First Internet Bancorp (the “Company”) (Nasdaq: INBK), the
parent company of First Internet Bank (the “Bank”), announced today
financial and operational results for the fourth quarter and full
year ended December 31, 2023.
Fourth Quarter 2023 Financial
Highlights
- Net income of $4.1 million and diluted earnings per share of
$0.48, increases of 21.5% and 23.1%, respectively, from the third
quarter of 2023
- Net interest income of $19.8 million and fully-taxable
equivalent net interest income of $21.0 million, increases of 14.0%
and 12.9%, respectively, from the third quarter of 2023
- Net interest margin of 1.58% and fully-taxable equivalent
net interest margin of 1.68%, both increasing 19 basis points from
the third quarter of 2023
- Loan growth of $105.2 million, a 2.8% increase from the
third quarter of 2023
- Nonperforming loans to total loans of 0.26%; net charge-offs
to average loans of 0.12%
- Tangible common equity to tangible assets of 6.94%; CET1
ratio of 9.60%
- Repurchased 40,000 shares at an average price of $18.78; for
the full year, repurchased 502,525 common shares at an average
price of $18.40 per share
- Tangible book value per share of $41.43, a 4.7% increase
from the third quarter of 2023
David Becker, Chairman and Chief Executive Officer, commented:
“The fourth quarter’s results showcase our efforts over the past 18
months to reposition our balance sheet. With asset yields
continuing to reprice higher, coupled with solid loan growth, we
delivered welcome net interest margin expansion and net interest
income growth. We produced positive operating leverage and a
significant improvement in our operating efficiency. In all, we
believe this quarter’s results represent an important inflection
point for our company.
“We continued to optimize our loan portfolio mix in the fourth
quarter, with solid production in construction and franchise
finance lending. Additionally, we remain one of the ten most active
SBA 7(a) lenders in the country. Our SBA lending team finished the
year with impressive origination volumes and generated another
record quarter of gain on sale revenue.
"With or without anticipated rate cuts, we are well-positioned
to continue to improve our earnings and profitability in 2024. Now
less than one month away from the 25th anniversary of our public
launch, we are in an enviable position to start our second quarter
century: with a strong balance sheet and capital levels,
outstanding asset quality, and a team that is focused on the
continued execution of our strategies.”
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2023 was $19.8
million, compared to $17.4 million for the third quarter of 2023,
and $21.7 million for the fourth quarter of 2022. On a
fully-taxable equivalent basis, net interest income for the fourth
quarter of 2023 was $21.0 million, compared to $18.6 million for
the third quarter of 2023, and $23.1 million for the fourth quarter
of 2022.
Total interest income for the fourth quarter of 2023 was $66.3
million, an increase of 5.2% compared to the third quarter of 2023,
and an increase of 45.1% compared to the fourth quarter of 2022. On
a fully-taxable equivalent basis, total interest income for the
fourth quarter of 2023 was $67.5 million, an increase of 5.0%
compared to the third quarter of 2023, and an increase of 43.5%
compared to the fourth quarter of 2022. The yield on average
interest-earning assets for the fourth quarter of 2023 increased to
5.28% from 5.02% for the third quarter of 2023 due to a 26 basis
point (“bp”) increase in the yield earned on loans, a 40 bp
increase in the yield earned on securities and a 27 bp increase in
the yield earned on other earning assets. Compared to the linked
quarter, average loan balances increased $98.9 million, or 2.7%,
and the average balance of securities increased $61.2 million, or
9.8%, while the average balance of other earning assets decreased
$152.6 million, or 23.4%.
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, construction and commercial
and industrial lending portfolios, as well as growth in the
higher-yielding franchise finance portfolio. This was partially
offset by lower average balances in the public finance, healthcare
finance and single tenant lease financing portfolios. The continued
shift in the loan mix is the result of a strategic initiative to
focus on variable rate and higher-yielding products, in part to
help improve the interest rate risk profile of our balance
sheet.
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 8.85% in the
fourth quarter of 2023, relatively stable with the third quarter of
2023, and an increase of 278 bps compared to the fourth quarter of
2022. For the full year of 2023, new loan origination yields
increased 302 bps compared to 2022. Because of the fixed-rate
nature of certain larger portfolios, there is a lagging impact of
the higher origination yields on the portfolio.
Interest income earned on securities in the fourth quarter of
2023 increased $1.2 million, or 22.9%, compared to the third
quarter of 2023 due to an increase in the yield earned on the
portfolio and the increase in average balances. The yield on the
securities portfolio increased 40 bps to 3.72%, driven primarily by
variable rate securities repricing higher and higher yields on new
purchases. Interest earned on other earning asset balances
decreased $1.7 million, or 19.4%, in the fourth quarter of 2023
compared to the linked quarter, due primarily to lower average cash
balances.
