8-K
First Internet Bancorp (INBK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8‑K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 22, 2020
| First Internet Bancorp | |
|---|---|
| (Exact Name of Registrant as Specified in Its Charter) | |
| Indiana | |
| (State or Other Jurisdiction of Incorporation) | |
| 001-35750 | 20-3489991 |
| (Commission File Number) | (IRS Employer Identification No.) |
| 11201 USA Parkway | 46037 |
| Fishers, Indiana | |
| (Address of Principal Executive Offices) | (Zip Code) |
| (317) 532-7900 | |
| (Registrant's Telephone Number, Including Area Code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|---|---|
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered |
|---|---|---|
| Common Stock, without par value | INBK | The Nasdaq Stock Market LLC |
| 6.0% Fixed to Floating Subordinated Notes due 2026 | INBKL | The Nasdaq Stock Market LLC |
| 6.0% Fixed to Floating Subordinated Notes due 2029 | INBKZ | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition |
|---|
On January 22, 2020, First Internet Bancorp issued a press release announcing financial results for the quarter ended December 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.
On January 23, at 12:00 p.m. (Eastern Time), the Company will host a conference call and webcast to discuss financial results for the quarter ended December 31, 2019. The Company provided electronic presentation slides that will be used in connection with the earnings conference call. A copy of the electronic presentation slides is included in this report as Exhibit 99.2 and is incorporated by reference herein.
| Item 9.01 | Financial Statements and Exhibits | |
|---|---|---|
| Number | Description | Method of filing |
| --- | --- | --- |
| 99.1 | Press release dated January 22, 2020 | Furnished herewith |
| 99.2 | Presentation Slides dated January 22, 2020 | Furnished herewith |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: | January 22, 2020 |
|---|---|
| FIRST INTERNET BANCORP | |
| By: | /s/ Kenneth J. Lovik |
| Kenneth J. Lovik, Executive Vice President & Chief Financial Officer |
Exhibit
First Internet Bancorp Reports Fourth Quarter and Full Year 2019 Results
Highlights for the fourth quarter and full year 2019 include:
| ▪ | Record annual net income and diluted earnings per share of $25.2 million and $2.51, respectively |
|---|---|
| ▪ | Record quarterly net income of $7.1 million, compared to $6.3 million for the third quarter of 2019 and $3.6 million for the fourth quarter of 2018 |
| --- | --- |
| ▪ | Record quarterly diluted earnings per share of $0.72, compared to $0.63 diluted earnings per share for the third quarter of 2019 and $0.35 diluted earnings per share for the fourth quarter of 2018 |
| --- | --- |
| ▪ | Total quarterly revenue of $20.8 million, consistent with the third quarter of 2019 and an 18.9% increase from the fourth quarter of 2018 |
| --- | --- |
Fishers, Indiana, January 22, 2020 - First Internet Bancorp (the “Company”) (Nasdaq: INBK), the parent company of First Internet Bank (the “Bank”), announced today financial and operational results for the fourth quarter and full year ended December 31, 2019. Net income for the fourth quarter of 2019 was a record $7.1 million, or $0.72 diluted earnings per share. This compares to net income of $6.3 million, or $0.63 diluted earnings per share, for the third quarter of 2019, and net income of $3.6 million, or $0.35 diluted earnings per share, for the fourth quarter of 2018. The fourth quarter of 2018 results included a $2.4 million pre-tax write-down of commercial other real estate owned (“OREO”). Excluding this charge, adjusted net income for the quarter was $5.5 million, or $0.53 adjusted diluted earnings per share.
For the twelve month period ended December 31, 2019, net income was a record $25.2 million and diluted earnings per share were a record $2.51 compared to net income of $21.9 million and diluted earnings per share of $2.30 for the twelve month period ended December 31, 2018. Excluding the OREO write-down described above, adjusted net income for the full year 2018 was $23.8 million, or $2.50 adjusted diluted earnings per share.
“First Internet Bancorp produced strong 2019 results, highlighted by record annual net income that was driven by full-year revenue growth of 12%, well-managed expenses and disciplined balance sheet management,” said David Becker, Chairman, President and Chief Executive Officer. “We generated strong production in both commercial and consumer loans, particularly in a number of our specialty lending areas, including single-tenant lease financing, healthcare finance and horse trailer and recreational vehicle lending. Additionally, we capitalized on the lower interest rate environment to drive strong origination growth in our direct-to-consumer mortgage business.
“Looking to 2020, we continue to see opportunities for growth within our collection of lending franchises and to further implement strategies to diversify our revenue and enhance margins in a capital efficient manner,” Becker added. “In 2019, we made significant progress with our expansion into small business banking, capitalizing on attractive opportunities on both sides of our balance sheet. During the fourth quarter, we completed our acquisition of the small business lending division of First Colorado National Bank. This transaction, combined with the experienced professionals we brought on board during the year, positions us to accelerate our efforts to build a nationwide platform that offers a full suite of services to small business entrepreneurs.”
Mr. Becker concluded, “As always, I would like to thank the entire First Internet team for their very hard work to deliver record revenue and earnings performance again in 2019. Their dedication and efforts are the key to our ongoing growth and success.”
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2019 was $15.4 million, compared to $15.2 million for the third quarter of 2019. On a fully-taxable equivalent basis, net interest income for the fourth quarter was $16.9 million, compared to $16.8 million for the third quarter. Net interest income on both a reported and fully-taxable equivalent basis, was consistent with the fourth quarter of 2018.
Total interest income for the fourth quarter of 2019 was $37.9 million, an increase of 0.5%, compared to the third quarter of 2019, and an increase of 18.9% compared to the fourth quarter of 2018. On a fully-taxable equivalent basis, total interest income for the fourth quarter was $39.4 million, an increase of 0.4% compared to the third quarter, and an increase of 18.4% compared to the fourth quarter of 2018. The slight increase in total interest income compared to the third quarter of 2019 was driven primarily by a $98.0 million, or 2.5%, increase in average interest-earning assets, partially offset by a 7 basis point (“bp”) decrease in the yield on those assets. The yield on interest-earning assets for the fourth quarter of 2019 declined to 3.73% from 3.80% in the prior quarter due primarily to the decline in short term rates during the quarter following Federal Reserve rate cuts in September and October, which negatively impacted the yields earned on cash balances, securities and other earning assets. Additionally, cash balances remained elevated as time deposit renewal rates exceeded expectations, which also negatively affected the yield on earning assets. Partially offsetting this was a 2 bp increase in the yield earned on the loan portfolio, including loans held for sale, which benefitted from the acquisition of Small Business Administration (“SBA”) loans and strong healthcare finance production during the quarter.
Total interest expense for the fourth quarter of 2019 was $22.5 million, relatively consistent with the third quarter of 2019, and an increase of 37.0% compared to the fourth quarter of 2018. During the fourth quarter, average interest-bearing deposit balances increased by $79.4 million, compared to the third quarter, while the cost of funds related to those deposits declined 5 bps. The increase in average interest-bearing deposit balances was due primarily to a $113.8 million, or 17.8%, increase in average money market account balances but was partially offset by a $32.1 million, or 1.4%, decrease in the average balance of certificates and brokered deposits. The decrease in deposit costs reflects a decrease in the rates paid on money market accounts and certificates of deposit (“CDs”) as well as a shift in the deposit mix from CDs to money market accounts. During the fourth quarter, the cost of money market deposits decreased by 10 bps and the cost of certificates and brokered deposits decreased 3 bps as rates paid on new CD production and renewals were below the rates paid on maturing CDs.
