3,152,101
100.0
%
1 Includes carrying value adjustments of $30.5 million,
$31.5 million and $35.4 million related to terminated interest rate
swaps associated with public finance loans as of June 30, 2023,
March 31, 2023 and June 30, 2022, respectively.
First Internet
Bancorp Reconciliation of Non-GAAP Financial Measures
Dollar amounts in thousands, except per share data
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2023
2023
2022
2023
2022
Total equity - GAAP
$
354,332
$
355,572
$
365,332
$
354,332
$
365,332
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible common equity
$
349,645
$
350,885
$
360,645
$
349,645
$
360,645
Total assets - GAAP
$
4,947,049
$
4,721,319
$
4,099,806
$
4,947,049
$
4,099,806
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible assets
$
4,942,362
$
4,716,632
$
4,095,119
$
4,942,362
$
4,095,119
Common shares outstanding
8,774,507
8,943,477
9,404,000
8,774,507
9,404,000
Book value per common share
$
40.38
$
39.76
$
38.85
$
40.38
$
38.85
Effect of goodwill
(0.53
)
(0.53
)
(0.50
)
(0.53
)
(0.50
)
Tangible book value per common share
$
39.85
$
39.23
$
38.35
$
39.85
$
38.35
Total shareholders' equity to assets
7.16
%
7.53
%
8.91
%
7.16
%
8.91
%
Effect of goodwill
(0.09
%)
(0.09
%)
(0.10
%)
(0.09
%)
(0.10
%)
Tangible common equity to tangible assets
7.07
%
7.44
%
8.81
%
7.07
%
8.81
%
Total average equity - GAAP
$
358,312
$
363,273
$
374,274
$
360,779
$
377,504
Adjustments: Average goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Average tangible common equity
$
353,625
$
358,586
$
369,587
$
356,092
$
372,817
Return on average shareholders' equity
4.35
%
(3.37
%)
10.23
%
0.48
%
11.09
%
Effect of goodwill
0.05
%
(0.04
%)
0.13
%
0.01
%
0.14
%
Return on average tangible common equity
4.40
%
(3.41
%)
10.36
%
0.49
%
11.23
%
Total interest income
$
58,122
$
52,033
$
36,106
$
110,155
$
72,140
Adjustments: Fully-taxable equivalent adjustments 1
1,347
1,383
1,377
2,731
2,691
Total interest income - FTE
$
59,469
$
53,416
$
37,483
$
112,886
$
74,831
Net interest income
$
18,145
$
19,574
$
25,680
$
37,719
$
51,430
Adjustments: Fully-taxable equivalent adjustments 1
1,347
1,383
1,377
2,731
2,691
Net interest income - FTE
$
19,492
$
20,957
$
27,057
$
40,450
$
54,121
Net interest margin
1.53
%
1.76
%
2.60
%
1.64
%
2.58
%
Effect of fully-taxable equivalent adjustments 1
0.11
%
0.13
%
0.14
%
0.12
%
0.13
%
Net interest margin - FTE
1.64
%
1.89
%
2.74
%
1.76
%
2.71
%
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
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2023
2023
2022
2023
2022
Total revenue - GAAP
$
24,016
$
25,020
$
29,994
$
49,036
$
62,564
Adjustments: Mortgage-related revenue
-
(65
)
-
-
-
Adjusted total revenue
$
24,016
$
24,955
$
29,994
$
49,036
$
62,564
Noninterest income - GAAP
$
5,871
$
5,446
$
4,314
$
11,317
$
11,134
Adjustments: Mortgage-related revenue
-
(65
)
-
(65
)
-
Adjusted noninterest income
$
5,871
$
5,381
$
4,314
$
11,252
$
11,134
Noninterest expense - GAAP
$
18,670
$
20,954
$
17,985
$
39,624
$
36,765
Adjustments: Mortgage-related costs
-
(3,052
)
-
(3,052
)
-
Acquisition-related expenses
-
-
(103
)
-
(273
)
Nonrecurring consulting fee
-
-
-
-
(875
)
Discretionary inflation bonus
-
-
(531
)
-
(531
)
Accelerated equity compensation
-
-
(289
)
-
(289
)
Adjusted noninterest expense
$
18,670
$
17,902
$
17,062
$
36,572
$
34,797
Income (loss) before income taxes - GAAP
$
3,648
$
(5,349
)
$
10,824
$
(1,701
)
$
23,823
Adjustments:1 Mortgage-related revenue
-
(65
)
-
(65
)
-
Mortgage-related costs
-
3,052
-
3,052
-
Partial charge-off of C&I participation loan
-
6,914
-
6,914
-
Acquisition-related expenses
-
-
103
-
273
Nonrecurring consulting fee
-
-
-
-
875
Discretionary inflation bonus
-
-
531
-
531
Accelerated equity compensation
-
-
289
-
289
Adjusted income (loss) before income taxes
$
3,648
$
4,552
$
11,747
$
8,200
$
25,791
Income tax (benefit) provision - GAAP
$
(234
)
$