Total interest expense for the fourth quarter of 2023 was $46.5
million, an increase of $0.8 million, or 1.8%, compared to the
linked quarter, due to modest increases in both deposit rates and
average interest-bearing deposit balances throughout the quarter.
Interest expense related to interest-bearing deposits increased
$0.7 million, or 1.8%, driven primarily by higher costs on CDs,
BaaS-brokered deposits and money market accounts. The cost of
interest-bearing deposits was 4.14% for the fourth quarter of 2023,
compared to 4.09% for the third quarter of 2023. The increase of 5
bps in deposit costs during the fourth quarter was the slowest
experienced by the Company in the past six quarters.
Average CD balances increased $59.2 million, or 3.8%, from the
third quarter of 2023 while the cost of funds increased 18 bps. The
increase in the cost of CDs is also the lowest in the past six
quarters, reflecting the narrowing repricing gap between new
production and maturities. The average balance of BaaS – brokered
deposits increased $30.2 million, or 94.7%, due to higher payments
volume while the cost of funds increased 5 bps.
These increases were partially offset by lower average brokered
deposit balances, which decreased $51.7 million, or 7.7%, from the
third quarter of 2023, as the Company continued to reduce the
balance of higher cost funding throughout the quarter.
Additionally, the average balance of interest-bearing demand
deposits decreased $5.1 million, or 1.3%, while the cost of funds
decreased 47 bps.
Net interest margin (“NIM”) was 1.58% for the fourth quarter of
2023, up from 1.39% for the third quarter of 2023 and down from
2.09% for the fourth quarter of 2022. Fully-taxable equivalent NIM
(“FTE NIM”) was 1.68% for the fourth quarter of 2023, up from 1.49%
for the third quarter of 2023 and down from 2.22% for the fourth
quarter of 2022. The increases in NIM and FTE NIM compared to the
linked quarter were driven primarily by higher yields on loans,
securities and other earning assets, as well as higher average loan
and securities balances, partially offset by higher
interest-bearing deposit costs and lower cash balances.
Noninterest Income
Noninterest income for the fourth quarter of 2023 was $7.4
million, consistent with the third quarter of 2023, and up $1.6
million, or 27.4%, from the fourth quarter of 2022. Gain on sale of
loans totaled $6.0 million for the fourth quarter of 2023, up $0.5
million, or 8.2%, 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 and a slight improvement in
net premiums. Net loan servicing revenue decreased $0.5 million, or
57.7%, during the quarter as growth in the servicing portfolio was
more than offset by a lower fair value adjustment to the loan
servicing asset.
Noninterest Expense
Noninterest expense totaled $20.1 million for the fourth quarter
of 2023, compared to $19.8 million for the third quarter of 2023,
and $18.5 million for the fourth quarter of 2022, representing
increases of 1.5% and 8.3%, respectively. The increase of $0.3
million compared to the linked quarter was due primarily to higher
premises and equipment, consulting and professional fees and
deposit insurance premium, partially offset by lower salaries and
employee benefits and data processing.
The increase in premises and equipment was due primarily to a
lower property tax accrual in the prior quarter. Consulting and
professional fees increased due mainly to third-party loan review
and stress testing activities. Deposit insurance premium increased
due to higher assessments driven by year-over-year asset growth and
loan composition. Salaries and employee benefits declined due
primarily to lower incentive compensation and lower benefits costs.
Data processing declined due to lower variable deposit
activity-based expenses and transaction processing fees.
Income Taxes
The Company recognized an income tax benefit of $0.6 million for
the fourth quarter of 2023, compared to an income tax benefit of
$0.3 million for the third quarter of 2023, and an income tax
expense of $0.5 million and an effective tax rate of 7.3% for the
fourth quarter of 2022. The income tax benefit for the fourth
quarter of 2023 reflects the benefit of tax-exempt income relative
to the amount of stated pre-tax income as well as adjustments to
certain state income tax rates.
Loans and Credit Quality
Total loans as of December 31, 2023 were $3.8 billion, an
increase of $105.2 million, or 2.8%, compared to September 30,
2023, and an increase of $340.8 million, or 9.7%, compared to
December 31, 2022. Total commercial loan balances were $3.0 billion
as of December 31, 2023, an increase of $97.7 million, or 3.4%,
compared to September 30, 2023, and an increase of $286.6 million,
or 10.5%, compared to December 31, 2022. Compared to the linked
quarter, the increase in commercial loan balances was driven
primarily by strategic growth in higher yielding franchise finance,
small business lending, commercial and industrial and construction
balances. These items were partially offset by decreases in the
fixed-rate public finance and healthcare finance portfolios.
Total consumer loan balances were $796.9 million as of December
31, 2023, an increase of $10.4 million, or 1.3%, compared to
September 30, 2023, and an increase of $63.7 million, or 8.7%,
compared to December 31, 2022. The increase compared to the linked
quarter was due primarily to higher balances in the trailers,
recreational vehicles and residential mortgage portfolios.