Net interest margin (“NIM”) was 1.51% for the fourth quarter of 2019, compared to 1.54% for the third quarter of 2019 and 1.89% for the fourth quarter of 2018. On a fully-taxable equivalent basis, NIM decreased 3 basis points to 1.67% for the fourth quarter of 2019, from 1.70% for the third quarter of 2019, and was down from 2.07% for the fourth quarter of 2018. Compared to the linked quarter, deposit costs had a positive impact of 4 bps on NIM while loan yields provided a benefit of 2 bps. However, these benefits were offset by the lower yields earned on elevated cash balances, which had a negative impact of 7 bps, and on other interest-earning assets, which had a negative impact of 2 bps.
Noninterest Income
Noninterest income for the fourth quarter of 2019 was $5.4 million, down from $5.6 million for the third quarter of 2019, and up from $2.0 million for the fourth quarter of 2018. Compared to the linked quarter, a decline in mortgage banking revenue was essentially offset by higher gain on sale of loans and loan servicing revenue. Mortgage banking revenue decreased $1.4 million, or 31.4%, as mandatory pipeline volumes and margins declined due to seasonal factors following an extraordinarily strong third quarter. The increase of $1.2 million in gain on sale of loans was driven by sales of $53.7 million of single tenant lease financing and public finance loans and the Company’s first sales of SBA 7(a) guaranteed loans, which included $9.2 million of balances. The Company also began earning loan servicing revenue from the acquired SBA servicing portfolio, recognizing $0.2 million during the fourth quarter.
Noninterest Expense
Noninterest expense for the fourth quarter of 2019 was $12.6 million, compared to $11.2 million for the third quarter of 2019 and $12.7 million for the fourth quarter of 2018. The increase from the third quarter was due primarily to a $0.6 million increase in deposit insurance premium, a $0.5 million increase in consulting and professional fees and a $0.3 million increase in salaries and employee benefits. Deposit insurance premium expense resumed in the fourth quarter after not incurring any expense in the third quarter of 2019 as a result of the small bank assessment credit applied by the Federal Deposit Insurance Corporation. The increase in consulting and professional fees was due to higher recruiting fees and third party loan review fees while salaries and employee benefits expense increased due to the headcount growth in the Company’s SBA lending business.
Income Taxes
The Company reported an income tax expense of $0.6 million for the fourth quarter of 2019 and an effective tax rate of 7.8%, compared to income tax expense of $0.4 million and an effective tax rate of 6.6% for the third quarter of 2019 and an income tax benefit of $0.3 million for the fourth quarter of 2018. The income tax benefit reported in the fourth quarter of 2018 primarily related to the write-down of the OREO property and the continued growth in the public finance portfolio, which increased the proportion of tax-exempt income relative to overall total pre-tax income. When excluding the income tax benefit related to the OREO write-down, the Company’s adjusted effective income tax rate for the fourth quarter of 2018 was 3.1%.
Loans and Credit Quality
Total loans as of December 31, 2019 were $3.0 billion, an increase of $82.3 million, or 2.9%, compared to September 30, 2019 and an increase of $247.3 million, or 9.1%, compared to December 31, 2018. Total commercial loan balances were $2.3 billion as of December 31, 2019, an increase of $93.5 million, or 4.3%, compared to September 30, 2019 and an increase of $296.9 million, or 14.9%, compared to December 31, 2018. Compared to the linked quarter, the growth in commercial loan balances was driven largely by production in healthcare finance and the acquisition of the SBA loan portfolio. These increases were partially offset by the sale of $53.7 million of single tenant lease financing and public finance loans discussed above.
Total consumer loan balances were $633.5 million as of December 31, 2019, a decrease of $8.6 million, or 1.3%, compared to September 30, 2019 and a decrease of $74.9 million, or 10.6%, compared to December 31, 2018. The decline in consumer loan balances from September 30, 2019 was driven primarily by increased early payoffs on portfolio residential mortgage loans.
Total delinquencies 30 days or more past due increased to 0.24% of total loans as of December 31, 2019, up from 0.13% as of September 30, 2019 and 0.15% as of December 31, 2018. The increase in delinquencies compared to the linked and prior year quarters was due primarily to the single tenant lease financing relationship that was placed on nonaccrual status in the third quarter of 2019 becoming past due. Overall credit quality remained solid as nonperforming loans to total loans remained low at 0.23% as of December 31, 2019, compared to 0.20% at September 30, 2019 and 0.03% as of December 31, 2018.
The allowance for loan losses as a percentage of total loans was 0.74% as of December 31, 2019, compared to 0.75% as of September 30, 2019 and 0.66% as of December 31, 2018. The slight decline in the coverage ratio compared to the linked quarter was due primarily to lower specific reserves in the commercial and industrial portfolio.
Net charge-offs of $0.3 million were recognized during the fourth quarter of 2019, resulting in net charge-offs to average loans of 0.04%, compared to 0.15% for the third quarter and 0.05% for the fourth quarter of 2018. The provision for loan losses in the fourth quarter was $0.5 million, compared to $2.8 million for the third quarter and $1.5 million for the fourth quarter of 2018. The third quarter’s results included a specific reserve of $1.7 million recognized on the single tenant lease financing relationship mentioned above and a $0.8 million commercial loan charge-off. The provision for the fourth quarter was driven primarily by growth in the healthcare finance portfolio and net charge-offs, partially offset by the loan sale activity.
Capital
As of December 31, 2019, total shareholders’ equity was $304.9 million, an increase of $9.8 million, or 3.3%, compared to September 30, 2019, primarily due to the net income earned during the quarter and a decrease in accumulated other comprehensive loss. Book value per common share increased to $31.30 as of December 30, 2019, up from $30.30 as of September 30, 2019 and $28.39 as of December 31, 2018. Tangible book value per share increased to $30.82, up from $29.82 and $27.93, each as of the same reference dates.
The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of December 31, 2019.
| As of December 31, 2019 | ||||
|---|---|---|---|---|
| Company | Bank | |||
| Total shareholders' equity to assets | 7.44 | % | 8.11 | % |
| Tangible common equity to tangible assets ^1^ | 7.33 | % | 8.01 | % |
| Tier 1 leverage ratio ^2^ | 7.64 | % | 8.32 | % |
| Common equity tier 1 capital ratio ^2^ | 10.84 | % | 11.80 | % |
| Tier 1 capital ratio ^2^ | 10.84 | % | 11.80 | % |
| Total risk-based capital ratio ^2^ | 14.00 | % | 12.55 | % |
| ^1^ This information represents a non-GAAP financial measure. For a discussion of non-GAAP financial measures, see the section below entitled "Non-GAAP Financial Measures." | ||||
| ^2^ Regulatory capital ratios are preliminary pending filing of the Company's and the Bank's regulatory reports. |
Conference Call and Webcast
The Company will host a conference call and webcast at 12:00 p.m. Eastern Time on Thursday, January 23, 2020 to discuss its quarterly financial results. The call can be accessed via telephone at (888) 348-3664. A recorded replay can be accessed through February 23, 2020 by dialing (877) 344-7529; passcode: 10138147.
Additionally, interested parties can listen to a live webcast of the call on Company's website at www.firstinternetbancorp.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.
About First Internet Bancorp
First Internet Bancorp is a bank holding company with assets of $4.1 billion as of December 31, 2019. The Company’s subsidiary, First Internet Bank, opened for business in 1999 as an industry pioneer in the branchless delivery of banking services. The Bank provides consumer and small business deposit, consumer loan, residential mortgage, and specialty finance services nationally as well as commercial real estate loans, commercial and industrial loans, SBA financing and treasury management services in select geographies. First Internet Bancorp’s common stock trades on the Nasdaq Global Select Market under the symbol “INBK” and is a component of the Russell 2000® Index. Additional information about the Company is available at www.firstinternetbancorp.com and additional information about the Bank, including its products and services, is available at www.firstib.com.
