First Internet Bancorp Reports Second Quarter 2021 Results
First Internet Bancorp (the “Company”) (Nasdaq: INBK), the parent company of First Internet Bank (the “Bank”), announced today financial and operational results for the second quarter of 2021. Net income for the second quarter of 2021 was $13.1 million, or $1.31 diluted earnings per share. This compares to net income of $10.5 million, or $1.05 diluted earnings per share, for the first quarter of 2021, and net income of $3.9 million, or $0.40 diluted earnings per share, for the second quarter of 2020.
“We produced strong operating results for the second quarter of 2021 driven by net interest margin expansion and disciplined expense management,” said David Becker, Chairman and Chief Executive Officer. “We also maintained excellent credit quality, as nonperforming loans declined during the quarter and delinquencies were at historically low levels. Additionally, our growing national SBA platform steadily gained momentum and drove higher gain-on-sale revenue. Looking forward, pipelines in SBA, as well as in other key lines of business, grew significantly during the quarter, leaving us well-positioned to capitalize on loan growth opportunities in the second half of 2021.
Mr. Becker concluded, “We continue to challenge ourselves to imagine more. First Internet Bank has fostered a workplace culture that promotes innovation, collaboration and customer focus. This is reflected in our being named one of the 'Top Workplaces in Central Indiana' for the eighth consecutive year. I would like to thank the entire First Internet Bank team for helping to deliver record earnings performance for the quarter.”
Net Interest Income and Net Interest Margin
Net interest income for the second quarter of 2021 was $21.6 million, compared to $20.5 million for the first quarter of 2021 and $14.4 million for the second quarter of 2020. On a fully-taxable equivalent basis, net interest income for the second quarter of 2021 was $23.0 million, compared to $21.9 million for the first quarter of 2021 and $15.9 million for the second quarter of 2020.
Total interest income for the second quarter of 2021 was $33.4 million, an increase of 0.3% compared to the first quarter of 2021 and a decrease of 2.5% compared to the second quarter of 2020. On a fully-taxable equivalent basis, total interest income for the second quarter of 2021 was $34.8 million, an increase of 0.4% compared to the first quarter of 2021 and a decrease of 2.5% compared to the second quarter of 2020. The modest increase in total interest income compared to the first quarter of 2021 was driven primarily by a 0.7% increase in the average balance of interest-earning assets, which was partially offset by a 5 bp decrease in the yield on these assets. The yield on interest-earning assets for the second quarter of 2021 decreased to 3.26% from 3.31% in the prior quarter due primarily to changes in the earning asset mix. Average loan balances, including loans held for sale, decreased $62.8 million, or 2.0%, while the average balances of other earning assets and securities increased $63.7 million, or 14.3%, and $26.3 million, or 4.8%, respectively.
Total interest expense for the second quarter of 2021 was $11.8 million, a decrease of 7.7% compared to the first quarter of 2021 and a decrease of 40.5% compared to the second quarter of 2020. The decrease in total interest expense compared to the linked quarter was due primarily to a 13 bp decline in the cost of interest-bearing deposits as well as a slight decline of 0.2% in the average balance of these deposits. The decrease in deposit costs reflects the continued decline in the rates paid on interest-bearing deposits as well as a shift in the deposit mix due to a reduction in the average balance of certificates and brokered deposits.
During the second quarter of 2021, the cost of money market deposits remained stable compared to the linked quarter while the average balance of these deposits increased $46.8 million, or 3.4%. Furthermore, the cost of certificates and brokered deposits decreased by 21 bps and average balances decreased by $75.4 million, or 5.0%. During the second quarter of 2021, new certificates of deposit were originated at a weighted average cost of 44 bps while maturing certificates of deposit had a weighted average cost of 174 bps, a difference of 130 bps.
Net interest margin (“NIM”) improved to 2.11% for the second quarter of 2021, up from 2.04% for the first quarter of 2021 and 1.37% for the second quarter of 2020. Fully-taxable equivalent NIM (“FTE NIM”) increased to 2.25% for the second quarter of 2021, up from 2.18% for the first quarter of 2021 and 1.50% for the second quarter of 2020. The increases in NIM and FTE NIM compared to the linked quarter were driven primarily by lower interest-bearing deposit costs, partially offset by the change in the earning asset mix.