Total delinquencies 30 days or more past due were 0.31% of total
loans as of December 31, 2023, compared to 0.22% at September 30,
2023 and 0.17% as of December 31, 2022. The increase in
delinquencies during the fourth quarter of 2023 was due primarily
to an increase in delinquencies in the small business lending and
franchise finance portfolios. Nonperforming loans were 0.26% of
total loans as of December 31, 2023, compared to 0.16% as of
September 30, 2023, and 0.22% as of December 31, 2022.
Nonperforming loans totaled $10.0 million at December 31, 2023, up
from $5.9 million at September 30, 2023. The increase in
nonperforming loans was due primarily to the addition of small
business lending and franchise finance loans for which specific
reserves were established, as well as certain residential mortgage
loans that were more than 90 days delinquent.
The allowance for credit losses (“ACL”) as a percentage of total
loans was 1.01% as of December 31, 2023, compared to 0.98% as of
September 30, 2023, and 0.91% as of December 31, 2022. The increase
in the ACL reflects the addition of specific reserves mentioned
above, as well as the overall growth in the loan portfolio,
partially offset by the positive impact of economic data on
forecasted loss rates and qualitative factors on certain
portfolios.
Net charge-offs of $1.2 million were recognized during the
fourth quarter of 2023, resulting in net charge-offs to average
loans of 0.12%, compared to $1.5 million, or 0.16%, for the third
quarter of 2023 and $0.2 million, or 0.03%, for the fourth quarter
of 2022. Net charge-offs in the fourth quarter of 2023 were driven
primarily by small business lending, as well as one healthcare
finance loan that was charged-off during the quarter.
The provision for credit losses in the fourth quarter of 2023
was $3.6 million, compared to $1.9 million for the third quarter of
2023 and $2.1 million for the fourth quarter of 2022. The provision
for the fourth quarter of 2023 was driven primarily by net
charge-offs, specific reserves and growth in certain loan
portfolios and unfunded commitments, partially offset by the
positive impact of economic forecasts on certain portfolios.
Capital
As of December 31, 2023, total shareholders’ equity was $362.8
million, an increase of $15.1 million, or 4.3%, compared to
September 30, 2023, and a decrease of $2.2 million, or 0.6%,
compared to December 31, 2022. The increase in shareholders’ equity
during the fourth quarter of 2023 compared to the linked quarter
was due primarily to the net income earned during the quarter and a
decrease in accumulated other comprehensive loss. Book value per
common share increased to $41.97 as of December 31, 2023, up from
$40.11 as of September 30, 2023 and $40.26 as of December 31, 2022.
Tangible book value per share was $41.43, up from $39.57 as of
September 30, 2023 and $39.74 as of December 31, 2022.
In connection with its previously announced stock repurchase
program, the Company repurchased 40,000 shares of its common stock
during the fourth quarter of 2023 at an average price of $18.78 per
share. The Company has repurchased $41.5 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 December 31, 2023.
As of December 31, 2023
Company
Bank
Total shareholders' equity to assets
7.02
%
8.62
%
Tangible common equity to tangible assets
1
6.94
%
8.54
%
Tier 1 leverage ratio 2
7.33
%
8.95
%
Common equity tier 1 capital ratio 2
9.60
%
11.73
%
Tier 1 capital ratio 2
9.60
%
11.73
%
Total risk-based capital ratio 2
13.23
%
12.73
%
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, January 25, 2024 to discuss its quarterly
financial results. The call can be accessed via telephone at (888)
259-6580; access code: 23964485. A recorded replay can be accessed
through February 24, 2024 by dialing (877) 674-7070; access code:
964485.
