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 ended
September 30, 2023.
Third Quarter 2023 Financial
Highlights
- Net income of $3.4 million and diluted earnings per share of
$0.39
- Deposit growth of $229.2 million, a 5.9% increase from the
second quarter of 2023
- Loan growth of $88.2 million, a 2.4% increase from the
second quarter of 2023
- The loans to deposits ratio was 91.5%, compared to 94.6% at
the prior quarter-end
- Net interest margin of 1.39% and fully-taxable equivalent
net interest margin of 1.49%, compared to 1.53% and 1.64%,
respectively, for the second quarter of 2023
- Nonperforming loans declined to 0.16% of total
loans
- Repurchased 97,834 common shares at an average price of
$18.29 per share
- Tangible common equity to tangible assets of 6.64%; CET1
ratio of 9.59%
- Tangible book value per share of $39.57, compared to $39.85
at the prior quarter-end
“We experienced strong deposit growth and bolstered our balance
sheet liquidity during the third quarter,” said David Becker,
Chairman and Chief Executive Officer. “At the same time, we further
optimized our loan portfolio composition and overall balance sheet
mix as new origination yields continued to improve while the pace
of deposit cost increases and the compression in our net interest
margin was the slowest it has been in five quarters.
“Growth in noninterest income was fueled by our SBA lending
team, which delivered another strong quarter with gain on sale
revenue up 14% from the prior quarter. We ended the SBA fiscal year
among the top ten most active lenders. I am proud of the continued
success of this team.
“Amidst economic and geopolitical uncertainty, our stalwart
foundation remains intact. Overall asset quality is sound. Our
capital position is strong. Our teams are focused. We believe we
are well-positioned to improve our earnings and profitability
profile as funding costs stabilize.”
Net Interest Income and Net Interest Margin
Net interest income for the third quarter of 2023 was $17.4
million, compared to $18.1 million for the second quarter of 2023,
and $24.0 million for the third quarter of 2022. On a fully-taxable
equivalent basis, net interest income for the third quarter of 2023
was $18.6 million, compared to $19.5 million for the second quarter
of 2023, and $25.3 million for the third quarter of 2022.
Total interest income for the third quarter of 2023 was $63.0
million, an increase of 8.4% compared to the second quarter of
2023, and an increase of 61.2% compared to the third quarter of
2022. On a fully-taxable equivalent basis, total interest income
for the third quarter of 2023 was $64.3 million, an increase of
8.1% compared to the second quarter of 2023, and an increase of
59.2% compared to the third quarter of 2022. The yield on average
interest-earning assets for the third quarter of 2023 increased to
5.02% from 4.89% for the second quarter of 2023 due to a 29 basis
point (“bp”) increase in the yield earned on other earning assets,
a 9 bp increase in the yield earned on loans, and a 20 bp increase
in the yield earned on securities. Compared to the linked quarter,
the average balance of other earning assets increased $142.1
million, or 27.8%, while average loan balances increased $44.9
million, or 1.2%, and the average balance of securities increased
$18.0 million, or 3.0%.
Interest income earned on commercial loans was higher due to
increased average balances and the positive impact of higher rates
in the variable rate construction and small business lending
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 public finance, healthcare finance,
single tenant lease financing and investor commercial real estate
portfolios. The shift in loan mix is the result of a strategic
initiative to focus on variable rate and higher-yielding products
during a historic period of rapidly rising rates.
In the consumer loan portfolio, interest income was up due to
higher yields on new originations and growth in the average
balances of trailers, recreational vehicles and other consumer
loans portfolios.
The yield on funded portfolio loan originations was 8.92% in the
third quarter of 2023, an increase of 50 bps compared to the second
quarter of 2023, and an increase of 362 bps compared to the third
quarter of 2022. Because certain larger portfolios consist of
longer duration, fixed rate loans, new origination yields have a
gradual effect on the overall loan portfolio.
Interest earned on cash and other earning asset balances
increased $2.4 million, or 36.5%, during the quarter due to the
impact of higher short-term interest rates on cash balances as well
as a $142.1 million, or 29.6%, increase in average cash balances.
Furthermore, interest income earned on securities increased $0.5
million, or 11.0%, during the third quarter of 2023 due to an
increase in the yield earned on the portfolio and an increase in
average balances. The yield on the securities portfolio increased
20 bps to 3.32%, driven primarily by variable rate securities
repricing higher and increased yields on new purchases.
Total interest expense for the third quarter of 2023 was $45.6
million, an increase of $5.7 million, or 14.2%, compared to the
linked quarter, due to increases in both deposit rates and average
interest-bearing deposit balances throughout the quarter. Interest
expense related to interest-bearing deposits increased $5.7
million, or 16.3%, driven primarily by higher costs on CDs,
interest-bearing demand deposits and money market accounts. The
cost of interest-bearing deposits was 4.09% for the third quarter
of 2023, compared to 3.75% for the second quarter of 2023. The pace
of increase in deposit costs during the third quarter was the
slowest experienced by the Company in the past five quarters.