Noninterest Income
Noninterest income for the second quarter of 2021 was $9.0 million, compared to $8.4 million for the first quarter of 2021 and $5.0 million for the second quarter of 2020. The increase compared to the linked quarter was driven primarily by a gain on sale of premises and equipment and gain on sale of loans, partially offset by lower revenues from mortgage banking activities. During the second quarter of 2021, the Company completed the sale of its headquarters, resulting in a $2.5 million gain. Gain on sale of loans totaled $3.0 million for the quarter, increasing $1.3 million compared to the first quarter of 2021, due to an increase in the volume of U.S. Small Business Administration (“SBA”) 7(a) guaranteed loan sales and an increase in secondary market premiums during the quarter. Mortgage banking revenue totaled $2.7 million for the second quarter of 2021, down $3.1 million from the linked quarter, due primarily to decreases in interest rate locks, sold loan volume and margins.
Noninterest Expense
Noninterest expense for the second quarter of 2021 was $15.1 million, compared to $15.3 million for the first quarter of 2021 and $13.2 million for the second quarter of 2020. Noninterest expense decreased slightly on a linked-quarter basis, driven primarily by decreases of $0.3 million in salaries and employee benefits and $0.2 million in deposit insurance premium, which was partially offset by a $0.2 million increase in marketing, advertising and promotion expense. The decrease in salaries and employee benefits expense was due mainly to a decrease in medical claims expense in the second quarter of 2021. The decrease in deposit insurance premium was due to the decline in total assets year-over-year. The increase in marketing expenses was due to higher mortgage lead generation costs and sponsorship initiatives.
Income Taxes
The Company reported income tax expense of $2.4 million for the second quarter of 2021 and an effective tax rate of 15.4%, compared to income tax expense of $1.9 million and an effective tax rate of 15.1% for the first quarter of 2021 and an income tax benefit of $0.3 million for the second quarter of 2020.
Loans and Credit Quality
Total loans as of June 30, 2021 were $3.0 billion, a decrease of $101.1 million, or 3.3%, compared to March 31, 2021, and a decrease of $16.1 million, or 0.5%, compared to June 30, 2020. Total commercial loan balances were $2.4 billion as of June 30, 2021, a decrease of $85.1 million, or 3.4%, compared to March 31, 2021, and an increase of $48.3 million, or 2.0%, compared to June 30, 2020. Compared to the linked quarter, the decline in commercial loan balances was driven largely by net payoffs in healthcare finance, single tenant lease financing and public finance loans, which was partially offset by increases in commercial and industrial and investor commercial real estate loan balances.
Total consumer loan balances were $466.5 million as of June 30, 2021, a decrease of $11.9 million, or 2.5%, compared to March 31, 2021, and a decrease of $56.5 million, or 10.8%, compared to June 30, 2020. The decline in consumer loan balances from March 31, 2021 was due primarily to prepayment activity in the residential mortgage portfolio, partially offset by an increase in trailer balances.
Total delinquencies 30 days or more past due were 0.07% of total loans as of June 30, 2021, down from 0.23% as of March 31, 2021, and down from 0.25% as of June 30, 2020. Overall credit quality remained strong as nonperforming loans to total loans was 0.31% as of June 30, 2021, compared to 0.48% as of March 31, 2021, and 0.28% as of June 30, 2020. During the second quarter of 2021, nonperforming loans declined $5.4 million, or 36.8%, compared to the linked quarter due primarily to positive developments related to a single tenant lease financing relationship and a commercial and industrial relationship, both of which had been classified as nonaccrual. The single tenant lease financing relationship included two loans, one of which was paid off at net book value (unpaid principal balance less specific reserves) and the other was transferred to other real estate owned. The commercial and industrial relationship included four loans, two of which paid off during the quarter.
The allowance for loan losses as a percentage of total loans was 0.95% as of June 30, 2021, or 0.96% when excluding SBA Paycheck Protection Program (“PPP”) loans, compared to 1.00% and 1.02%, respectively, as of March 31, 2021, and 0.82% and 0.84%, respectively, as of June 30, 2020. The decline in the allowance for loan losses compared to the linked quarter was due primarily to the elimination of $2.9 million of specific reserves related to the loan relationships discussed above as well as the decrease in total loan balances, which included commercial loan portfolios with higher allowance coverage ratios. These items were partially offset by additional adjustments to the qualitative factors in the Company’s allowance model, resulting in a 6 bp increase to the allowance coverage ratio related to the general reserve on the Company’s commercial loan portfolio, which totaled 0.99% at quarter end.