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 December 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”. 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,” :improve,” “may,”
“ongoing,” “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 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 Twelve Months Ended December
31, September 30, December 31, December
31, December 31,
2023
2023
2022
2023
2022
Net income
$
4,143
$
3,409
$
6,351
$
8,417
$
35,541
Per share and share information Earnings per share -
basic
$
0.48
$
0.39
$
0.68
$
0.95
$
3.73
Earnings per share - diluted
0.48
0.39
0.68
0.95
3.70
Dividends declared per share
0.06
0.06
0.06
0.24
0.24
Book value per common share
41.97
40.11
40.26
41.97
40.26
Tangible book value per common share 1
41.43
39.57
39.74
41.43
39.74
Common shares outstanding
8,644,451
8,669,673
9,065,883
8,644,451
9,065,883
Average common shares outstanding: Basic
8,683,331
8,744,385
9,281,309
8,837,558
9,530,921
Diluted
8,720,078
8,767,217
9,343,533
8,858,890
9,595,115
Performance ratios Return on average assets
0.32
%
0.26
%
0.59
%
0.17
%
0.85
%
Return on average shareholders' equity
4.66
%
3.79
%
6.91
%
2.35
%
9.53
%
Return on average tangible common equity 1
4.72
%
3.84
%
7.00
%
2.38
%
9.65
%
Net interest margin
1.58
%
1.39
%
2.09
%
1.56
%
2.41
%
Net interest margin - FTE 1,2
1.68
%
1.49
%
2.22
%
1.67
%
2.54
%
Capital ratios 3 Total shareholders' equity to assets
7.02
%
6.73
%
8.03
%
7.02
%
8.03
%
Tangible common equity to tangible assets 1
6.94
%
6.64
%
7.94
%
6.94
%
7.94
%
Tier 1 leverage ratio
7.33
%
7.31
%
9.06
%
7.33
%
9.06
%
Common equity tier 1 capital ratio
9.60
%
9.59
%
10.93
%
9.60
%
10.93
%
Tier 1 capital ratio
9.60
%
9.59
%
10.93
%
9.60
%
10.93
%
Total risk-based capital ratio
13.23
%
13.18
%
14.75
%
13.23
%
14.75
%
Asset quality Nonperforming loans
$
9,962
$
5,885
$
7,529
$
9,962
$
7,529
Nonperforming assets
10,354
6,069
7,571
10,354
7,571
Nonperforming loans to loans
0.26
%
0.16
%
0.22
%
0.26
%
0.22
%
Nonperforming assets to total assets
0.20
%
0.12
%
0.17
%
0.20
%
0.17
%
Allowance for credit losses - loans to: Loans
1.01
%
0.98
%
0.91
%
1.01
%
0.91
%
Nonperforming loans
389.2
%
619.4
%
421.5
%
389.2
%
421.5
%
Net charge-offs to average loans
0.12
%
0.16
%
0.03
%
0.31
%
0.03
%
Average balance sheet information Loans
$
3,799,211
$
3,700,410
$
3,382,212
$
3,682,490
$
3,123,972
Total securities
683,468
$
622,220
$
578,608
624,050
613,303
Other earning assets
500,733
$
653,375
$
149,910
500,061
278,073
Total interest-earning assets
4,984,133
$
4,976,667
$
4,119,897
4,809,840
4,033,542
Total assets
5,154,285
$
5,137,474
$
4,263,246
4,968,514
4,170,526
Noninterest-bearing deposits
123,351
$
127,540
$
135,702
125,816
120,325
Interest-bearing deposits
3,935,519
$
3,911,696
$
3,041,022
3,744,964
3,022,794
Total deposits
4,058,870
$
4,039,236
$
3,176,724
3,870,780
3,143,119
Shareholders' equity
353,037
$
356,701
$
364,657
357,800
372,844
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
December 31, September 30, December 31,
2023
2023
2022
Assets Cash and due from banks
$
8,269
$
3,595
$
17,426
Interest-bearing deposits
397,629
517,610
239,126
Securities available-for-sale, at fair value
474,855
450,827
390,384
Securities held-to-maturity, at amortized cost, net of allowance
for credit losses
227,153
231,928
189,168
Loans held-for-sale
22,052
31,669
21,511
Loans
3,840,220
3,735,068
3,499,401
Allowance for credit losses - loans
(38,774
)
(36,452
)
(31,737
)
Net loans
3,801,446
3,698,616
3,467,664
Accrued interest receivable
26,746
23,761
21,069
Federal Home Loan Bank of Indianapolis stock
28,350
28,350
28,350
Cash surrender value of bank-owned life insurance
40,882
40,619
39,859
Premises and equipment, net
73,463
74,197
72,711
Goodwill
4,687
4,687
4,687
Servicing asset
10,567
9,579
6,255
Other real estate owned
375
106
-
Accrued income and other assets
51,098
53,479
44,894
Total assets
$
5,167,572
$
5,169,023
$
4,543,104
Liabilities Noninterest-bearing deposits
$
123,464
$
125,265
$
175,315
Interest-bearing deposits
3,943,509
3,958,280
3,265,930
Total deposits
4,066,973
4,083,545
3,441,245
Advances from Federal Home Loan Bank
614,934
614,933
614,928
Subordinated debt
104,838
104,761
104,532
Accrued interest payable
3,848
2,968
2,913
Accrued expenses and other liabilities
14,184
15,072