Forward-Looking Statements
This press release may contain forward-looking statements with respect to the financial condition, results of operations, trends in lending policies, timing of pending acquisitions, plans, objectives, future performance or business of the Company. Forward-looking statements are generally identifiable by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “pending,” “plan,” “position,” “preliminary,” “remain,” “should,” “will,” “would” or other similar expressions. Forward-looking statements are not a guarantee of future performance or results, are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the information in the forward-looking statements. Factors that may cause such differences include: failures or breaches of or interruptions in the communications and information systems on which we rely to conduct our business; failure of our plans to grow our commercial real estate, commercial and industrial, public finance, SBA and healthcare finance loan portfolios;
competition with national, regional and community financial institutions; the loss of any key members of senior management; fluctuations in interest rates; general economic conditions; risks relating to the regulation of financial institutions; failure to close any pending acquisitions; failure to satisfy or waive closing condition; 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 adjusted net income, adjusted diluted earnings per share, tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, total interest income - FTE, net interest income - FTE, net interest margin - FTE, adjusted income before income taxes, adjusted income tax provision, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity, adjusted return on average tangible common equity and adjusted effective income tax rate are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the table at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”
| Contact Information: | |
|---|---|
| Investors/Analysts | Media |
| Paula Deemer | Nicole Lorch |
| Investor Relations | Executive Vice President & Chief Operating Officer |
| (317) 428-4628 | (317) 532-7906 |
| investors@firstib.com | nlorch@firstib.com |
| First Internet Bancorp | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Summary Financial Information (unaudited) | |||||||||||||||
| Amounts in thousands, except per share data | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31, <br>2019 | September 30, <br>2019 | December 31, <br>2018 | December 31, <br>2019 | December 31, <br>2018 | |||||||||||
| Net income | $ | 7,096 | $ | 6,326 | $ | 3,576 | $ | 25,239 | $ | 21,900 | |||||
| Per share and share information | |||||||||||||||
| Earnings per share - basic | $ | 0.72 | $ | 0.63 | $ | 0.35 | $ | 2.51 | $ | 2.31 | |||||
| Earnings per share - diluted | 0.72 | 0.63 | 0.35 | 2.51 | 2.30 | ||||||||||
| Dividends declared per share | 0.06 | 0.06 | 0.06 | 0.24 | 0.24 | ||||||||||
| Book value per common share | 31.30 | 30.30 | 28.39 | 31.30 | 28.39 | ||||||||||
| Tangible book value per common share ^1^ | 30.82 | 29.82 | 27.93 | 30.82 | 27.93 | ||||||||||
| Common shares outstanding | 9,741,800 | 9,741,800 | 10,170,778 | 9,741,800 | 10,170,778 | ||||||||||
| Average common shares outstanding: | |||||||||||||||
| Basic | 9,825,784 | 9,979,603 | 10,263,086 | 10,041,581 | 9,490,506 | ||||||||||
| Diluted | 9,843,829 | 9,980,612 | 10,275,040 | 10,044,483 | 9,508,653 | ||||||||||
| Performance ratios | |||||||||||||||
| Return on average assets | 0.69 | % | 0.63 | % | 0.43 | % | 0.65 | % | 0.72 | % | |||||
| Return on average shareholders' equity | 9.46 | % | 8.40 | % | 4.89 | % | 8.52 | % | 8.44 | % | |||||
| Return on average tangible common equity ^1^ | 9.61 | % | 8.53 | % | 4.98 | % | 8.65 | % | 8.60 | % | |||||
| Net interest margin | 1.51 | % | 1.54 | % | 1.89 | % | 1.65 | % | 2.09 | % | |||||
| Net interest margin - FTE ^1,2^ | 1.67 | % | 1.70 | % | 2.07 | % | 1.82 | % | 2.25 | % | |||||
| Capital ratios^3^ | |||||||||||||||
| Total shareholders' equity to assets | 7.44 | % | 7.21 | % | 8.15 | % | 7.44 | % | 8.15 | % | |||||
| Tangible common equity to tangible assets ^1^ | 7.33 | % | 7.10 | % | 8.03 | % | 7.33 | % | 8.03 | % | |||||
| Tier 1 leverage ratio | 7.64 | % | 7.66 | % | 9.00 | % | 7.64 | % | 9.00 | % | |||||
| Common equity tier 1 capital ratio | 10.84 | % | 10.93 | % | 12.39 | % | 10.84 | % | 12.39 | % | |||||
| Tier 1 capital ratio | 10.84 | % | 10.93 | % | 12.39 | % | 10.84 | % | 12.39 | % | |||||
| Total risk-based capital ratio | 14.00 | % | 14.17 | % | 14.53 | % | 14.00 | % | 14.53 | % | |||||
| Asset quality | |||||||||||||||
| Nonperforming loans | $ | 6,732 | $ | 5,783 | $ | 889 | $ | 6,732 | $ | 889 | |||||
| Nonperforming assets | 8,872 | 8,497 | 3,508 | 8,872 | 3,508 | ||||||||||
| Nonperforming loans to loans | 0.23 | % | 0.20 | % | 0.03 | % | 0.23 | % | 0.03 | % | |||||
| Nonperforming assets to total assets | 0.22 | % | 0.21 | % | 0.10 | % | 0.22 | % | 0.10 | % | |||||
| Allowance for loan losses to: | |||||||||||||||
| Loans | 0.74 | % | 0.75 | % | 0.66 | % | 0.74 | % | 0.66 | % | |||||
| Nonperforming loans | 324.4 | % | 374.9 | % | 2,013.1 | % | 324.4 | % | 2,013.1 | % | |||||
| Net charge-offs to average loans | 0.04 | % | 0.15 | % | 0.05 | % | 0.07 | % | 0.04 | % | |||||
| Average balance sheet information | |||||||||||||||
| Loans | $ | 2,936,144 | $ | 2,865,258 | $ | 2,577,584 | $ | 2,863,250 | $ | 2,364,336 | |||||
| Total securities | 597,049 | 561,780 | 494,256 | 560,317 | 486,030 | ||||||||||
| Other earning assets | 452,945 | 469,454 | 148,311 | 355,412 | 116,074 | ||||||||||
| Total interest-earning assets | 4,031,327 | 3,933,315 | 3,236,144 | 3,809,903 | 2,984,608 | ||||||||||
| Total assets | 4,108,216 | 4,015,433 | 3,320,850 | 3,890,708 | 3,055,224 | ||||||||||
| Noninterest-bearing deposits | 49,570 | 43,972 | 48,779 | 44,682 | 45,562 | ||||||||||
| Interest-bearing deposits | 3,110,501 | 3,031,095 | 2,472,443 | 2,938,622 | 2,272,037 | ||||||||||
| Total deposits | 3,160,071 | 3,075,067 | 2,521,222 | 2,983,304 | 2,317,599 | ||||||||||
| Shareholders' equity | 297,623 | 298,782 | 289,844 | 296,382 | 259,416 |
^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, 2018) | |||||||||
| Amounts in thousands | |||||||||
| December 31, <br>2019 | September 30, <br>2019 | December 31, <br>2018 | |||||||
| Assets | |||||||||
| Cash and due from banks | $ | 5,061 | $ | 6,283 | $ | 7,080 | |||
| Interest-bearing deposits | 322,300 | 410,119 | 181,632 | ||||||
| Securities available-for-sale, at fair value | 540,852 | 544,742 | 481,345 | ||||||
| Securities held-to-maturity, at amortized cost | 61,878 | 46,807 | 22,750 | ||||||