Net charge-offs of $2.6 million were recognized during the second quarter of 2021, resulting in net charge-offs to average loans of 0.35%, compared to 0.02% for the first quarter of 2021 and 0.12% for the second quarter of 2020. The increase in net charge-offs is primarily due to the single tenant lease financing relationship discussed above as the loan payoff and the transfer to other real estate owned were recorded at net book value. The provision for loan losses in the second quarter of 2021 was $21,000, compared to $1.3 million for the first quarter of 2021 and $2.5 million for the second quarter of 2020. The decrease in provision for loan losses for the second quarter of 2021 was due primarily to the $101.1 million decrease in loan balances mentioned above.
Capital
As of June 30, 2021, total shareholders’ equity was $358.6 million, an increase of $14.1 million, or 4.1%, compared to March 31, 2021, and an increase of $50.9 million, or 16.6%, compared to June 30, 2020. The increase compared to the linked quarter was due primarily to net income earned during the quarter and a decrease in accumulated other comprehensive loss. Book value per common share increased to $36.39 as of June 30, 2021, up from $35.07 as of March 31, 2021, and $31.40 as of June 30, 2020. Tangible book value per share increased to $35.92, up from $34.60 and $30.92, 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 June 30, 2021.
As of June 30, 2021
Company
Bank
Total shareholders' equity to assets
8.53%
9.45%
Tangible common equity to tangible assets 1
8.43%
9.35%
Tier 1 leverage ratio 2
8.70%
9.61%
Common equity tier 1 capital ratio 2
12.23%
13.54%
Tier 1 capital ratio 2
12.23%
13.54%
Total risk-based capital ratio 2
15.51%
14.48%
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, July 22, 2021, to discuss its quarterly financial results. The call can be accessed via telephone at (888) 348-3664. A recorded replay can be accessed through August 22, 2021, by dialing (877) 344-7529; passcode: 10158195.
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 bank holding company with assets of $4.2 billion as of June 30, 2021. 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, 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,” “designed,” “estimate,” “expect,” “intend,” “may,” “optimistic,” “pending,” “plan,” “position,” “preliminary,” “remain,” “should,” “will,” “would” or other similar expressions. Such statements are not a guarantee of future performance or results, are based on information available at the time the statements are made and are subject to certain risks and uncertainties including: the effects of the COVID-19 global pandemic and other adverse public health developments on the economy, 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 we own or that is the collateral for our loans; 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 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, allowance for loan losses to loans, excluding PPP loans, adjusted revenue, 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 press release under the caption “Reconciliation of Non-GAAP Financial Measures.”
First Internet Bancorp Summary Financial Information (unaudited) Dollar amounts in thousands, except per share dataThree Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2021
2021
2020
2021
2020
Net income$
13,096
$
10,450
$
3,932
$
23,546
$
9,951
Per share and share information Earnings per share - basic
$
1.32
$
1.06
$