Average CD balances increased $273.1 million, or 21.2%, while
the cost of funds increased 53 bps. Early in the quarter, the
Company strategically bolstered its liquidity position ahead of the
anticipated Fed Funds rate increase in late July. The average
balance of interest-bearing demand deposits increased $27.5
million, or 7.7%, due to higher average Banking-as-a-Service
balances, while the cost of funds increased 50 bps.
These increases were partially offset by lower average brokered
deposit balances, which decreased $63.6 million, or 8.6%, from the
second quarter of 2023, as the Company reduced the balance of
higher cost brokered funding over the last two quarters.
Net interest margin (“NIM”) was 1.39% for the third quarter of
2023, down from 1.53% for the second quarter of 2023, and 2.40% for
the third quarter of 2022. Fully-taxable equivalent NIM (“FTE NIM”)
was 1.49% for the third quarter of 2023, down from 1.64% for the
second quarter of 2023, and 2.53% for the third 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. Higher cash balances, which the
Company continued to carry given the volatility in the banking
industry over the last several months, were estimated to have
negatively impacted both NIM and FTE NIM by 10 to 12 bps.
Noninterest Income
Noninterest income for the third quarter of 2023 was $7.4
million, up $1.5 million, or 26.2%, from the second quarter of
2023, and up $3.1 million, or 71.6%, from the third quarter of
2022. Gain on sale of loans totaled $5.6 million for the third
quarter of 2023, up $0.7 million, or 14.4%, from the linked
quarter. Gain on sale revenue in the quarter, which consisted
entirely of sales of U.S. Small Business Administration (“SBA”)
7(a) guaranteed loans, increased due to a higher volume of loan
sales, partially offset by modestly lower net premiums. The
Company’s SBA lending team closed out the SBA fiscal year ended
September 30, 2023 as the ninth most active 7(a) lender in the
nation by loan dollars. Net loan servicing revenue increased $0.3
million during the quarter due to growth in the servicing portfolio
as well as a lower fair value adjustment to the loan servicing
asset. Other income increased $0.5 million from the prior quarter
due primarily to income from fund investments.
Noninterest Expense
Noninterest expense for the third quarter of 2023 was $19.8
million, up $1.1 million, or 5.8%, from the second quarter of 2023,
and up $1.8 million, or 9.8%, from the third quarter of 2022.
Salaries and employee benefits expense increased $1.1 million, or
9.9%, compared to the second quarter of 2023 due mainly to higher
benefit plan costs as well as higher incentive compensation in SBA
and construction lending. Loan expenses increased from the linked
quarter due to higher third party loan servicing fees and other
miscellaneous lending costs. Data processing costs increased due to
variable deposit activity-based expenses. These increases were
partially offset by declines in premises and equipment, marketing
expenses and consulting and professional fees.
Income Taxes
The Company recognized an income tax benefit of $0.3 million for
the third quarter of 2023, compared to an income tax benefit of
$0.2 million for the second quarter of 2023, and an income tax
expense of $1.0 million and an effective tax rate of 10.5% for the
third quarter of 2022. The income tax benefit in the third quarter
of 2023 reflects the benefit of tax-exempt income relative to the
amount of stated pre-tax income.
Loans and Credit Quality
Total loans as of September 30, 2023 were $3.7 billion, an
increase of $88.2 million, or 2.4%, compared to June 30, 2023, and
an increase of $479.2 million, or 14.7%, compared to September 30,
2022. Total commercial loan balances were $2.9 billion as of
September 30, 2023, an increase of $77.2 million, or 2.7%, compared
to June 30, 2023, and an increase of $373.2 million, or 14.7%,
compared to September 30, 2022. Compared to the linked quarter, the
increase in commercial loan balances was driven primarily by
strategic growth in higher yielding franchise finance, construction
and small business lending balances. These items were partially
offset by planned decreases in the fixed-rate public finance,
single tenant lease financing and investor commercial real estate
portfolios as well as continued runoff in the healthcare finance
portfolio.
Total consumer loan balances were $786.5 million as of September
30, 2023, an increase of $13.8 million, or 1.8%, compared to June
30, 2023, and an increase of $114.3 million, or 17.0%, compared to
September 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.
Total delinquencies 30 days or more past due were 0.22% of total
loans as of September 30, 2023, compared to 0.09% at June 30, 2023,
and 0.06% as of September 30, 2022. Nonperforming loans were 0.16%
of total loans as of September 30, 2023, compared to 0.17% as of
June 30, 2023, and 0.18% as of September 30, 2022. Nonperforming
loans totaled $5.9 million at September 30, 2023, down from $6.2
million at June 30, 2023. The decrease was due primarily to an
owner-occupied commercial real estate relationship that was
returned to accrual status during the third quarter of 2023.