| Loans held-for-sale | 56,097 | 41,119 | 18,328 | ||||||
| Loans | 2,963,547 | 2,881,272 | 2,716,228 | ||||||
| Allowance for loan losses | (21,840 | ) | (21,683 | ) | (17,896 | ) | |||
| Net loans | 2,941,707 | 2,859,589 | 2,698,332 | ||||||
| Accrued interest receivable | 18,607 | 16,652 | 16,822 | ||||||
| Federal Home Loan Bank of Indianapolis stock | 25,650 | 25,650 | 23,625 | ||||||
| Cash surrender value of bank-owned life insurance | 37,002 | 36,764 | 36,059 | ||||||
| Premises and equipment, net | 14,630 | 14,512 | 10,697 | ||||||
| Goodwill | 4,687 | 4,687 | 4,687 | ||||||
| Servicing asset | 2,481 | — | — | ||||||
| Other real estate owned | 2,065 | 2,619 | 2,619 | ||||||
| Accrued income and other assets | 67,066 | 85,948 | 37,716 | ||||||
| Total assets | $ | 4,100,083 | $ | 4,095,491 | $ | 3,541,692 | |||
| Liabilities | |||||||||
| Noninterest-bearing deposits | $ | 57,115 | $ | 50,560 | $ | 43,301 | |||
| Interest-bearing deposits | 3,096,848 | 3,097,682 | 2,628,050 | ||||||
| Total deposits | 3,153,963 | 3,148,242 | 2,671,351 | ||||||
| Advances from Federal Home Loan Bank | 514,910 | 514,908 | 525,153 | ||||||
| Subordinated debt | 69,528 | 69,452 | 33,875 | ||||||
| Accrued interest payable | 3,767 | 2,635 | 1,108 | ||||||
| Accrued expenses and other liabilities | 53,002 | 65,114 | 21,470 | ||||||
| Total liabilities | 3,795,170 | 3,800,351 | 3,252,957 | ||||||
| Shareholders' equity | |||||||||
| Voting common stock | 219,423 | 219,013 | 227,587 | ||||||
| Retained earnings | 99,681 | 93,182 | 77,689 | ||||||
| Accumulated other comprehensive loss | (14,191 | ) | (17,055 | ) | (16,541 | ) | |||
| Total shareholders' equity | 304,913 | 295,140 | 288,735 | ||||||
| Total liabilities and shareholders' equity | $ | 4,100,083 | $ | 4,095,491 | $ | 3,541,692 |
| First Internet Bancorp | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Condensed Consolidated Statements of Income (unaudited, except for the twelve months ended December 31, 2018) | ||||||||||||
| Amounts in thousands, except per share data | ||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||
| December 31, <br>2019 | September 30, <br>2019 | December 31, <br>2018 | December 31, <br>2019 | December 31, <br>2018 | ||||||||
| Interest income | ||||||||||||
| Loans | $ | 31,574 | $ | 30,594 | $ | 27,249 | $ | 122,228 | $ | 99,082 | ||
| Securities - taxable | 3,475 | 3,468 | 2,927 | 13,807 | 10,630 | |||||||
| Securities - non-taxable | 604 | 639 | 701 | 2,595 | 2,810 | |||||||
| Other earning assets | 2,224 | 2,993 | 972 | 8,784 | 2,945 | |||||||
| Total interest income | 37,877 | 37,694 | 31,849 | 147,414 | 115,467 | |||||||
| Interest expense | ||||||||||||
| Deposits | 18,417 | 18,363 | 13,338 | 69,313 | 42,484 | |||||||
| Other borrowed funds | 4,086 | 4,087 | 3,090 | 15,134 | 10,716 | |||||||
| Total interest expense | 22,503 | 22,450 | 16,428 | 84,447 | 53,200 | |||||||
| Net interest income | 15,374 | 15,244 | 15,421 | 62,967 | 62,267 | |||||||
| Provision for loan losses | 468 | 2,824 | 1,487 | 5,966 | 3,892 | |||||||
| Net interest income after provision for loan losses | 14,906 | 12,420 | 13,934 | 57,001 | 58,375 | |||||||
| Noninterest income | ||||||||||||
| Service charges and fees | 213 | 211 | 237 | 885 | 934 | |||||||
| Loan servicing revenue | 166 | — | — | 166 | — | |||||||
| Mortgage banking activities | 2,953 | 4,307 | 1,141 | 11,541 | 5,718 | |||||||
| Gain on sale of loans | 1,721 | 523 | 89 | 2,074 | 503 | |||||||
| Loss on sale of securities | — | — | — | (458 | ) | — | ||||||
| Other | 352 | 517 | 580 | 2,581 | 1,605 | |||||||
| Total noninterest income | 5,405 | 5,558 | 2,047 | 16,789 | 8,760 | |||||||
| Noninterest expense | ||||||||||||
| Salaries and employee benefits | 7,168 | 6,883 | 5,738 | 27,014 | 23,174 | |||||||
| Marketing, advertising and promotion | 409 | 456 | 543 | 1,800 | 2,468 | |||||||
| Consulting and professional fees | 1,242 | 778 | 862 | 3,669 | 3,055 | |||||||
| Data processing | 312 | 381 | 320 | 1,338 | 1,233 | |||||||
| Loan expenses | 289 | 247 | 204 | 1,142 | 942 | |||||||
| Premises and equipment | 1,556 | 1,506 | 1,307 | 6,059 | 4,996 | |||||||
| Deposit insurance premium | 601 | — | 570 | 1,903 | 1,956 | |||||||
| Write-down of other real estate owned | — | — | 2,423 | — | 2,423 | |||||||
| Other | 1,036 | 952 | 772 | 3,709 | 2,936 | |||||||
| Total noninterest expense | 12,613 | 11,203 | 12,739 | 46,634 | 43,183 | |||||||
| Income before income taxes | 7,698 | 6,775 | 3,242 | 27,156 | 23,952 | |||||||
| Income tax (benefit) provision | 602 | 449 | (334 | ) | 1,917 | 2,052 | ||||||
| Net income | $ | 7,096 | $ | 6,326 | $ | 3,576 | $ | 25,239 | $ | 21,900 | ||
| Per common share data | ||||||||||||
| Earnings per share - basic | $ | 0.72 | $ | 0.63 | $ | 0.35 | $ | 2.51 | $ | 2.31 | ||
| Earnings per share - diluted | $ | 0.72 | $ | 0.63 | $ | 0.35 | $ | 2.51 | $ | 2.30 | ||
| 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) | |||||||||||||||||||||
| Amounts in thousands | |||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||
| December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||||||||||||
| Average Balance | Interest/Dividends | Yield/ Cost | Average Balance | Interest/Dividends | Yield/ Cost | Average Balance | Interest/Dividends | Yield/ Cost | |||||||||||||
| Assets | |||||||||||||||||||||
| Interest-earning assets | |||||||||||||||||||||
| Loans, including loans held-for-sale ^1^ | $ | 2,981,333 | $ | 31,574 | 4.20 | % | $ | 2,902,081 | $ | 30,594 | 4.18 | % | $ | 2,593,577 | $ | 27,249 | 4.17 | % | |||
| Securities - taxable | 497,739 | 3,475 | 2.77 | % | 462,490 | 3,468 | 2.97 | % | 402,179 | 2,927 | 2.89 | % | |||||||||
| Securities - non-taxable | 99,310 | 604 | 2.41 | % | 99,290 | 639 | 2.55 | % | 92,077 | 701 | 3.02 | % | |||||||||
| Other earning assets | 452,945 | 2,224 | 1.95 | % | 469,454 | 2,993 | 2.53 | % | 148,311 | 972 | 2.60 | % | |||||||||
| Total interest-earning assets | 4,031,327 | 37,877 | 3.73 | % | 3,933,315 | 37,694 | 3.80 | % | 3,236,144 | 31,849 | 3.90 | % | |||||||||
| Allowance for loan losses | (21,967 | ) | (20,050 | ) | (17,065 | ) | |||||||||||||||
| Noninterest earning-assets | 98,856 | 102,168 | 101,771 | ||||||||||||||||||
| Total assets | $ | 4,108,216 | $ | 4,015,433 | $ | 3,320,850 | |||||||||||||||
| Liabilities | |||||||||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||||||
| Interest-bearing demand deposits | $ | 122,031 | $ | 223 | 0.73 | % | $ | 126,130 | $ | 233 | 0.73 | % | $ | 89,234 | $ | 182 | 0.81 | % | |||
| Savings accounts | 34,298 | 94 | 1.09 | % | 32,434 | 91 | 1.11 | % | 42,694 | 123 | 1.14 | % | |||||||||
| Money market accounts | 752,941 | 3,653 | 1.92 | % | 639,181 | 3,261 | 2.02 | % | 518,421 | 2,575 | 1.97 | % | |||||||||