0.40
$
2.37
$
1.02
Earnings per share - diluted
1.31
1.05
0.40
2.36
1.02
Dividends declared per share
0.06
0.06
0.06
0.12
0.12
Book value per common share
36.39
35.07
31.40
36.39
31.40
Tangible book value per common share 1
35.92
34.60
30.92
35.92
30.92
Common shares outstanding
9,854,153
9,823,831
9,799,047
9,854,153
9,799,047
Average common shares outstanding: Basic
9,932,761
9,899,230
9,768,227
9,916,087
9,798,528
Diluted
9,981,422
9,963,036
9,768,227
9,970,147
9,802,427
Performance ratios Return on average assets
1.25
%
1.02
%
0.37
%
1.13
%
0.47
%
Return on average shareholders' equity
14.88
%
12.61
%
5.15
%
13.78
%
6.48
%
Return on average tangible common equity 1
15.09
%
12.79
%
5.23
%
13.97
%
6.58
%
Net interest margin
2.11
%
2.04
%
1.37
%
2.08
%
1.43
%
Net interest margin - FTE 1,2
2.25
%
2.18
%
1.50
%
2.21
%
1.58
%
Capital ratios 3 Total shareholders' equity to assets
8.53
%
8.23
%
7.12
%
8.53
%
7.12
%
Tangible common equity to tangible assets 1
8.43
%
8.12
%
7.01
%
8.43
%
7.01
%
Tier 1 leverage ratio
8.70
%
8.46
%
7.49
%
8.70
%
7.49
%
Common equity tier 1 capital ratio
12.23
%
11.81
%
10.94
%
12.23
%
10.94
%
Tier 1 capital ratio
12.23
%
11.81
%
10.94
%
12.23
%
10.94
%
Total risk-based capital ratio
15.51
%
15.18
%
14.13
%
15.51
%
14.13
%
Asset quality Nonperforming loans$
9,264
$
14,649
$
8,195
$
9,264
$
8,195
Nonperforming assets
10,564
14,678
10,304
10,564
10,304
Nonperforming loans to loans
0.31
%
0.48
%
0.28
%
0.31
%
0.28
%
Nonperforming assets to total assets
0.25
%
0.35
%
0.24
%
0.25
%
0.24
%
Allowance for loan losses to: Loans
0.95
%
1.00
%
0.82
%
0.95
%
0.82
%
Loans, excluding PPP loans 1
0.96
%
1.02
%
0.84
%
0.96
%
0.84
%
Nonperforming loans
303.0
%
209.2
%
298.5
%
303.0
%
298.5
%
Net charge-offs to average loans
0.35
%
0.02
%
0.12
%
0.18
%
0.09
%
Average balance sheet information Loans$
2,994,356
$
3,047,915
$
2,943,165
$
3,020,987
$
2,937,136
Total securities
574,684
548,429
657,622
561,630
644,251
Other earning assets
509,735
446,045
594,296
478,065
505,111
Total interest-earning assets
4,100,749
4,073,604
4,241,690
4,087,255
4,133,245
Total assets
4,206,966
4,173,273
4,330,174
4,190,212
4,215,053
Noninterest-bearing deposits
98,207
90,764
73,758
94,506
67,107
Interest-bearing deposits
3,109,165
3,115,987
3,270,720
3,112,557
3,179,882
Total deposits
3,207,372
3,206,751
3,344,478
3,207,063
3,246,989
Shareholders' equity
352,894
335,968
306,868
344,478
308,937
1 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below 2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate 3 Regulatory capital ratios are preliminary pending filing of the Company's regulatory reports First Internet Bancorp Condensed Consolidated Balance Sheets (unaudited) Dollar amounts in thousands
June 30,
March 31,
June 30,
2021
2021
2020
Assets Cash and due from banks$
4,347
$
4,440
$
7,016
Interest-bearing deposits
324,450
411,765
491,603
Securities available-for-sale, at fair value
663,519
462,376
589,017
Securities held-to-maturity, at amortized cost
65,659
68,190
68,295
Loans held-for-sale
27,587
30,235
38,813
Loans
2,957,608
3,058,694
2,973,674
Allowance for loan losses
(28,066
)
(30,642
)
(24,465
)
Net loans
2,929,542
3,028,052
2,949,209
Accrued interest receivable
16,345
16,433
21,093
Federal Home Loan Bank of Indianapolis stock
25,650
25,650
25,650
Cash surrender value of bank-owned life insurance
38,421
38,185
37,474
Premises and equipment, net
44,249
42,381
23,939
Goodwill
4,687
4,687
4,687
Servicing asset
4,120
3,817