The allowance for credit losses (“ACL”) as a percentage of total
loans was 0.98% as of September 30, 2023, compared to 0.99% as of
June 30, 2023, and 0.92% as of September 30, 2022. The slight
decrease in the ACL reflects the positive impact of economic data
on forecasted loss rates and adjustments to qualitative factors on
certain portfolios, partially offset by specific reserves placed on
certain loans.
Net charge-offs of $1.5 million were recognized during the third
quarter of 2023, resulting in net charge-offs to average loans of
0.16%, compared to $1.6 million, or 0.17%, for the second quarter
of 2023 and $0.2 million, or 0.02%, for the third quarter of 2022.
Net charge-offs during the third quarter of 2023 were driven
primarily by small business lending as well as a loss on the sale
of a commercial and industrial participation loan executed by the
lead bank.
The provision for credit losses in the third quarter was $1.9
million, compared to $1.7 million for the second quarter of 2023
and $0.9 million for the third quarter of 2022. The provision for
the quarter was driven primarily by net charge-offs as well as
increases in specific reserves and unfunded commitments, partially
offset by the positive impact of economic forecasts on certain
portfolios.
Capital
As of September 30, 2023, total shareholders’ equity was $347.7
million, a decrease of $6.6 million, or 1.9%, compared to June 30,
2023, and a decrease of $13.1 million, or 3.6%, compared to
September 30, 2022. The decrease in shareholders’ equity during the
third quarter of 2023 was due primarily to an increase in
accumulated other comprehensive loss and stock repurchase activity,
partially offset by net income earned during the quarter. Book
value per common share was $40.11 as of September 30, 2023,
compared to $40.38 as of June 30, 2023, and $38.84 as of September
30, 2022. Tangible book value per share was $39.57, compared to
$39.85 as of June 30, 2023 and $38.34 as of September 30, 2022.
In connection with its previously announced stock repurchase
program, the Company repurchased 97,834 shares of its common stock
during the third quarter of 2023 at an average price of $18.29 per
share. The Company has repurchased $40.7 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 September 30, 2023.
As of September 30, 2023
Company
Bank
Total shareholders' equity to assets
6.73
%
8.35
%
Tangible common equity to tangible assets
1
6.64
%
8.26
%
Tier 1 leverage ratio 2
7.31
%
8.97
%
Common equity tier 1 capital ratio 2
9.59
%
11.77
%
Tier 1 capital ratio 2
9.59
%
11.77
%
Total risk-based capital ratio 2
13.18
%
12.71
%
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, October 26, 2023 to discuss its quarterly
financial results. The call can be accessed via telephone at (888)
259-6580; access code: 53091613. A recorded replay can be accessed
through November 24, 2023 by dialing (877) 674-7070; access code:
091613.
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 $5.2 billion as of September 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 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 Nine Months Ended
September 30, June 30, September 30,
September 30, September 30,
2023
2023
2022
2023
2022
Net income
$
3,409
$
3,882
$
8,436
$
4,274
$
29,190
Per share and share information Earnings per share -
basic
$
0.39
$
0.44
$
0.89
$
0.48
$
3.04
Earnings per share - diluted
0.39
0.44
0.89
0.48
3.01
Dividends declared per share
0.06
0.06
0.06
0.18
0.18
Book value per common share
40.11
40.38
38.84
40.11
38.84
Tangible book value per common share 1
39.57
39.85
38.34
39.57
38.34
Common shares outstanding
8,669,673
8,774,507
9,290,885
8,669,673
9,290,885
Average common shares outstanding: Basic
8,744,385
8,903,213
9,458,259
8,889,532
9,615,039
Diluted
8,767,217
8,908,180
9,525,855
8,907,748
9,681,742
Performance ratios Return on average assets