| Certificates and brokered deposits | 2,201,231 | 14,447 | 2.60 | % | 2,233,350 | 14,778 | 2.63 | % | 1,822,094 | 10,458 | 2.28 | % | |||||||||
| Total interest-bearing deposits | 3,110,501 | 18,417 | 2.35 | % | 3,031,095 | 18,363 | 2.40 | % | 2,472,443 | 13,338 | 2.14 | % | |||||||||
| Other borrowed funds | 584,386 | 4,086 | 2.77 | % | 584,308 | 4,087 | 2.78 | % | 499,877 | 3,090 | 2.45 | % | |||||||||
| Total interest-bearing liabilities | 3,694,887 | 22,503 | 2.42 | % | 3,615,403 | 22,450 | 2.46 | % | 2,972,320 | 16,428 | 2.19 | % | |||||||||
| Noninterest-bearing deposits | 49,570 | 43,972 | 48,779 | ||||||||||||||||||
| Other noninterest-bearing liabilities | 66,136 | 57,276 | 9,907 | ||||||||||||||||||
| Total liabilities | 3,810,593 | 3,716,651 | 3,031,006 | ||||||||||||||||||
| Shareholders' equity | 297,623 | 298,782 | 289,844 | ||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 4,108,216 | $ | 4,015,433 | $ | 3,320,850 | |||||||||||||||
| Net interest income | $ | 15,374 | $ | 15,244 | $ | 15,421 | |||||||||||||||
| Interest rate spread | 1.31 | % | 1.34 | % | 1.71 | % | |||||||||||||||
| Net interest margin | 1.51 | % | 1.54 | % | 1.89 | % | |||||||||||||||
| Net interest margin - FTE ^2,3^ | 1.67 | % | 1.70 | % | 2.07 | % |
^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) | ||||||||||||||
| Amounts in thousands | ||||||||||||||
| Twelve Months Ended | ||||||||||||||
| December 31, 2019 | December 31, 2018 | |||||||||||||
| Average Balance | Interest/Dividends | Yield/Cost | Average Balance | Interest/Dividends | Yield/Cost | |||||||||
| Assets | ||||||||||||||
| Interest-earning assets | ||||||||||||||
| Loans, including loans held-for-sale ^1^ | $ | 2,894,174 | $ | 122,228 | 4.22 | % | $ | 2,382,504 | $ | 99,082 | 4.16 | % | ||
| Securities - taxable | 462,704 | 13,807 | 2.98 | % | 391,958 | 10,630 | 2.71 | % | ||||||
| Securities - non-taxable | 97,613 | 2,595 | 2.66 | % | 94,072 | 2,810 | 2.99 | % | ||||||
| Other earning assets | 355,412 | 8,784 | 2.47 | % | 116,074 | 2,945 | 2.54 | % | ||||||
| Total interest-earning assets | 3,809,903 | 147,414 | 3.87 | % | 2,984,608 | 115,467 | 3.87 | % | ||||||
| Allowance for loan losses | (19,891 | ) | (16,097 | ) | ||||||||||
| Noninterest earning-assets | 100,696 | 86,713 | ||||||||||||
| Total assets | $ | 3,890,708 | $ | 3,055,224 | ||||||||||
| Liabilities | ||||||||||||||
| Interest-bearing liabilities | ||||||||||||||
| Interest-bearing demand deposits | $ | 118,874 | $ | 882 | 0.74 | % | $ | 90,229 | $ | 583 | 0.65 | % | ||
| Regular savings accounts | 35,751 | 398 | 1.11 | % | 51,333 | 585 | 1.14 | % | ||||||
| Money market accounts | 637,360 | 12,661 | 1.99 | % | 544,802 | 8,803 | 1.62 | % | ||||||
| Certificates and brokered deposits | 2,146,637 | 55,372 | 2.58 | % | 1,585,673 | 32,513 | 2.05 | % | ||||||
| Total interest-bearing deposits | 2,938,622 | 69,313 | 2.36 | % | 2,272,037 | 42,484 | 1.87 | % | ||||||
| Other borrowed funds | 564,757 | 15,134 | 2.68 | % | 468,411 | 10,716 | 2.29 | % | ||||||
| Total interest-bearing liabilities | 3,503,379 | 84,447 | 2.41 | % | 2,740,448 | 53,200 | 1.94 | % | ||||||
| Noninterest-bearing deposits | 44,682 | 45,562 | ||||||||||||
| Other noninterest-bearing liabilities | 46,265 | 9,798 | ||||||||||||
| Total liabilities | 3,594,326 | 2,795,808 | ||||||||||||
| Shareholders' equity | 296,382 | 259,416 | ||||||||||||
| Total liabilities and shareholders' equity | $ | 3,890,708 | $ | 3,055,224 | ||||||||||
| Net interest income | $ | 62,967 | $ | 62,267 | ||||||||||
| Interest rate spread | 1.46 | % | 1.93 | % | ||||||||||
| Net interest margin | 1.65 | % | 2.09 | % | ||||||||||
| Net interest margin - FTE ^2,3^ | 1.82 | % | 2.25 | % |
^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) | ||||||||||||
| Amounts in thousands | ||||||||||||
| December 31, 2019 | September 30, 2019 | December 31, 2018 | ||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||
| Commercial loans | ||||||||||||
| Commercial and industrial | $ | 96,420 | 3.3 | % | $ | 82,791 | 2.9 | % | $ | 107,405 | 4.0 | % |
| Owner-occupied commercial real estate | 73,392 | 2.5 | % | 76,197 | 2.6 | % | 77,569 | 2.9 | % | |||
| Investor commercial real estate | 12,567 | 0.4 | % | 11,852 | 0.4 | % | 5,391 | 0.2 | % | |||
| Construction | 60,274 | 2.0 | % | 54,131 | 1.9 | % | 39,916 | 1.5 | % | |||
| Single tenant lease financing | 995,879 | 33.6 | % | 1,008,247 | 35.0 | % | 919,440 | 33.8 | % | |||
| Public finance | 687,094 | 23.2 | % | 686,622 | 23.8 | % | 706,342 | 26.0 | % | |||
| Healthcare finance | 300,612 | 10.1 | % | 251,530 | 8.6 | % | 117,007 | 4.4 | % | |||
| Small business lending | 61,121 | 2.1 | % | 22,447 | 0.8 | % | 17,370 | 0.5 | % | |||
| Total commercial loans | 2,287,359 | 77.2 | % | 2,193,817 | 76.0 | % | 1,990,440 | 73.3 | % | |||
| Consumer loans | ||||||||||||
| Residential mortgage | 313,849 | 10.6 | % | 320,451 | 11.1 | % | 399,898 | 14.7 | % | |||
| Home equity | 24,306 | 0.8 | % | 25,042 | 0.9 | % | 28,735 | 1.1 | % | |||
| Trailers | 146,734 | 5.0 | % | 145,600 | 5.1 | % | 136,620 | 5.0 | % | |||
| Recreational vehicles | 102,702 | 3.5 | % | 102,698 | 3.6 | % | 91,912 | 3.4 | % | |||
| Other consumer loans | 45,873 | 1.5 | % | 48,275 | 1.7 | % | 51,239 | 1.9 | % | |||
| Total consumer loans | 633,464 | 21.4 | % | 642,066 | 22.4 | % | 708,404 | 26.1 | % | |||
| Net deferred loan fees, premiums, discounts and other ^1^ | 42,724 | 1.4 | % | 45,389 | 1.6 | % | 17,384 | 0.6 | % | |||
| Total loans | $ | 2,963,547 | 100.0 | % | $ | 2,881,272 | 100.0 | % | $ | 2,716,228 | 100.0 | % |
| December 31, 2019 | September 30, 2019 | December 31, 2018 | ||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||
| Deposits | ||||||||||||
| Noninterest-bearing deposits | $ | 57,115 | 1.8 | % | $ | 50,560 | 1.6 | % | $ | 43,301 | 1.6 | % |
| Interest-bearing demand deposits | 129,020 | 4.1 | % | 122,551 | 3.9 | % | 121,055 | 4.5 | % | |||
| Savings accounts | 29,616 | 0.9 | % | 34,886 | 1.1 | % | 38,489 | 1.4 | % | |||
| Money market accounts | 786,390 | 24.9 | % | 698,077 | 22.2 | % | 528,533 | 19.9 | % | |||
| Certificates of deposits | 1,613,453 | 51.2 | % | 1,681,377 | 53.4 | % | 1,292,883 | 48.4 | % | |||
| Brokered deposits | 538,369 | 17.1 | % | 560,791 | 17.8 | % | 647,090 | 24.2 | % | |||
| Total deposits | $ | 3,153,963 | 100.0 | % | $ | 3,148,242 | 100.0 | % | $ | 2,671,351 | 100.0 | % |
^1^ Includes carrying value adjustments of $21.4 million, $27.6 million and $5.0 million as of December 31, 2019, September 30, 2019 and December 31, 2018, respectively, related to interest rate swaps associated with public finance loans.