2,522
Other real estate owned
1,300
-
2,065
Accrued income and other assets
54,766
52,359
63,217
Total assets
$
4,204,642
$
4,188,570
$
4,324,600
Liabilities Noninterest-bearing deposits
$
113,996
$
100,700
$
82,864
Interest-bearing deposits
3,092,151
3,116,903
3,297,925
Total deposits
3,206,147
3,217,603
3,380,789
Advances from Federal Home Loan Bank
514,919
514,917
514,913
Subordinated debt
69,871
69,794
69,681
Accrued interest payable
1,132
1,418
1,073
Accrued expenses and other liabilities
53,932
40,272
50,433
Total liabilities
3,846,001
3,844,004
4,016,889
Shareholders' equity Voting common stock
222,486
221,911
220,418
Retained earnings
149,066
136,575
108,431
Accumulated other comprehensive loss
(12,911
)
(13,920
)
(21,138
)
Total shareholders' equity
358,641
344,566
307,711
Total liabilities and shareholders' equity
$
4,204,642
$
4,188,570
$
4,324,600
First Internet Bancorp Condensed Consolidated Statements of Income (unaudited) Dollar amounts in thousands, except per share data
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2021
2021
2020
2021
2020
Interest income Loans$
30,835
$
30,885
$
29,730
$
61,720
$
60,138
Securities - taxable
1,921
1,779
3,276
3,700
6,895
Securities - non-taxable
259
281
457
540
1,029
Other earning assets
362
335
759
697
2,404
Total interest income
33,377
33,280
34,222
66,657
70,466
Interest expense Deposits
7,705
8,628
15,763
16,333
32,971
Other borrowed funds
4,065
4,127
4,033
8,192
8,051
Total interest expense
11,770
12,755
19,796
24,525
41,022
Net interest income
21,607
20,525
14,426
42,132
29,444
Provision for loan losses
21
1,276
2,491
1,297
3,952
Net interest income after provision for loan losses
21,586
19,249
11,935
40,835
25,492
Noninterest income Service charges and fees
280
266
182
546
394
Loan servicing revenue
457
422
255
879
506
Loan servicing asset revaluation
(240
)
(155
)
(90
)
(395
)
(269
)
Mortgage banking activities
2,674
5,750
3,408
8,424
7,076
Gain on sale of loans
3,019
1,723
762
4,742
2,563
Gain on sale of securities
-
-
-
-
41
Gain on sale of premises and equipment
2,523
-
-
2,523
-
Other
249
369
456
618
873
Total noninterest income
8,962
8,375
4,973
17,337
11,184
Noninterest expense Salaries and employee benefits
9,232
9,492
7,789
18,724
15,563
Marketing, advertising and promotion
872
680
411
1,552
786
Consulting and professional fees
1,078
986
932
2,064
2,109
Data processing
382
462
339
844
714
Loan expenses
541
534
399
1,075
998
Premises and equipment
1,587
1,601
1,602
3,188
3,227
Deposit insurance premium
275
425
435
700
920
Other
1,108
1,137
1,337
2,245
2,413
Total noninterest expense
15,075
15,317
13,244
30,392
26,730
Income before income taxes
15,473
12,307
3,664
27,780
9,946
Income tax provision (benefit)
2,377
1,857
(268
)
4,234
(5
)
Net income$
13,096
$
10,450
$
3,932
$
23,546
$
9,951
Per common share data Earnings per share - basic
$
1.32
$
1.06
$
0.40
$
2.37
$
1.02
Earnings per share - diluted
$
1.31
$
1.05
$
0.40
$
2.36
$
1.02
Dividends declared per share
$
0.06
$
0.06
$
0.06
$
0.12
$
0.12
All periods presented have been reclassified to conform to the current period classification. First Internet Bancorp Average Balances and Rates (unaudited) Dollar amounts in thousands Three Months Ended June 30, 2021 March 31, 2021 June 30, 2020 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
$
3,016,330
$
30,835
4.10
%
$
3,079,130
$
30,885
4.07
%
$
2,989,772
$
29,730
4.00
%
Securities - taxable
490,634
1,921
1.57
%
461,300
1,779
1.56
%
560,947
3,276