14,512
Total liabilities
4,804,777
4,821,279
4,178,130
Shareholders' equity Voting common stock
184,700
185,085
192,935
Retained earnings
207,470
203,856
205,675
Accumulated other comprehensive loss
(29,375
)
(41,197
)
(33,636
)
Total shareholders' equity
362,795
347,744
364,974
Total liabilities and shareholders' equity
$
5,167,572
$
5,169,023
$
4,543,104
First Internet Bancorp Condensed Consolidated Statements
of Income (unaudited, except for the twelve months ended December
31, 2022) Dollar amounts in thousands, except per share data
Three Months Ended Twelve Months Ended December
31, September 30, December 31, December
31, December 31,
2023
2023
2022
2023
2022
Interest income Loans
$
52,690
$
48,898
$
40,354
$
192,337
$
140,600
Securities - taxable
5,447
4,301
3,222
17,189
10,711
Securities - non-taxable
962
912
699
3,532
1,767
Other earning assets
7,173
8,904
1,394
26,384
3,830
Total interest income
66,272
63,015
45,669
239,442
156,908
Interest expense Deposits
41,078
40,339
18,807
143,363
41,832
Other borrowed funds
5,387
5,298
5,193
21,175
17,983
Total interest expense
46,465
45,637
24,000
164,538
59,815
Net interest income
19,807
17,378
21,669
74,904
97,093
Provision for credit losses
3,594
1,946
2,109
16,653
4,977
Net interest income after provision for credit losses
16,213
15,432
19,560
58,251
92,116
Noninterest income Service charges and fees
216
208
226
851
1,071
Loan servicing revenue
1,134
1,064
715
3,833
2,573
Loan servicing asset revaluation
(793
)
(257
)
(539
)
(1,463
)
(1,639
)
Mortgage banking activities
-
-
1,010
76
5,464
Gain on sale of loans
6,028
5,569
2,862
20,526
11,372
Other
816
823
1,533
2,302
2,416
Total noninterest income
7,401
7,407
5,807
26,125
21,257
Noninterest expense Salaries and employee benefits
11,055
11,767
10,404
45,322
41,553
Marketing, advertising and promotion
518
500
837
2,567
3,554
Consulting and professional fees
893
552
914
3,082
4,826
Data processing
493
701
567
2,373
1,989
Loan expenses
1,371
1,336
1,018
5,756
4,435
Premises and equipment
2,846
2,315
2,921
10,599
10,688
Deposit insurance premium
1,334
1,067
355
3,880
1,152
Other
1,546
1,518
1,497
5,857
5,076
Total noninterest expense
20,056
19,756
18,513
79,436
73,273
Income before income taxes
3,558
3,083
6,854
4,940
40,100
Income tax (benefit) provision
(585
)
(326
)
503
(3,477
)
4,559
Net income
$
4,143
$
3,409
$
6,351
$
8,417
$
35,541
Per common share data Earnings per share - basic
$
0.48
$
0.39
$
0.68
$
0.95
$
3.73
Earnings per share - diluted
$
0.48
$
0.39
$
0.68
$
0.95
$
3.70
Dividends declared per share
$
0.06
$
0.06
$
0.06
$
0.24
$
0.24
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 December 31,
2023 September 30, 2023 December 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
$
3,799,932
$
52,690
5.50
%
$
3,701,072
$
48,898
5.24
%
$
3,391,379
$
40,354
4.72
%
Securities - taxable
611,664
5,447
3.53
%
550,208
4,301
3.10
%
508,725
3,222
2.51
%
Securities - non-taxable
71,804
962
5.32
%
72,012
912
5.02
%
69,883
699
3.97
%
Other earning assets
500,733
7,173
5.68
%
653,375
8,904
5.41
%
149,910
1,394
3.69
%
Total interest-earning assets
4,984,133
66,272
5.28
%
4,976,667
63,015
5.02
%
4,119,897
45,669
4.40
%
Allowance for credit losses
(36,792
)
(35,601
)
(30,543
)
Noninterest-earning assets
206,944
196,408
173,892
Total assets
$
5,154,285
$
5,137,474
$
4,263,246
Liabilities Interest-bearing liabilities
Interest-bearing demand deposits
$
382,427
$
1,646
1.71
%
$
387,517
$
2,131
2.18
%
$
326,102
$
628
0.76
%
Savings accounts
22,394
48
0.85
%
26,221
56
0.85
%
47,799
104
0.86
%
Money market accounts
1,225,781
12,739
4.12
%
1,230,746
12,537
4.04
%
1,441,583
10,508
2.89
%
BaaS - brokered deposits
62,098
685
4.38
%
31,891
348
4.33
%
4,563
13
1.13
%
Certificates and brokered deposits
2,242,819
25,960
4.59
%
2,235,321
25,267
4.48
%
1,220,975
7,554
2.45
%
Total interest-bearing deposits
3,935,519
41,078
4.14
%
3,911,696
40,339
4.09
%
3,041,022
18,807
2.45
%
Other borrowed funds
719,733
5,387
2.97
%
719,655
5,298
2.92
%
712,465
5,193
2.89
%
Total interest-bearing liabilities
4,655,252
46,465
3.96
%
4,631,351
45,637
3.91
%
3,753,487
24,000
2.54
%
Noninterest-bearing deposits
123,351
127,540
135,702
Other noninterest-bearing liabilities
22,645
21,882
9,400
Total liabilities
4,801,248
4,780,773
3,898,589
Shareholders' equity
353,037
356,701