(2,332
)
$
1,279
$
(2,566
)
$
3,069
Adjustments:1 Mortgage-related revenue
-
(14
)
-
(14
)
-
Mortgage-related costs
-
641
-
641
-
Partial charge-off of C&I participation loan
-
1,452
-
1,452
-
Acquisition-related expenses
-
-
21
-
57
Nonrecurring consulting fee
-
-
-
-
184
Discretionary inflation bonus
-
-
112
-
112
Accelerated equity compensation
-
-
61
-
61
Adjusted income tax (benefit) provision
$
(234
)
$
(253
)
$
1,473
$
(487
)
$
3,483
Net income (loss) - GAAP
$
3,882
$
(3,017
)
$
9,545
$
865
$
20,754
Adjustments: Mortgage-related revenue
-
(51
)
-
(51
)
-
Mortgage-related costs
-
2,411
-
2,411
-
Partial charge-off of C&I participation loan
-
5,462
-
5,462
-
Acquisition-related expenses
-
-
82
-
216
Nonrecurring consulting fee
-
-
-
-
691
Discretionary inflation bonus
-
-
419
-
419
Accelerated equity compensation
-
-
228
-
228
Adjusted net income
$
3,882
$
4,805
$
10,274
$
8,687
$
22,308
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
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2023
2023
2022
2023
2022
Diluted average common shares outstanding
8,908,180
9,024,072
9,658,689
8,980,262
9,764,232
Diluted earnings (loss) per share - GAAP
$
0.44
$
(0.33
)
$
0.99
$
0.10
$
2.13
Adjustments: Effect of mortgage-related revenue
-
(0.01
)
-
(0.01
)
-
Effect of mortgage-related costs
-
0.27
-
0.27
-
Effect of partial charge-off of C&I participation loan
-
0.60
-
0.61
-
Effect of acquisition-related expenses
-
-
0.01
-
0.02
Effect of nonrecurring consulting fee
-
-
-
-
0.07
Effect of discretionary inflation
-
-
0.04
-
0.04
Effect of accelerated equity compensation
-
0.02
-
0.02
Adjusted diluted earnings (loss) per share
$
0.44
$
0.53
$
1.06
$
0.97
$
2.28
Return on average assets
0.32
%
(0.26
%)
0.93
%
0.04
%
1.01
%
Effect of mortgage-related revenue
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Effect of mortgage-related costs
0.00
%
0.21
%
0.00
%
0.10
%
0.00
%
Effect of partial charge-off of C&I participation loan
0.00
%
0.48
%
0.00
%
0.23
%
0.00
%
Effect of acquisition-related expenses
0.00
%
0.00
%
0.01
%
0.00
%
0.01
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.00
%
0.00
%
0.03
%
Effect of discretionary inflation
0.00
%
0.00
%
0.04
%
0.00
%
0.02
%
Effect of accelerated equity compensation
0.00
%
0.00
%
0.02
%
0.00
%
0.01
%
Adjusted return on average assets
0.32
%
0.43
%
1.00
%
0.37
%
1.08
%
Return on average shareholders' equity
4.35
%
(3.37
%)
10.23
%
0.48
%
11.09
%
Effect of mortgage-related revenue
0.00
%
(0.06
%)
0.00
%
(0.03
%)
0.00
%
Effect of mortgage-related costs
0.00
%
2.69
%
0.00
%
1.35
%
0.00
%
Effect of partial charge-off of C&I participation loan
0.00
%
6.10
%
0.00
%
3.05
%
0.00
%
Effect of acquisition-related expenses
0.00
%
0.00
%
0.09
%
0.00
%
0.12
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.00
%
0.00
%
0.37
%
Effect of discretionary inflation
0.00
%
0.00
%
0.45
%
0.00
%
0.22
%
Effect of accelerated equity compensation
0.00
%
0.00
%
0.24
%
0.00
%
0.12
%
Adjusted return on average shareholders' equity
4.35
%
5.36
%
11.01
%
4.85
%
11.92
%
Return on average tangible common equity
4.40
%
(3.41
%)
10.36
%
0.49
%
11.23
%
Effect of mortgage-related revenue
0.00
%
(0.06
%)
0.00
%
(0.03
%)
0.00
%
Effect of mortgage-related costs
0.00
%
2.73
%
0.00
%
1.37
%
0.00
%
Effect of partial charge-off of C&I participation loan
0.00
%
6.18
%
0.00
%
3.09
%
0.00
%
Effect of acquisition-related expenses
0.00
%
0.00
%
0.09
%
0.00
%
0.12
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.00
%
0.00
%
0.37
%
Effect of discretionary inflation
0.00
%
0.00
%
0.45
%
0.00
%
0.23
%
Effect of accelerated equity compensation
0.00
%
0.00
%
0.25
%
0.00
%
0.12
%
Adjusted return on average tangible common equity
4.40
%
5.44
%
11.15
%
4.92
%
12.07
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230724720099/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
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