2.35
%
Securities - non-taxable
84,050
259
1.24
%
87,129
281
1.31
%
96,675
457
1.90
%
Other earning assets
509,735
362
0.28
%
446,045
335
0.30
%
594,296
759
0.51
%
Total interest-earning assets
4,100,749
33,377
3.26
%
4,073,604
33,280
3.31
%
4,241,690
34,222
3.24
%
Allowance for loan losses
(30,348
)
(29,884
)
(23,388
)
Noninterest-earning assets
136,565
129,553
111,872
Total assets
$
4,206,966
$
4,173,273
$
4,330,174
Liabilities Interest-bearing liabilities Interest-bearing demand deposits
$
192,777
$
143
0.30
%
$
180,746
$
133
0.30
%
$
137,487
$
237
0.69
%
Savings accounts
55,811
49
0.35
%
46,035
40
0.35
%
37,204
92
0.99
%
Money market accounts
1,416,406
1,462
0.41
%
1,369,626
1,391
0.41
%
1,089,063
3,541
1.31
%
Certificates and brokered deposits
1,444,171
6,051
1.68
%
1,519,580
7,064
1.89
%
2,006,966
11,893
2.38
%
Total interest-bearing deposits
3,109,165
7,705
0.99
%
3,115,987
8,628
1.12
%
3,270,720
15,763
1.94
%
Other borrowed funds
584,751
4,065
2.79
%
583,780
4,127
2.87
%
584,543
4,033
2.77
%
Total interest-bearing liabilities
3,693,916
11,770
1.28
%
3,699,767
12,755
1.40
%
3,855,263
19,796
2.07
%
Noninterest-bearing deposits
98,207
90,764
73,758
Other noninterest-bearing liabilities
61,949
46,774
94,285
Total liabilities
3,854,072
3,837,305
4,023,306
Shareholders' equity
352,894
335,968
306,868
Total liabilities and shareholders' equity
$
4,206,966
$
4,173,273
$
4,330,174
Net interest income
$
21,607
$
20,525
$
14,426
Interest rate spread1.98
%
1.91
%
1.17
%
Net interest margin2.11
%
2.04
%
1.37
%
Net interest margin - FTE 2,32.25
%
2.18
%
1.50
%
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 thousandsSix Months Ended
June 30, 2021
June 30, 2020
Average
Interest /
Yield /
Average
Interest /
Yield /
Balance
Dividends
Cost
Balance
Dividends
Cost
Assets Interest-earning assets Loans, including loans held-for-sale 1$
3,047,560
$
61,720
4.08
%
$
2,983,883
$
60,138
4.05
%
Securities - taxable
476,049
3,700
1.57
%
545,997
6,895
2.54
%
Securities - non-taxable
85,581
540
1.27
%
98,254
1,029
2.11
%
Other earning assets
478,065
697
0.29
%
505,111
2,404
0.96
%
Total interest-earning assets
4,087,255
66,657
3.29
%
4,133,245
70,466
3.43
%
Allowance for loan losses
(30,117
)
(22,724
)
Noninterest-earning assets
133,074
104,532
Total assets
$
4,190,212
$
4,215,053
Liabilities Interest-bearing liabilities Interest-bearing demand deposits
$
186,795
$
276
0.30
%
$
130,206
$
456
0.70
%
Savings accounts
50,950
89
0.35
%
33,774
170
1.01
%
Money market accounts
1,393,145
2,853
0.41
%
977,834
7,284
1.50
%
Certificates and brokered deposits
1,481,667
13,115
1.78
%
2,038,068
25,061
2.47
%
Total interest-bearing deposits
3,112,557
16,333
1.06
%
3,179,882
32,971
2.09
%
Other borrowed funds
584,268
8,192
2.83
%
584,504
8,051
2.77
%
Total interest-bearing liabilities
3,696,825
24,525
1.34
%
3,764,386
41,022
2.19
%
Noninterest-bearing deposits
94,506
67,107
Other noninterest-bearing liabilities
54,403
74,623
Total liabilities
3,845,734
3,906,116
Shareholders' equity
344,478
308,937
Total liabilities and shareholders' equity
$
4,190,212
$
4,215,053
Net interest income
$
42,132
$
29,444
Interest rate spread1.95
%
1.24
%
Net interest margin2.08
%
1.43
%
Net interest margin - FTE 2,32.21
%
1.58
%
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 thousandsJune 30, 2021
March 31, 2021
June 30, 2020
Amount
Percent
Amount
Percent
Amount
Percent
Commercial loans Commercial and industrial$
96,203
3.3
%
$
71,835
2.3
%
$
81,687
2.7
%