| First Internet Bancorp | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||
| Amounts in thousands, except per share data | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31, <br>2019 | September 30, <br>2019 | December 31, <br>2018 | December 31, <br>2019 | December 31, <br>2018 | |||||||||||
| Total equity - GAAP | $ | 304,913 | $ | 295,140 | $ | 288,735 | $ | 304,913 | $ | 288,735 | |||||
| Adjustments: | |||||||||||||||
| Goodwill | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | |||||
| Tangible common equity | $ | 300,226 | $ | 290,453 | $ | 284,048 | $ | 300,226 | $ | 284,048 | |||||
| Total assets - GAAP | $ | 4,100,083 | $ | 4,095,491 | $ | 3,541,692 | $ | 4,100,083 | $ | 3,541,692 | |||||
| Adjustments: | |||||||||||||||
| Goodwill | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | |||||
| Tangible assets | $ | 4,095,396 | $ | 4,090,804 | $ | 3,537,005 | $ | 4,095,396 | $ | 3,537,005 | |||||
| Common shares outstanding | 9,741,800 | 9,741,800 | 10,170,778 | 9,741,800 | 10,170,778 | ||||||||||
| Book value per common share | $ | 31.30 | $ | 30.30 | $ | 28.39 | $ | 31.30 | $ | 28.39 | |||||
| Effect of goodwill | (0.48 | ) | (0.48 | ) | (0.46 | ) | (0.48 | ) | (0.46 | ) | |||||
| Tangible book value per common share | $ | 30.82 | $ | 29.82 | $ | 27.93 | $ | 30.82 | $ | 27.93 | |||||
| Total shareholders' equity to assets ratio | 7.44 | % | 7.21 | % | 8.15 | % | 7.44 | % | 8.15 | % | |||||
| Effect of goodwill | (0.11 | )% | (0.11 | )% | (0.12 | )% | (0.11 | )% | (0.12 | )% | |||||
| Tangible common equity to tangible assets ratio | 7.33 | % | 7.10 | % | 8.03 | % | 7.33 | % | 8.03 | % | |||||
| Total average equity - GAAP | $ | 297,623 | $ | 298,782 | $ | 289,844 | $ | 296,382 | $ | 259,416 | |||||
| Adjustments: | |||||||||||||||
| Average goodwill | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | |||||
| Average tangible common equity | $ | 292,936 | $ | 294,095 | $ | 285,157 | $ | 291,695 | $ | 254,729 | |||||
| Return on average shareholders' equity | 9.46 | % | 8.40 | % | 4.89 | % | 8.52 | % | 8.44 | % | |||||
| Effect of goodwill | 0.15 | % | 0.13 | % | 0.09 | % | 0.13 | % | 0.16 | % | |||||
| Return on average tangible common equity | 9.61 | % | 8.53 | % | 4.98 | % | 8.65 | % | 8.60 | % | |||||
| Total interest income | $ | 37,877 | $ | 37,694 | $ | 31,849 | $ | 147,414 | $ | 115,467 | |||||
| Adjustments: | |||||||||||||||
| Fully-taxable equivalent adjustments ^1^ | 1,570 | 1,595 | 1,477 | 6,334 | 5,010 | ||||||||||
| Total interest income - FTE | $ | 39,447 | $ | 39,289 | $ | 33,326 | $ | 153,748 | $ | 120,477 | |||||
| Net interest income | $ | 15,374 | $ | 15,244 | $ | 15,421 | $ | 62,967 | $ | 62,267 | |||||
| Adjustments: | |||||||||||||||
| Fully-taxable equivalent adjustments ^1^ | 1,570 | 1,595 | 1,477 | 6,334 | 5,010 | ||||||||||
| Net interest income - FTE | $ | 16,944 | $ | 16,839 | $ | 16,898 | $ | 69,301 | $ | 67,277 | |||||
| Net interest margin | 1.51 | % | 1.54 | % | 1.89 | % | 1.65 | % | 2.09 | % | |||||
| Effect of fully-taxable equivalent adjustments ^1^ | 0.16 | % | 0.16 | % | 0.18 | % | 0.17 | % | 0.16 | % | |||||
| Net interest margin - FTE | 1.67 | % | 1.70 | % | 2.07 | % | 1.82 | % | 2.25 | % |
^1^ Assuming a 21% tax rate
| First Internet Bancorp | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||
| Amounts in thousands, except per share data | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31, <br>2019 | September 30, <br>2019 | December 31, <br>2018 | December 31, <br>2019 | December 31, <br>2018 | |||||||||||
| Income before income taxes - GAAP | $ | 7,698 | $ | 6,775 | $ | 3,242 | $ | 27,156 | $ | 23,952 | |||||
| Adjustments: | |||||||||||||||
| Write-down of other real estate owned | — | — | 2,423 | — | 2,423 | ||||||||||
| Adjusted income before income taxes | $ | 7,698 | $ | 6,775 | $ | 5,665 | $ | 27,156 | $ | 26,375 | |||||
| Income tax (benefit) provision - GAAP | $ | 602 | $ | 449 | $ | (334 | ) | $ | 1,917 | $ | 2,052 | ||||
| Adjustments: | |||||||||||||||
| Write-down of other real estate owned | — | — | 509 | — | 509 | ||||||||||
| Adjusted income tax provision | $ | 602 | $ | 449 | $ | 175 | $ | 1,917 | $ | 2,561 | |||||
| Net income - GAAP | $ | 7,096 | $ | 6,326 | $ | 3,576 | $ | 25,239 | $ | 21,900 | |||||
| Adjustments: | |||||||||||||||
| Write-down of other real estate owned | — | — | 1,914 | — | 1,914 | ||||||||||
| Adjusted net income | $ | 7,096 | $ | 6,326 | $ | 5,490 | $ | 25,239 | $ | 23,814 | |||||
| Diluted average common shares outstanding | $ | 9,843,829 | $ | 9,980,612 | $ | 10,275,040 | $ | 10,044,483 | $ | 9,508,653 | |||||
| Diluted earnings per share - GAAP | $ | 0.72 | $ | 0.63 | $ | 0.35 | $ | 2.51 | $ | 2.30 | |||||
| Adjustments: | |||||||||||||||
| Effect of write-down of other real estate owned | — | — | 0.18 | — | 0.20 | ||||||||||
| Adjusted diluted earnings per share | $ | 0.72 | $ | 0.63 | $ | 0.53 | $ | 2.51 | $ | 2.50 | |||||
| Return on average assets | 0.69 | % | 0.63 | % | 0.43 | % | 0.65 | % | 0.72 | % | |||||
| Effect of write-down of other real estate owned | 0.00 | % | 0.00 | % | 0.23 | % | 0.00 | % | 0.06 | % | |||||
| Adjusted return on average assets | 0.69 | % | 0.63 | % | 0.66 | % | 0.65 | % | 0.78 | % | |||||
| Return on average shareholders' equity | 9.46 | % | 8.40 | % | 4.89 | % | 8.52 | % | 8.44 | % | |||||
| Effect of write-down of other real estate owned | 0.00 | % | 0.00 | % | 2.62 | % | 0.00 | % | 0.74 | % | |||||
| Adjusted return on average shareholders' equity | 9.46 | % | 8.40 | % | 7.51 | % | 8.52 | % | 9.18 | % | |||||
| Return on tangible common equity | 9.61 | % | 8.53 | % | 4.98 | % | 8.65 | % | 8.60 | % | |||||
| Effect of write-down of other real estate owned | 0.00 | % | 0.00 | % | 2.66 | % | 0.00 | % | 0.75 | % | |||||
| Adjusted return on average tangible common equity | 9.61 | % | 8.53 | % | 7.64 | % | 8.65 | % | 9.35 | % | |||||
| Effective income tax rate | 7.8 | % | 6.6 | % | (10.3 | )% | 7.1 | % | 8.6 | % | |||||
| Effect of write-down of other real estate owned | 0.0 | % | 0.0 | % | 13.4 | % | 0.0 | % | 1.1 | % | |||||
| Adjusted effective income tax rate | 7.8 | % | 6.6 | % | 3.1 | % | 7.1 | % | 9.7 | % |
inbk4q19earningspresenta
Financial Results Fourth Quarter 2019 Exhibit 99.2