0.26
%
0.32
%
0.82
%
0.12
%
0.94
%
Return on average shareholders' equity
3.79
%
4.35
%
9.01
%
1.59
%
10.40
%
Return on average tangible common equity 1
3.84
%
4.40
%
9.13
%
1.61
%
10.53
%
Net interest margin
1.39
%
1.53
%
2.40
%
1.55
%
2.52
%
Net interest margin - FTE 1,2
1.49
%
1.64
%
2.53
%
1.66
%
2.65
%
Capital ratios 3 Total shareholders' equity to assets
6.73
%
7.16
%
8.46
%
6.73
%
8.46
%
Tangible common equity to tangible assets 1
6.64
%
7.07
%
8.36
%
6.64
%
8.36
%
Tier 1 leverage ratio
7.31
%
7.63
%
9.49
%
7.31
%
9.49
%
Common equity tier 1 capital ratio
9.59
%
10.10
%
11.72
%
9.59
%
11.72
%
Tier 1 capital ratio
9.59
%
10.10
%
11.72
%
9.59
%
11.72
%
Total risk-based capital ratio
13.18
%
13.87
%
15.73
%
13.18
%
15.73
%
Asset quality Nonperforming loans
$
5,885
$
6,227
$
6,006
$
5,885
$
6,006
Nonperforming assets
6,069
6,397
6,006
6,069
6,006
Nonperforming loans to loans
0.16
%
0.17
%
0.18
%
0.16
%
0.18
%
Nonperforming assets to total assets
0.12
%
0.13
%
0.14
%
0.12
%
0.14
%
Allowance for credit losses - loans to: Loans
0.98
%
0.99
%
0.92
%
0.98
%
0.92
%
Nonperforming loans
619.4
%
579.1
%
497.3
%
619.4
%
497.3
%
Net charge-offs to average loans
0.16
%
0.17
%
0.02
%
0.38
%
0.04
%
Average balance sheet information Loans
$
3,700,410
$
3,653,839
$
3,161,850
$
3,643,156
$
3,036,532
Total securities
622,220
604,182
606,329
604,026
624,995
Other earning assets
653,375
511,295
188,467
499,835
321,262
Total interest-earning assets
4,976,667
4,771,623
3,970,650
4,751,104
4,004,025
Total assets
5,137,474
4,927,712
4,105,688
4,905,910
4,138,866
Noninterest-bearing deposits
127,540
117,496
124,067
126,647
115,142
Interest-bearing deposits
3,911,696
3,713,086
2,961,327
3,680,746
3,016,652
Total deposits
4,039,236
3,830,582
3,085,394
3,807,393
3,131,794
Shareholders' equity
356,701
358,312
371,303
359,405
375,190
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
September 30, June
30, September 30,
2023
2023
2022
Assets Cash and due from banks
$
3,595
$
9,503
$
14,743
Interest-bearing deposits
517,610
456,128
206,309
Securities available-for-sale, at fair value
450,827
379,394
393,565
Securities held-to-maturity, at amortized cost, net of allowance
for credit losses
231,928
230,605
191,057
Loans held-for-sale
31,669
32,001
23,103
Loans
3,735,068
3,646,832
3,255,906
Allowance for credit losses - loans
(36,452
)
(36,058
)
(29,866
)
Net loans
3,698,616
3,610,774
3,226,040
Accrued interest receivable
23,761
24,101
16,918
Federal Home Loan Bank of Indianapolis stock
28,350
28,350
28,350
Cash surrender value of bank-owned life insurance
40,619
40,357
39,612
Premises and equipment, net
74,197
73,525
70,747
Goodwill
4,687
4,687
4,687
Servicing asset
9,579
8,252
5,795
Other real estate owned
106
106
-
Accrued income and other assets
53,479
49,266
43,498
Total assets
$
5,169,023
$
4,947,049
$
4,264,424
Liabilities Noninterest-bearing deposits
$
125,265
$
119,291
$
142,875
Interest-bearing deposits
3,958,280
3,735,017
3,049,769
Total deposits
4,083,545
3,854,308
3,192,644
Advances from Federal Home Loan Bank
614,933
614,931
589,926
Subordinated debt
104,761
104,684
104,456
Accrued interest payable
2,968
3,338
1,887
Accrued expenses and other liabilities
15,072
15,456
14,654
Total liabilities
4,821,279
4,592,717
3,903,567
Shareholders' equity Voting common stock
185,085
186,545
200,123
Retained earnings
203,856
200,973
199,877
Accumulated other comprehensive loss
(41,197
)
(33,186
)
(39,143
)
Total shareholders' equity
347,744
354,332
360,857
Total liabilities and shareholders' equity
$
5,169,023
$
4,947,049
$
4,264,424
First Internet Bancorp Condensed Consolidated Statements
of Income (unaudited) Dollar amounts in thousands, except per
share data
Three Months Ended Nine Months
Ended September 30, June 30, September
30, September 30, September 30,
2023
2023
2022
2023
2022