Owner-occupied commercial real estate
87,136
2.9
%
87,930
2.9
%
86,897
2.9
%
Investor commercial real estate
28,871
1.0
%
14,832
0.5
%
13,286
0.4
%
Construction
117,970
4.0
%
123,483
4.0
%
77,591
2.6
%
Single tenant lease financing
913,115
30.9
%
941,322
30.8
%
980,292
33.0
%
Public finance
612,138
20.7
%
637,600
20.8
%
647,107
21.8
%
Healthcare finance
455,890
15.3
%
510,237
16.8
%
380,956
12.8
%
Small business lending
123,293
4.2
%
132,490
4.3
%
118,526
4.0
%
Total commercial loans
2,434,616
82.3
%
2,519,729
82.4
%
2,386,342
80.2
%
Consumer loans Residential mortgage
177,148
6.0
%
190,148
6.2
%
208,728
7.0
%
Home equity
17,510
0.6
%
17,949
0.6
%
22,640
0.8
%
Trailers
148,795
5.0
%
143,454
4.7
%
147,326
5.0
%
Recreational vehicles
91,030
3.1
%
92,221
3.0
%
102,088
3.4
%
Other consumer loans
31,971
1.1
%
34,534
1.1
%
42,218
1.4
%
Total consumer loans
466,454
15.8
%
478,306
15.6
%
523,000
17.6
%
Net deferred loan fees, premiums, discounts and other 1
56,538
1.9
%
60,659
2.0
%
64,332
2.2
%
Total loans$
2,957,608
100.0
%
$
3,058,694
100.0
%
$
2,973,674
100.0
%
June 30, 2021
March 31, 2021
June 30, 2020
Amount
Percent
Amount
Percent
Amount
Percent
Deposits Noninterest-bearing deposits$
113,996
3.6
%
$
100,700
3.1
%
$
82,864
2.5
%
Interest-bearing demand deposits$
196,841
6.1
%
186,015
5.8
%
152,391
4.5
%
Savings accounts$
56,298
1.8
%
51,251
1.6
%
43,366
1.3
%
Money market accounts$
1,432,355
44.6
%
1,397,449
43.4
%
1,241,874
36.7
%
Certificates of deposits$
1,087,350
33.9
%
1,174,764
36.5
%
1,470,905
43.5
%
Brokered deposits$
319,307
10.0
%
307,424
9.6
%
389,389
11.5
%
Total deposits$
3,206,147
100.0
%
$
3,217,603
100.0
%
$
3,380,789
100.0
%
1 Includes carrying value adjustments of $40.4 million, $41.6 million and $46.0 million related to terminated interest rate swaps associated with public finance loans as of June 30, 2021, March 31, 2021 and June 30, 2020, respectively. First Internet Bancorp Reconciliation of Non-GAAP Financial Measures Dollar amounts in thousands, except per share dataThree Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2021
2021
2020
2021
2020
Total equity - GAAP$
358,641
$
344,566
$
307,711
$
358,641
$
307,711
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible common equity$
353,954
$
339,879
$
303,024
$
353,954
$
303,024
Total assets - GAAP
$
4,204,642
$
4,188,570
$
4,324,600
$
4,204,642
$
4,324,600
Adjustments: Goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Tangible assets$
4,199,955
$
4,183,883
$
4,319,913
$
4,199,955
$
4,319,913
Common shares outstanding
9,854,153
9,823,831
9,799,047
9,854,153
9,799,047
Book value per common share
$
36.39
$
35.07
$
31.40
$
36.39
$
31.40
Effect of goodwill
(0.47
)
(0.47
)
(0.48
)
(0.47
)
(0.48
)
Tangible book value per common share$
35.92
$
34.60
$
30.92
$
35.92
$
30.92
Total shareholders' equity to assets
8.53
%
8.23
%
7.12
%
8.53
%
7.12
%
Effect of goodwill
(0.10
%)
(0.11
%)
(0.11
%)
(0.10
%)
(0.11
%)
Tangible common equity to tangible assets
8.43
%
8.12
%
7.01
%
8.43
%
7.01
%
Total average equity - GAAP$
352,894
$
335,968
$
306,868
$
344,478
$
308,937
Adjustments: Average goodwill
(4,687
)
(4,687
)
(4,687
)
(4,687
)
(4,687
)
Average tangible common equity$
348,207
$
331,281
$
302,181
$
339,791
$
304,250
Return on average shareholders' equity
14.88
%
12.61
%
5.15
%
13.78
%
6.48
%
Effect of goodwill
0.21
%
0.18
%
0.08
%
0.19
%
0.10
%
Return on average tangible common equity
15.09
%
12.79
%
5.23
%
13.97
%
6.58
%
Total interest income$
33,377
$
33,280
$