364,657
Total liabilities and shareholders' equity
$
5,154,285
$
5,137,474
$
4,263,246
Net interest income
$
19,807
$
17,378
$
21,669
Interest rate spread
1.32
%
1.11
%
1.86
%
Net interest margin
1.58
%
1.39
%
2.09
%
Net interest margin - FTE 2,3
1.68
%
1.49
%
2.22
%
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
Twelve Months Ended December 31, 2023 December 31,
2022 Average Interest / Yield /
Average Interest / Yield / Balance
Dividends Cost Balance Dividends
Cost Assets Interest-earning assets Loans,
including loans held-for-sale 1
$
3,685,729
$
192,337
5.22
%
$
3,142,166
$
140,600
4.47
%
Securities - taxable
551,479
17,189
3.12
%
537,921
10,711
1.99
%
Securities - non-taxable
72,571
3,532
4.87
%
75,382
1,767
2.34
%
Other earning assets
500,061
26,384
5.28
%
278,073
3,830
1.38
%
Total interest-earning assets
4,809,840
239,442
4.98
%
4,033,542
156,908
3.89
%
-
Allowance for credit losses
(36,038
)
(29,143
)
Noninterest-earning assets
194,712
166,127
Total assets
$
4,968,514
$
4,170,526
Liabilities Interest-bearing liabilities
Interest-bearing demand deposits
$
366,082
$
6,186
1.69
%
$
333,737
$
2,056
0.62
%
Savings accounts
29,200
249
0.85
%
58,156
336
0.58
%
Money market accounts
1,276,602
49,890
3.91
%
1,423,185
18,513
1.30
%
BaaS - brokered deposits
33,039
1,402
4.24
%
60,699
1,033
1.70
%
Certificates and brokered deposits
2,040,041
85,636
4.20
%
1,147,017
19,894
1.73
%
Total interest-bearing deposits
3,744,964
143,363
3.83
%
3,022,794
41,832
1.38
%
Other borrowed funds
719,617
21,175
2.94
%
638,526
17,983
2.82
%
Total interest-bearing liabilities
4,464,581
164,538
3.69
%
3,661,320
59,815
1.63
%
Noninterest-bearing deposits
125,816
120,325
Other noninterest-bearing liabilities
20,317
16,037
Total liabilities
4,610,714
3,797,682
Shareholders' equity
357,800
372,844
Total liabilities and shareholders' equity
$
4,968,514
$
4,170,526
Net interest income
$
74,904
$
97,093
Interest rate spread
1.29
%
2.26
%
Net interest margin
1.56
%
2.41
%
Net interest margin - FTE 2,3
1.67
%
2.54
%
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
December 31, 2023 September 30, 2023 December 31,
2022 Amount Percent Amount Percent
Amount Percent Commercial loans
Commercial and industrial
$
129,349
3.4
%
$
114,265
3.1
%
$
126,108
3.6
%
Owner-occupied commercial real estate
57,286
1.5
%
58,486
1.6
%
61,836
1.8
%
Investor commercial real estate
132,077
3.4
%
129,831
3.5
%
93,121
2.7
%
Construction
261,750
6.8
%
252,105
6.7
%
181,966
5.2
%
Single tenant lease financing
936,616
24.4
%
933,873
25.0
%
939,240
26.8
%
Public finance
521,764
13.6
%
535,960
14.3
%
621,032
17.7
%
Healthcare finance
222,793
5.8
%
235,622
6.3
%
272,461
7.8
%
Small business lending
218,506
5.7
%
192,996
5.2
%
123,750
3.5
%
Franchise finance
525,783
13.7
%
455,094
12.2
%
299,835
8.6
%
Total commercial loans
3,005,924
78.3
%
2,908,232
77.9
%
2,719,349
77.7
%
Consumer loans Residential mortgage
395,648
10.3
%
393,501
10.5
%
383,948
11.0
%
Home equity
23,669
0.6
%
23,544
0.6
%
24,712
0.7
%
Trailers
188,763
4.9
%
186,424
5.0
%
167,326
4.8
%
Recreational vehicles
145,558
3.8
%
140,205
3.8
%
121,808
3.5
%
Other consumer loans
43,293
1.1
%
42,822
1.1
%
35,464
1.0
%
Total consumer loans
796,931
20.7
%
786,496
21.0
%
733,258
21.0
%
Net deferred loan fees, premiums, discounts and other 1
37,365
1.0
%
40,340
1.1
%
46,794
1.3
%
Total loans
$
3,840,220
100.0
%
$
3,735,068
100.0
%
$
3,499,401
100.0
%
December 31, 2023 September 30, 2023
December 31, 2022 Amount Percent
Amount Percent Amount Percent
Deposits Noninterest-bearing deposits
$
123,464
3.0
%
$
125,265
3.1
%
$
175,315
5.1
%
Interest-bearing demand deposits
402,976
9.9
%
374,915
9.2
%
335,611
9.8
%
Savings accounts
21,364
0.5
%
23,811
0.6
%
44,819
1.3
%
Money market accounts
1,248,319
30.8
%
1,222,511
29.9
%
1,418,599
41.2
%
BaaS - brokered deposits
74,401
1.8
%
41,884
1.0
%
13,607
0.4
%
Certificates of deposits
1,605,156
39.5
%
1,624,447
39.8
%
874,490
25.4
%
Brokered deposits
591,293
14.5
%
670,712
16.4
%
578,804
16.8
%
Total deposits
$
4,066,973
100.0
%
$
4,083,545
100.0
%
$
3,441,245
100.0
%
1 Includes carrying value adjustments of $27.8 million,
$29.0 million and $32.5 million related to terminated interest rate
swaps associated with public finance loans as of December 31, 2023,
September 30, 2023 and December 31, 2022, respectively.