Forward-Looking Statements & Non-GAAP Financial Measures This presentation may contain forward-looking statements with respect to the financial condition, results of operations, trends in lending policies, plans, objectives, future performance or business of the Company. Forward-looking statements are generally identifiable by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “pending,” “plan,” “preliminary,” “remain,” “should,” “will,” “would” or other similar expressions. Forward-looking statements are not a guarantee of future performance or results, are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the information in the forward-looking statements. Factors that may cause such differences include: failures or breaches of or interruptions in the communications and information systems on which we rely to conduct our business; failure of our plans to grow our commercial real estate, commercial and industrial, public finance, SBA and healthcare finance loan portfolios; competition with national, regional and community financial institutions; the loss of any key members of senior management; fluctuations in interest rates; general economic conditions; risks relating to the regulation of financial institutions; and other factors identified in reports we file with the U.S. Securities and Exchange Commission. All statements in this presentation, 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. This presentation 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, net interest income – FTE, net interest margin – FTE, adjusted noninterest expense and adjusted noninterest expense/average assets 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.” 2
Fourth Quarter 2019 Highlights . Record net income of $7.1 million and record diluted EPS of $0.72 . Earnings Record annual net income of $25.2 million and record annual diluted EPS of $2.51 . Improved return on average assets and average tangible common equity . Total revenue of $20.8 million, up 19% from 4Q18 Key Operating . Cost of interest-bearing deposits declined 5 bps from 3Q19 to 2.35% Trends . Asset quality remained solid with NPAs to total assets of 0.22% . Disciplined Deployed liquidity through SBA portfolio acquisition Balance Sheet . Sold $53.7 million of single tenant lease financing and public finance loans Management . Initial sales of SBA 7(a) loan production . Book value per share increased 3.3% from 3Q19 to $31.30 Strong Capital . Tangible book value per share1 increased 3.4% from 3Q19 to $30.82 Generation . TCE/TA ratio1 increased to 7.33% from 7.10% in 3Q19 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix 3 3
Loan Portfolio Overview . Total loans increased $82.3 million, or 2.9%, compared to 3Q19 and $247.3 million, or 9.1%, year-over- year . Quarterly commercial loan growth of $93.5 million driven by healthcare finance and the SBA loan portfolio acquisition . Sold $53.7 million of single tenant lease financing and public finance loans during the quarter . Consumer loan balances down slightly due primarily to elevated payoffs in residential mortgage Loan Portfolio Mix Dollars in millions $2,963.5 $2,716.2 6% 2% 7% 1 2% Commercial and Industrial Commercial Real Estate $2,091.0 34% 9% 34% Single Tenant Lease Financing 2% Public Finance Healthcare Finance 38% $1,250.8 24% Small Business Lending 13% 26% 5% Residential Mortgage/HE/HELOCs 22% 4% 10% Consumer 49% 1% 2% 2% 16% 12% 16% 19% 14% 11% 10% 10% 2016 2017 2018 2019 4 1 Includes commercial and industrial and owner-occupied commercial real estate balances
Deposit Composition . Total deposits increased $5.7 million, or 0.2%, compared to 3Q19 and $482.6 million, or 18.1%, year- over-year . Strong quarterly money market growth of $88.3 million, including $73.4 million in small business . CD and brokered deposit balances decreased $90.3 million compared to 3Q19 . Cost of interest-bearing deposits declined 5 bps compared to 3Q19 Total Deposits - $3.2 Billion Total Non-Time Deposits - $1.0 Billion As of December 31, 2019 As of December 31, 20191 $57.1 2% $119.5 12% $129.0 $29.6 4% 1% $110.9 $422.9 11% $2,151.9 42% 68% $786.4 25% $348.8 35% Noninterest-bearing deposits Interest-bearing demand deposits Savings accounts Money market accounts Commercial Public funds Small business Consumer Certificates and brokered deposits 1 Total non-time deposits excludes brokered non-time deposits 5
Net Interest Income and Net Interest Margin . Net interest income stabilized, following recent Net Interest Income – GAAP and FTE1 declines Dollars in millions GAAP FTE $17.8 $17.7 . Stable loan yields and declining deposit costs $16.9 $16.8 $16.9 . NIM contracted 3 bps sequentially due mainly to lower yields on elevated cash balances resulting $16.2 $16.1 from successive federal funds rate cuts $15.4 $15.2 $15.4 4Q18 1Q19 2Q19 3Q19 4Q19 Yield on Loans and Cost of Deposits NIM – GAAP and FTE1 4.27% GAAP FTE 4.17% 4.24% 4.18% 4.20% 2.07% 2.04% 1.91% 1.70% 1.67% 2.39% 2.40% 2.35% 2.14% 2.29% 1.89% 1.86% 1.73% 1.54% 1.51% 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 Yield on loans Cost of interest-bearing deposits 6 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix
Net Interest Margin Drivers . Linked quarter NIM decline was primarily attributable to the impact of elevated cash balances combined with falling short-term interest rates – 7 bp negative impact . Lower deposit costs and improved deposit mix had a positive impact of 4 bps . Higher loan yields added 2 bps . Significant opportunity to continue lowering deposit costs . $1.1 billion of CDs with a weighted average cost of 2.59% mature in 2020 – replacement cost is currently 1.85% - 1.90% . Recent reduction in rate paid on money market deposits NIM – FTE1 Linked-Quarter Change Monthly Rate Paid on Interest-bearing Deposits 7 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix
Noninterest Income . Noninterest income of $5.4 million compared to $5.6 million in 3Q19 and $2.0 million in 4Q18 . Seasonally strong mortgage banking revenue of $3.0 million . Gain on sale of loans of $1.7 million, up significantly over 3Q19 . Sales of single tenant lease financing and public finance loans at solid premiums . Initial sales of SBA 7(a) loans – $9.2 million in balances sold . Acquired SBA servicing portfolio adds stable revenue stream with strong growth potential Noninterest Income Noninterest Income 4Q19 Dollars in millions $0.2 $0.3 $0.2 $5.6 $5.4 $1.7 $3.5 $3.0 $2.4 $2.0 Mortgage banking activities Gain on sale of loans Service charges and fees Loan servicing revenue 4Q18 1Q19 2Q19 3Q19 4Q19 Other 8 8