34,222
$
66,657
$
70,466
Adjustments: Fully-taxable equivalent adjustments 1
1,394
1,356
1,437
2,750
2,972
Total interest income - FTE
$
34,771
$
34,636
$
35,659
$
69,407
$
73,438
Net interest income
$
21,607
$
20,525
$
14,426
$
42,132
$
29,444
Adjustments: Fully-taxable equivalent adjustments 1
1,394
1,356
1,437
2,750
2,972
Net interest income - FTE
$
23,001
$
21,881
$
15,863
$
44,882
$
32,416
Net interest margin
2.11
%
2.04
%
1.37
%
2.08
%
1.43
%
Effect of fully-taxable equivalent adjustments 1
0.14
%
0.14
%
0.13
%
0.13
%
0.15
%
Net interest margin - FTE
2.25
%
2.18
%
1.50
%
2.21
%
1.58
%
Allowance for loan losses$
28,066
$
30,642
$
24,465
$
28,066
$
24,465
Loans
$
2,957,608
$
3,058,694
$
2,973,674
$
2,957,608
$
2,973,674
Adjustments: PPP loans
(39,682
)
(53,365
)
(58,948
)
(39,682
)
(58,948
)
Loans, excluding PPP loans$
2,917,926
$
3,005,329
$
2,914,726
$
2,917,926
$
2,914,726
Allowance for loan losses to loans
0.95
%
1.00
%
0.82
%
0.95
%
0.82
%
Effect of PPP loans
0.01
%
0.02
%
0.02
%
0.01
%
0.02
%
Allowance for loan losses to loans, excluding PPP loans
0.96
%
1.02
%
0.84
%
0.96
%
0.84
%
1 Assuming a 21% tax rate First Internet Bancorp Reconciliation of Non-GAAP Financial Measures Dollar amounts in thousands, except per share dataThree Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2021
2021
2020
2021
2020
Total revenue - GAAP$
30,569
$
28,900
$
19,399
$
59,469
$
40,628
Adjustments: Gain on sale of premises and equipment(2,523
)
-
-
(2,523
)
-
Adjusted revenue$
28,046
$
28,900
$
19,399
$
56,946
$
40,628
Income before income taxes - GAAP$
15,473
$
12,307
$
3,664
$
27,780
$
9,946
Adjustments: Gain on sale of premises and equipment
(2,523
)
-
-
(2,523
)
-
Adjusted income before income taxes
$
12,950
$
12,307
$
3,664
$
25,257
$
9,946
Income tax provision - GAAP
$
2,377
$
1,857
$
(268
)
$
4,234
$
(5
)
Adjustments: Gain on sale of premises and equipment
(530
)
-
-
(530
)
-
Adjusted income tax provision
$
1,847
$
1,857
$
(268
)
$
3,704
$
(5
)
Net income - GAAP$
13,096
$
10,450
$
3,932
$
23,546
$
9,951
Adjustments: Gain on sale of premises and equipment
(1,993
)
-
-
(1,993
)
-
Adjusted net income
$
11,103
$
10,450
$
3,932
$
21,553
$
9,951
Diluted average common shares outstanding
9,981,422
9,963,036
9,768,227
9,970,147
9,802,427
Diluted earnings per share - GAAP
$
1.31
$
1.05
$
0.40
$
2.36
$
1.02
Adjustments: Effect of gain on sale of premises and equipment
(0.20
)
-
-
(0.20
)
-
Adjusted diluted earnings per share
$
1.11
$
1.05
$
0.40
$
2.16
$
1.02
Return on average assets
1.25
%
1.02
%
0.37
%
1.13
%
0.47
%
Effect of gain on sale of premises and equipment
(0.19
%)
0.00
%
0.00
%
(0.09
%)
0.00
%
Adjusted return on average assets
1.06
%
1.02
%
0.37
%
1.04
%
0.47
%
Return on average shareholders' equity
14.88
%
12.61
%
5.15
%
13.78
%
6.48
%
Effect of gain on sale of premises and equipment
(2.26
%)
0.00
%
0.00
%
(1.16
%)
0.00
%
Adjusted return on average shareholders' equity
12.62
%
12.61
%
5.15
%
12.62
%
6.48
%
Return on average tangible common equity
15.09
%
12.79
%
5.23
%
13.97
%
6.58
%
Effect of gain on sale of premises and equipment
(2.30
%)
0.00
%
0.00
%
(1.18
%)
0.00
%
Adjusted return on average tangible common equity
12.79
%
12.79
%
5.23
%
12.79
%
6.58
%
Effective income tax rate
15.4
%
15.1
%
(7.3
%)
15.2
%
(0.1
%)
Effect of gain on sale of premises and equipment
(1.1
%)
0.0
%
0.0
%
(0.5
%)
0.0
%
Adjusted effective income tax rate
14.3
%
15.1
%
(7.3
%)
14.7
%
(0.1
%)
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