Interest income Loans
$
48,898
$
46,906
$
34,643
$
139,647
$
100,246
Securities - taxable
4,301
3,835
2,701
11,742
7,489
Securities - non-taxable
912
860
491
2,570
1,068
Other earning assets
8,904
6,521
1,264
19,211
2,436
Total interest income
63,015
58,122
39,099
173,170
111,239
Interest expense Deposits
40,339
34,676
10,520
102,285
23,025
Other borrowed funds
5,298
5,301
4,585
15,788
12,790
Total interest expense
45,637
39,977
15,105
118,073
35,815
Net interest income
17,378
18,145
23,994
55,097
75,424
Provision for credit losses
1,946
1,698
892
13,059
2,868
Net interest income after provision for credit losses
15,432
16,447
23,102
42,038
72,556
Noninterest income Service charges and fees
208
218
248
635
845
Loan servicing revenue
1,064
850
653
2,699
1,858
Loan servicing asset revaluation
(257
)
(358
)
(333
)
(670
)
(1,100
)
Mortgage banking activities
-
-
871
76
4,454
Gain on sale of loans
5,569
4,868
2,713
14,498
8,510
Other
823
293
164
1,486
883
Total noninterest income
7,407
5,871
4,316
18,724
15,450
Noninterest expense Salaries and employee benefits
11,767
10,706
10,439
34,267
31,149
Marketing, advertising and promotion
500
705
1,041
2,049
2,717
Consulting and professional fees
552
711
790
2,189
3,912
Data processing
701
520
483
1,880
1,422
Loan expenses
1,336
1,072
1,142
4,385
3,417
Premises and equipment
2,315
2,661
2,808
7,753
7,767
Deposit insurance premium
1,067
936
229
2,546
797
Other
1,518
1,359
1,063
4,311
3,579
Total noninterest expense
19,756
18,670
17,995
59,380
54,760
Income before income taxes
3,083
3,648
9,423
1,382
33,246
Income tax (benefit) provision
(326
)
(234
)
987
(2,892
)
4,056
Net income
$
3,409
$
3,882
$
8,436
$
4,274
$
29,190
Per common share data Earnings per share - basic
$
0.39
$
0.44
$
0.89
$
0.48
$
3.04
Earnings per share - diluted
$
0.39
$
0.44
$
0.89
$
0.48
$
3.01
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, 2023 June 30, 2023 September 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
$
3,701,072
$
48,898
5.24
%
$
3,656,146
$
46,906
5.15
%
$
3,175,854
$
34,643
4.33
%
Securities - taxable
550,208
4,301
3.10
%
531,040
3,835
2.90
%
532,470
2,701
2.01
%
Securities - non-taxable
72,012
912
5.02
%
73,142
860
4.72
%
73,859
491
2.64
%
Other earning assets
653,375
8,904
5.41
%
511,295
6,521
5.12
%
188,467
1,264
2.66
%
Total interest-earning assets
4,976,667
63,015
5.02
%
4,771,623
58,122
4.89
%
3,970,650
39,099
3.91
%
Allowance for credit losses - loans
(35,601
)
(36,671
)
(29,423
)
Noninterest-earning assets
196,408
192,760
164,461
Total assets
$
5,137,474
$
4,927,712
$
4,105,688
Liabilities Interest-bearing liabilities
Interest-bearing demand deposits
$
387,517
$
2,131
2.18
%
$
359,969
$
1,509
1.68
%
$
342,116
$
551
0.64
%
Savings accounts
26,221
56
0.85
%
29,915
64
0.86
%
57,700
111
0.76
%
Money market accounts
1,230,746
12,537
4.04
%
1,274,453
12,314
3.88
%
1,369,783
4,581
1.33
%
BaaS - brokered deposits
31,891
348
4.33
%
22,918
230
4.03
%
153,936
859
2.21
%
Certificates and brokered deposits
2,235,321
25,267
4.48
%
2,025,831
20,559
4.07
%
1,037,792
4,418
1.69
%
Total interest-bearing deposits
3,911,696
40,339
4.09
%
3,713,086
34,676
3.75
%
2,961,327
10,520
1.41
%
Other borrowed funds
719,655
5,298
2.92
%
719,577
5,301
2.95
%
637,877
4,585
2.85
%
Total interest-bearing liabilities
4,631,351
45,637
3.91
%
4,432,663
39,977
3.62
%
3,599,204
15,105
1.67
%
Noninterest-bearing deposits
127,540
117,496
124,067
Other noninterest-bearing liabilities
21,882
19,241
11,114
Total liabilities
4,780,773
4,569,400
3,734,385
Shareholders' equity
356,701
358,312
371,303
Total liabilities and shareholders' equity
$
5,137,474
$
4,927,712
$
4,105,688
Net interest income
$
17,378
$
18,145
$
23,994
Interest rate spread
1.11
%
1.27
%
2.24
%
Net interest margin
1.39
%
1.53
%
2.40
%
Net interest margin - FTE 2,3
1.49
%
1.64
%
2.53
%
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, 2023