Noninterest Expense . Noninterest expense of $12.6 million compared to $11.2 million in 3Q19 and $12.7 million in 4Q18 . Deposit insurance premium resumed vs. a credit in 3Q19 (no expense recognized) . Increased consulting and professional fees related to recruiting and third party loan review fees . Higher salaries and employee benefits expense due primarily to SBA personnel additions from the acquired team and experienced hires . Noninterest expense / average assets is well below the industry average, demonstrating the operating efficiency of the technology-driven business model Noninterest Expense1 Noninterest Expense / Average Assets1 Dollars in millions 1.52% $12.7 $12.6 1.23% 1.24% 1.23% 1.22% $11.7 $11.2 1.11% $10.3 $11.1 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 1 4Q18 results included a write-down of legacy other real estate owned which increased noninterest expense by $2.4 million 9
Asset Quality . Asset quality metrics remain among the industry’s best, driven by a strong credit culture and lower-risk asset classes . Nonperforming loans up $0.9 million compared to 3Q19 driven by a portfolio residential mortgage loan and accruing loans 90+ days past due offset by a decline in nonperforming C&I loans . Allowance for loan losses to total loans of 0.74% and to nonperforming loans of 324.4% . Net charge-offs to average loans down significantly compared to 3Q19 and in line with historical results . Quarterly provision for loan losses of $0.5, down from $2.8 million in 4Q19 and $1.5 million in 4Q18 NPLs / Total Loans NPAs / Total Assets Net Charge-Offs / Average Loans 0.23% 0.22% 0.19% 0.20% 0.20% 0.21% 0.17% 0.15% 0.12% 0.10% 0.05% 0.05% 0.03% 0.04% 0.04% 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 10
2020 Strategy and Outlook . Manage balance sheet growth and deploy excess liquidity to fund loan growth and/or higher-cost deposit runoff . Continued loan production combined with loan sales to enhance noninterest income and improve mix of earning assets . Build capital through improved profitability and disciplined balance sheet management . Net interest margin expansion through lower deposit costs, managing loan pricing and portfolio composition . Continue to build out nationwide SBA platform, capitalizing on opportunities on both sides of the balance sheet . Increase noninterest income through SBA gain of sale and loan servicing revenue . Retain higher yielding loan balances . Continue to grow small business deposits . Following successful results in mortgage, implement technology to enhance the customer experience and workflow process in commercial and small business lending . Maintain top quartile asset quality 11
Appendix 12
Loan Portfolio Composition Dollars in thousands 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 Commercial loans Commercial and industrial $ 101,326 $ 121,966 $ 112,900 $ 110,560 $ 106,517 $ 88,874 $ 96,420 Owner-occupied commercial real estate 55,637 71,872 75,701 75,317 71,908 74,384 73,392 Investor commercial real estate 13,181 7,273 5,391 11,188 21,179 11,852 12,567 Construction 53,291 49,213 39,916 42,319 47,849 54,131 60,274 Single tenant lease financing 606,568 803,299 919,440 975,841 1,001,196 1,008,247 995,879 Public finance - 438,341 706,342 708,816 706,161 686,622 687,094 Healthcare finance - 31,573 117,007 158,796 212,351 251,530 300,612 Small business lending 3,142 4,870 13,743 13,751 15,697 18,177 61,121 Total commercial loans 833,145 1,528,407 1,990,440 2,096,588 2,182,858 2,193,817 2,287,359 Consumer loans Residential mortgage 205,554 299,935 399,898 404,869 318,678 320,451 313,849 Home equity 35,036 30,554 28,735 27,794 26,825 25,042 24,306 Trailers 81,186 101,369 136,620 140,548 144,704 145,600 146,734 Recreational vehicles 52,350 69,196 91,912 95,871 100,518 102,698 102,702 Other consumer loans 39,913 56,968 51,239 48,840 49,029 48,275 45,873 Total consumer loans 414,039 558,022 708,404 717,922 639,754 642,066 633,464 Net def. loan fees, prem., disc. and other 1 3,605 4,764 17,384 25,418 38,544 45,389 42,724 Total loans $ 1,250,789 $ 2,091,193 $ 2,716,228 $ 2,839,928 $ 2,861,156 $ 2,881,272 $ 2,963,547 1 Includes carrying value adjustments of $21.4 million, $27.6 million, $22.2 million, $11.5 million, $5.0 million, $0.3 million, and $0.0 million as of December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018, December 31, 2017 and December 31, 2016, respectively, related to interest rate swaps associated with public finance loans. 13
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Total equity - GAAP $224,824 $282,087 $287,740 $288,735 $294,013 $296,120 $295,140 $304,913 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $220,137 $277,400 $283,053 $284,048 $289,326 $291,433 $290,453 $300,226 Tota l a sse ts - GAAP $2,862,728 $3,115,773 $3,202,918 $3,541,692 $3,670,176 $3,958,829 $4,095,491 $4,100,083 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible assets $2,858,041 $3,111,086 $3,198,231 $3,537,005 $3,665,489 $3,954,142 $4,090,804 $4,095,396 Common shares outstanding 8,450,925 10,181,675 10,181,675 10,170,778 10,128,587 10,016,458 9,741,800 9,741,800 Book value per common share $33.38 $28.26 $28.36 $28.91 $29.03 $29.56 $30.30 $31.30 Effect of goodwill (0.56) (0.46) (0.46) (0.46) (0.46) (0.46) (0.48) (0.48) Tangible book value per common share $26.05 $27.25 $27.80 $27.93 $28.57 $29.10 $29.82 $30.82 Total shareholders' equity to assets 9.05% 8.98% 8.15% 8.01% 8.01% 7.48% 7.21% 7.44% Effect of goodwill (0.13%) (0.13%) (0.12%) (0.12%) (0.12%) (0.11%) (0.11%) (0.11%) Tangible common equity to tangible assets 7.70% 8.92% 8.85% 8.03% 7.89% 7.37% 7.10% 7.33% Net interest income $15,415 $15,461 $15,970 $15,421 $16,244 $16,105 $15,244 $15,374 Adjustments: Fully-taxable equivalent adjustments 1 1,018 1,164 1,351 1,477 1,557 1,612 1,595 1,570 Net interest income - FTE $16,433 $16,625 $17,321 $16,898 $17,801 $17,717 $16,839 $16,944 Net interest margin 2.26% 2.17% 2.06% 1.89% 1.86% 1.73% 1.54% 1.51% Adjustments: Effect of fully-taxable equivalent adjustments 1 0.15% 0.16% 0.17% 0.18% 0.18% 0.18% 0.16% 0.16% Net interest margin - FTE 2.41% 2.33% 2.23% 2.07% 2.04% 1.91% 1.70% 1.67% Noninterest expense $10,217 $10,182 $10,045 $12,709 $11,109 $11,709 $11,203 $12,613 Adjustments: Write-down of other real estate owned - - - 2,423 - - - - Adjusted noninterest expense $10,217 $10,182 $10,045 $10,286 $11,109 $11,709 $11,203 $12,613 Noninterest expense/average assets 1.47% 1.40% 1.27% 1.52% 1.24% 1.23% 1.12% 1.22% Effect of write-down of other real estate owned 0.00% 0.00% 0.00% 0.29% 0.00% 0.00% 0.00% 0.00% Adjusted noninterest expense/average assets 1.47% 1.40% 1.27% 1.23% 1.24% 1.23% 1.12% 1.22% 1 Assuming a 21% tax rate 14