First
Internet Bancorp Reconciliation of Non-GAAP Financial
Measures Dollar amounts in thousands, except per share data
Three Months Ended Twelve Months Ended
December 31, September 30, December 31,
December 31, December 31,
2023
2023
2022
2023
2022
Total equity - GAAP
$
362,795
$
347,744
$
364,974
$
362,795
$
364,974
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible common equity
$
358,108
$
343,057
$
360,287
$
358,108
$
360,287
Total assets - GAAP
$
5,167,572
$
5,169,023
$
4,543,104
$
5,167,572
$
4,543,104
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible assets
$
5,162,885
$
5,164,336
$
4,538,417
$
5,162,885
$
4,538,417
Common shares outstanding
8,644,451
8,669,673
9,065,883
8,644,451
9,065,883
Book value per common share
$
41.97
$
40.11
$
40.26
$
41.97
$
40.26
Effect of goodwill
(0.54
)
(0.54
)
(0.52
)
(0.54
)
(0.52
)
Tangible book value per common share
$
41.43
$
39.57
$
39.74
$
41.43
$
39.74
Total shareholders' equity to assets
7.02
%
6.73
%
8.03
%
7.02
%
8.03
%
Effect of goodwill
(0.08
%)
(0.09
%)
(0.09
%)
(0.08
%)
(0.09
%)
Tangible common equity to tangible assets
6.94
%
6.64
%
7.94
%
6.94
%
7.94
%
Total average equity - GAAP
$
353,037
$
356,701
$
364,657
$
357,800
$
372,844
Adjustments: Average goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Average tangible common equity
$
348,350
$
352,014
$
359,970
$
353,113
$
368,157
Return on average shareholders' equity
4.66
%
3.79
%
6.91
%
2.35
%
9.53
%
Effect of goodwill
0.06
%
0.05
%
0.09
%
0.03
%
0.12
%
Return on average tangible common equity
4.72
%
3.84
%
7.00
%
2.38
%
9.65
%
Total interest income
$
66,272
$
63,015
$
45,669
$
239,442
$
156,908
Adjustments: Fully-taxable equivalent adjustments 1
1,238
1,265
1,384
5,233
5,355
Total interest income - FTE
$
67,510
$
64,280
$
47,053
$
244,675
$
162,263
Net interest income
$
19,807
$
17,378
$
21,669
$
74,904
$
97,093
Adjustments: Fully-taxable equivalent adjustments 1
1,238
1,265
1,384
5,233
5,355
Net interest income - FTE
$
21,045
$
18,643
$
23,053
$
80,137
$
102,448
Net interest margin
1.58
%
1.39
%
2.09
%
1.56
%
2.41
%
Effect of fully-taxable equivalent adjustments 1
0.10
%
0.10
%
0.13
%
0.11
%
0.13
%
Net interest margin - FTE
1.68
%
1.49
%
2.22
%
1.67
%
2.54
%
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 Twelve Months Ended December
31, September 30, December 31, December
31, December 31,
2023
2023
2022
2023
2022
Total revenue - GAAP
$
27,208
$
24,785
$
27,476
$
101,029
$
118,350
Adjustments: Mortgage-related revenue
-
-
-
-
-
Adjusted total revenue
$
27,208
$
24,785
$
27,476
$
101,029
$
118,350
Noninterest income - GAAP
$
7,401
$
7,407
$
5,807
$
26,125
$
21,257
Adjustments: Mortgage-related revenue
-
-
-
(65
)
-
Adjusted noninterest income
$
7,401
$
7,407
$
5,807
$
26,060
$
21,257
Noninterest expense - GAAP
$
20,056
$
19,756
$
18,513
$
79,436
$
73,273
Adjustments: Mortgage-related costs
-
-
-
(3,052
)
-
Acquisition-related expenses
-
-
-
-
(273
)
Write-down of software
-
-
-
-
(125
)
Nonrecurring consulting fee
-
-
-
-
(875
)
Discretionary inflation bonus
-
-
-
-
(531
)
Accelerated equity compensation
-
-
-
-
(289
)
Adjusted noninterest expense
$
20,056
$
19,756
$
18,513
$
76,384
$
71,180
Income before income taxes - GAAP
$
3,558
$
3,083
$
6,854
$
4,940
$
40,100
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
Nonrecurring consulting fee
-
-
-
-
875
Discretionary inflation bonus
-
-
-
-
531
Accelerated equity compensation
-
-
-
-
289
Adjusted income before income taxes
$
3,558
$
3,083
$
6,854
$
14,841
$