September 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
$
3,647,243
$
139,647
5.12
%
$
3,057,768
$
100,246
4.38
%
Securities - taxable
531,197
11,742
2.96
%
547,759
7,489
1.83
%
Securities - non-taxable
72,829
2,570
4.72
%
77,236
1,068
1.85
%
Other earning assets
499,835
19,211
5.14
%
321,262
2,436
1.01
%
Total interest-earning assets
4,751,104
173,170
4.87
%
4,004,025
111,239
3.71
%
-
Allowance for credit losses - loans
(35,784
)
(28,671
)
Noninterest-earning assets
190,590
163,512
Total assets
$
4,905,910
$
4,138,866
Liabilities Interest-bearing liabilities
Interest-bearing demand deposits
$
360,573
$
4,540
1.68
%
$
336,311
$
1,429
0.57
%
Savings accounts
31,494
202
0.86
%
61,647
232
0.50
%
Money market accounts
1,293,728
37,151
3.84
%
1,416,984
8,006
0.76
%
BaaS - brokered deposits
23,246
716
4.12
%
79,613
1,019
1.71
%
Certificates and brokered deposits
1,971,705
59,676
4.05
%
1,122,097
12,339
1.47
%
Total interest-bearing deposits
3,680,746
102,285
3.72
%
3,016,652
23,025
1.02
%
Other borrowed funds
719,577
15,788
2.93
%
613,609
12,790
2.79
%
Total interest-bearing liabilities
4,400,323
118,073
3.59
%
3,630,261
35,815
1.32
%
Noninterest-bearing deposits
126,647
115,142
Other noninterest-bearing liabilities
19,535
18,273
Total liabilities
4,546,505
3,763,676
Shareholders' equity
359,405
375,190
Total liabilities and shareholders' equity
$
4,905,910
$
4,138,866
Net interest income
$
55,097
$
75,424
Interest rate spread
1.28
%
2.39
%
Net interest margin
1.55
%
2.52
%
Net interest margin - FTE 2,3
1.66
%
2.65
%
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, 2023 June 30, 2023 September 30,
2022 Amount Percent Amount
Percent Amount Percent Commercial
loans Commercial and industrial
$
114,265
3.1
%
$
112,423
3.1
%
$
104,780
3.2
%
Owner-occupied commercial real estate
58,486
1.6
%
59,564
1.6
%
58,615
1.8
%
Investor commercial real estate
129,831
3.5
%
137,504
3.8
%
91,021
2.8
%
Construction
252,105
6.7
%
192,453
5.3
%
139,509
4.3
%
Single tenant lease financing
933,873
25.0
%
947,466
25.9
%
895,302
27.4
%
Public finance
535,960
14.3
%
575,541
15.8
%
614,139
18.9
%
Healthcare finance
235,622
6.3
%
245,072
6.7
%
293,686
9.0
%
Small business lending
192,996
5.2
%
170,550
4.7
%
113,001
3.5
%
Franchise finance
455,094
12.2
%
390,479
10.6
%
225,012
6.8
%
Total commercial loans
2,908,232
77.9
%
2,831,052
77.5
%
2,535,065
77.7
%
Consumer loans Residential mortgage
393,501
10.5
%
396,154
10.9
%
337,565
10.4
%
Home equity
23,544
0.6
%
24,375
0.7
%
22,114
0.7
%
Trailers
186,424
5.0
%
178,035
4.9
%
162,161
5.0
%
Recreational vehicles
140,205
3.8
%
133,283
3.7
%
115,694
3.6
%
Other consumer loans
42,822
1.1
%
40,806
1.1
%
34,657
1.1
%
Total consumer loans
786,496
21.0
%
772,653
21.3
%
672,191
20.8
%
Net deferred loan fees, premiums, discounts and other 1
40,340
1.1
%
43,127
1.2
%
48,650
1.5
%
Total loans
$
3,735,068
100.0
%
$
3,646,832
100.0
%
$
3,255,906
100.0
%
September 30, 2023 June 30, 2023
September 30, 2022 Amount Percent
Amount Percent Amount Percent
Deposits Noninterest-bearing deposits
$
125,265
3.1
%
$
119,291
3.1
%
$
142,635
4.5
%
Interest-bearing demand deposits
374,915
9.2
%
398,899
10.3
%
337,765
10.6
%
Savings accounts
23,811
0.6
%
28,239
0.7
%
52,228
1.6
%
Money market accounts
1,222,511
29.9
%
1,232,719
32.0
%
1,378,087
43.2
%
BaaS - brokered deposits
41,884
1.0
%
25,549
0.7
%
96,287
3.0
%
Certificates of deposits
1,624,447
39.8
%
1,366,409
35.5
%
773,040
24.2
%
Brokered deposits
670,712
16.4
%
683,202
17.7
%
412,602
12.9
%
Total deposits
$
4,083,545
100.0
%
$
3,854,308
100.0
%
$
3,192,644
100.0
%
1 Includes carrying value adjustments of $29.0 million, $30.5
million and $33.9 million related to terminated interest rate swaps
associated with public finance loans as of September 30, 2023, June
30, 2023 and September 30, 2022, respectively.
First Internet
Bancorp Reconciliation of Non-GAAP Financial Measures
Dollar amounts in thousands, except per share data
Three Months Ended Nine Months Ended
September 30, June 30, September 30,
September 30, September 30,
2023
2023
2022
2023
2022
Total equity - GAAP
$
347,744
$
354,332
$
360,857
$
347,744
$
360,857
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible common equity
$
343,057
$
349,645
$
356,170
$
343,057
$
356,170
Total assets - GAAP
$
5,169,023
$
4,947,049
$
4,264,424
$
5,169,023
$
4,264,424
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible assets
$
5,164,336
$
4,942,362
$
4,259,737
$
5,164,336
$
4,259,737
Common shares outstanding
8,669,673
8,774,507
9,290,885
8,669,673
9,290,885
Book value per common share
$
40.11
$
40.38
$
38.84
$
40.11
$
38.84
Effect of goodwill
(0.54
)
(0.53
)
(0.50
)
(0.54
)
(0.50
)
Tangible book value per common share
$
39.57
$
39.85
$
38.34
$
39.57
$
38.34
Total shareholders' equity to assets
6.73
%
7.16
%
8.46
%
6.73
%
8.46
%
Effect of goodwill
(0.09
%)
(0.09
%)
(0.10
%)
(0.09
%)
(0.10
%)
Tangible common equity to tangible assets
6.64
%
7.07
%
8.36
%
6.64
%
8.36
%
Total average equity - GAAP
$
356,701
$
358,312
$
371,303
$
359,405
$
375,190
Adjustments: Average goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Average tangible common equity
$
352,014
$
353,625
$
366,616
$
354,718
$
370,503
Return on average shareholders' equity
3.79
%
4.35
%
9.01
%
1.59
%
10.40
%
Effect of goodwill
0.05
%
0.05
%
0.12
%
0.02
%
0.13
%
Return on average tangible common equity
3.84
%
4.40
%
9.13
%
1.61
%
10.53
%
Total interest income
$
63,015
$
58,122
$
39,099
$
173,170
$
111,239
Adjustments: Fully-taxable equivalent adjustments 1
1,265
1,347
1,280
3,995
3,971
Total interest income - FTE
$
64,280
$
59,469
$
40,379
$
177,165
$
115,210
Net interest income
$
17,378
$
18,145
$
23,994
$
55,097
$
75,424
Adjustments: Fully-taxable equivalent adjustments 1
1,265
1,347
1,280
3,995
3,971
Net interest income - FTE
$
18,643
$
19,492
$
25,274
$
59,092
$
79,395
Net interest margin
1.39
%
1.53
%
2.40
%
1.55
%
2.52
%
Effect of fully-taxable equivalent adjustments 1
0.10
%
0.11
%
0.13
%
0.11
%
0.13
%
Net interest margin - FTE
1.49
%
1.64
%
2.53
%
1.66
%
2.65
%
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 Nine Months Ended September 30,
June 30, September 30, September 30,
September 30,
2023
2023
2022
2023
2022
Total revenue - GAAP
$
24,785
$
24,016
$
28,310
$
73,821
$
90,874
Adjustments: Mortgage-related revenue
-
-
-
-
-
Adjusted total revenue
$
24,785
$
24,016
$
28,310
$
73,821
$
90,874
Noninterest income - GAAP
$
7,407
$
5,871
$
4,316
$
18,724
$
15,450
Adjustments: Mortgage-related revenue
-
-
-
(65
)
-
Adjusted noninterest income
$
7,407
$
5,871
$
4,316
$
18,659
$
15,450
Noninterest expense - GAAP
$
19,756
$
18,670
$
17,995
$
59,380
$
54,760
Adjustments: Mortgage-related costs
-
-
-
(3,052
)
-
Acquisition-related expenses
-
-
-
-
(273
)
Write-down of software
-
-
(125
)
-
(125
)
Nonrecurring consulting fee
-
-
-
-
(875
)
Discretionary inflation bonus
-
-
-
-
(531
)
Accelerated equity compensation
-
-
-
-
(289
)
Adjusted noninterest expense
$
19,756
$
18,670
$
17,870
$
56,328
$
52,667
Income before income taxes - GAAP
$
3,083
$
3,648
$
9,423
$
1,382
$
33,246
Adjustments:1 Mortgage-related revenue
-
-
-
(65
)
-
Mortgage-related costs
-
-
-
3,052
-
Partial charge-off of C&I participation loan
-
-
-
6,914
-
Acquisition-related expenses
-
-
-
-
273
Write-down of software
-
-
125
-
125
Nonrecurring consulting fee
-
-
-
-
875
Discretionary inflation bonus
-
-
-
-
531
Accelerated equity compensation
-
-
-
-
289
Adjusted income before income taxes
$
3,083
$
3,648
$
9,548
$
11,283
$
35,339
Income tax (benefit) provision - GAAP
$
(326
)
$
(234
)
$
987
$
(2,892
)
$
4,056
Adjustments:1 Mortgage-related revenue
-
-
-
(14
)
-
Mortgage-related costs
-
-
-
641
-
Partial charge-off of C&I participation loan
-
-
-
1,452
-
Acquisition-related expenses
-
-
-
-
57
Write-down of software
-
-
26
-
26
Nonrecurring consulting fee
-
-
-
-
184
Discretionary inflation bonus
-
-
-
-
112
Accelerated equity compensation