42,193
Income tax (benefit) provision - GAAP
$
(585
)
$
(326
)
$
503
$
(3,477
)
$
4,559
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
Nonrecurring consulting fee
-
-
-
-
184
Discretionary inflation bonus
-
-
-
-
112
Accelerated equity compensation
-
-
-
-
61
Adjusted income tax (benefit) provision
$
(585
)
$
(326
)
$
503
$
(1,398
)
$
4,999
Net income- GAAP
$
4,143
$
3,409
$
6,351
$
8,417
$
35,541
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
Nonrecurring consulting fee
-
-
-
-
691
Discretionary inflation bonus
-
-
-
-
419
Accelerated equity compensation
-
-
-
-
228
Adjusted net income
$
4,143
$
3,409
$
6,351
$
16,239
$
37,194
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 Twelve Months Ended December
31, September 30, December 31, December
31, December 31,
2023
2023
2022
2023
2022
Diluted average common shares outstanding
8,720,078
8,767,217
9,343,533
8,858,890
9,595,115
Diluted earnings per share - GAAP
$
0.48
$
0.39
$
0.68
$
0.95
$
3.70
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
-
-
-
0.62
-
Effect of acquisition-related expenses
-
-
-
0.02
Effect of write-down of software
-
-
-
-
0.01
Effect of nonrecurring consulting fee
-
-
-
-
0.07
Effect of discretionary inflation
-
-
-
-
0.04
Effect of accelerated equity compensation
-
-
-
0.02
Adjusted diluted earnings per share
$
0.48
$
0.39
$
0.68
$
1.83
$
3.86
Return on average assets
0.32
%
0.26
%
0.59
%
0.17
%
0.85
%
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
%
0.05
%
0.00
%
Effect of partial charge-off of C&I participation loan
0.00
%
0.00
%
0.00
%
0.11
%
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
%
0.00
%
0.00
%
0.00
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.00
%
0.00
%
0.02
%
Effect of discretionary inflation
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
0.32
%
0.26
%
0.59
%
0.33
%
0.90
%
Return on average shareholders' equity
4.66
%
3.79
%
6.91
%
2.35
%
9.53
%
Effect of mortgage-related revenue
0.00
%
0.00
%
0.00
%
(0.01
%)
0.00
%
Effect of mortgage-related costs
0.00
%
0.00
%
0.00
%
0.67
%
0.00
%
Effect of partial charge-off of C&I participation loan
0.00
%
0.00
%
0.00
%
1.53
%
0.00
%
Effect of acquisition-related expenses
0.00
%
0.00
%
0.00
%
0.00
%
0.06
%
Effect of write-down of software
0.00
%
0.00
%
0.00
%
0.00
%
0.03
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.00
%
0.00
%
0.19
%
Effect of discretionary inflation
0.00
%
0.00
%
0.00
%
0.00
%
0.11
%
Effect of accelerated equity compensation
0.00
%
0.00
%
0.00
%
0.00
%
0.06
%
Adjusted return on average shareholders' equity
4.66
%
3.79
%
6.91
%
4.54
%
9.98
%
Return on average tangible common equity
4.72
%
3.84
%
7.00
%
2.38
%
9.65
%
Effect of mortgage-related revenue
0.00
%
0.00
%
0.00
%
(0.01
%)
0.00
%
Effect of mortgage-related costs
0.00
%
0.00
%
0.00
%
0.68
%
0.00
%
Effect of partial charge-off of C&I participation loan
0.00
%
0.00
%
0.00
%
1.55
%
0.00
%
Effect of acquisition-related expenses
0.00
%
0.00
%
0.00
%
0.00
%
0.06
%
Effect of write-down of software
0.00
%
0.00
%
0.00
%
0.00
%
0.03
%
Effect of nonrecurring consulting fee
0.00
%
0.00
%
0.00
%
0.00
%
0.19
%
Effect of discretionary inflation
0.00
%
0.00
%
0.00
%
0.00
%
0.11
%
Effect of accelerated equity compensation
0.00
%
0.00
%
0.00
%
0.00
%
0.06
%
Adjusted return on average tangible common equity
4.72
%
3.84
%
7.00
%
4.60
%
10.10
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240122836057/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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