-
-
-
-
61
Adjusted income tax (benefit) provision
$
(326
)
$
(234
)
$
1,013
$
(813
)
$
4,496
Net income- GAAP
$
3,409
$
3,882
$
8,436
$
4,274
$
29,190
Adjustments: Mortgage-related revenue
-
-
-
(51
)
-
Mortgage-related costs
-
-
-
2,411
-
Partial charge-off of C&I participation loan
-
-
-
5,462
-
Acquisition-related expenses
-
-
-
-
216
Write-down of software
-
-
99
-
99
Nonrecurring consulting fee
-
-
-
-
691
Discretionary inflation bonus
-
-
-
-
419
Accelerated equity compensation
-
-
-
-
228
Adjusted net income
$
3,409
$
3,882
$
8,535
$
12,096
$
30,843
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 Nine Months Ended September 30,
June 30, September 30, September 30,
September 30,
2023
2023
2022
2023
2022
Diluted average common shares outstanding
8,767,217
8,908,180
9,525,855
8,907,748
9,681,742
Diluted earnings per share - GAAP
$
0.39
$
0.44
$
0.89
$
0.48
$
3.01
Adjustments: Effect of mortgage-related revenue
-
-
-
(0.01
)
-
Effect of mortgage-related costs
-
-
-
0.27
-
Effect of partial charge-off of C&I participation loan
-
-
-
0.61
-
Effect of acquisition-related expenses
-
-
-
0.02
Effect of write-down of software
-
-
0.01
-
0.01
Effect of nonrecurring consulting fee
-
-
-
-
0.07
Effect of discretionary inflation bonus
-
-
-
-
0.04
Effect of accelerated equity compensation
-
-
-
0.02
Adjusted diluted earnings per share
$
0.39
$
0.44
$
0.90
$
1.35
$
3.17
Return on average assets
0.26
%
0.32
%
0.82
%
0.12
%
0.94
%
Effect of mortgage-related revenue
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Effect of mortgage-related costs
0.00
%
0.00
%
0.00
%
0.07
%
0.00
%
Effect of partial charge-off of C&I participation loan
0.00
%
0.00
%
0.00
%
0.15
%
0.00
%
Effect of acquisition-related expenses
0.00
%
0.00
%
0.00
%
0.00
%
0.01
%
Effect of write-down of software
0.00
%
0.00
%
0.01
%
0.00
%
0.00
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.00
%
0.00
%
0.02
%
Effect of discretionary inflation bonus
0.00
%
0.00
%
0.00
%
0.00
%
0.01
%
Effect of accelerated equity compensation
0.00
%
0.00
%
0.00
%
0.00
%
0.01
%
Adjusted return on average assets
0.26
%
0.32
%
0.83
%
0.34
%
0.99
%
Return on average shareholders' equity
3.79
%
4.35
%
9.01
%
1.59
%
10.40
%
Effect of mortgage-related revenue
0.00
%
0.00
%
0.00
%
(0.02
%)
0.00
%
Effect of mortgage-related costs
0.00
%
0.00
%
0.00
%
0.90
%
0.00
%
Effect of partial charge-off of C&I participation loan
0.00
%
0.00
%
0.00
%
2.03
%
0.00
%
Effect of acquisition-related expenses
0.00
%
0.00
%
0.00
%
0.00
%
0.08
%
Effect of write-down of software
0.00
%
0.00
%
0.11
%
0.00
%
0.04
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.00
%
0.00
%
0.25
%
Effect of discretionary inflation bonus
0.00
%
0.00
%
0.00
%
0.00
%
0.15
%
Effect of accelerated equity compensation
0.00
%
0.00
%
0.00
%
0.00
%
0.08
%
Adjusted return on average shareholders' equity
3.79
%
4.35
%
9.12
%
4.50
%
11.00
%
Return on average tangible common equity
3.84
%
4.40
%
9.13
%
1.61
%
10.53
%
Effect of mortgage-related revenue
0.00
%
0.00
%
0.00
%
(0.02
%)
0.00
%
Effect of mortgage-related costs
0.00
%
0.00
%
0.00
%
0.91
%
0.00
%
Effect of partial charge-off of C&I participation loan
0.00
%
0.00
%
0.00
%
2.06
%
0.00
%
Effect of acquisition-related expenses
0.00
%
0.00
%
0.00
%
0.00
%
0.08
%
Effect of write-down of software
0.00
%
0.00
%
0.11
%
0.00
%
0.04
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.00
%
0.00
%
0.25
%
Effect of discretionary inflation bonus
0.00
%
0.00
%
0.00
%
0.00
%
0.15
%
Effect of accelerated equity compensation
0.00
%
0.00
%
0.00
%
0.00
%
0.08
%
Adjusted return on average tangible common equity
3.84
%
4.40
%
9.24
%
4.56
%
11.13
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231023839498/en/
Investors/Analysts Paula Deemer
Director of Corporate Administration (317) 428-4628
investors@firstib.com
Media BLASTmedia for First Internet
Bank Ryan Hecker firstib@blastmedia.com
First Internet Bancorp (NASDAQ:INBK)
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First Internet Bancorp (NASDAQ:INBK)
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From Dec 2023 to Dec 2024
