First Internet Bancorp Reports First Quarter 2023 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 first quarter ended March 31, 2023.

Addressing Recent Market Events

  • Deposit growth of $181.0 million in the first quarter, a 5.3% increase from the fourth quarter of 2022
  • Estimated uninsured deposits represented 26% of total deposits at March 31, 2023, and 19% of total deposits after adjusting for insured/collateralized public funds and contractual deposits
  • No additional borrowing from either the FHLB or the Federal Reserve during the first quarter; total borrowing availability of $628 million across all facilities at quarter end
  • Office commercial real estate exposure represents less than 1% of total loan balances and is primarily limited to suburban and medical offices
  • Total after-tax unrealized securities losses in both the available-for-sale and held-to-maturity portfolios represented 13.3% of tangible shareholders’ equity at quarter end
  • Tangible common equity to tangible assets of 7.47%; CET1 ratio of 10.35%; tangible book value per share of $39.43

First Quarter 2023 Financial Highlights

  • Net loss of $1.3 million and a diluted loss per share of $0.14
  • Net loss was impacted by a partial charge-off of $4.7 million related to one C&I participation loan
  • Adjusted net income of $4.8 million, or $0.53 adjusted diluted earnings per share, when excluding (i) net pre-tax costs of $3.0 million incurred as a result of the previously announced exit of the Bank's consumer mortgage operations and (ii) the aforementioned $4.7 million partial charge-off of the C&I participation loan
  • Net interest margin of 1.76% and fully-taxable equivalent net interest margin of 1.89%, compared to 2.09% and 2.22%, respectively, for the fourth quarter of 2022
  • Repurchased 161,691 shares

“Our active management of liquidity, capital and revenue streams in preparation for a dynamic economic environment positioned us to effectively withstand the recent challenges to the banking system,” said David Becker, Chairman and Chief Executive Officer. “Early in the first quarter, we focused on growing deposits and building liquidity, which we successfully accomplished despite intense competition amid the overall decline in system-wide deposits. While we experienced a modest decline in deposits from mid-March through quarter-end, balances have rebounded and are up $135 million thus far in April.

“We remain focused on our strategies to bolster the resilience of our balance sheet and our revenue channels. We continue to improve the composition of the loan portfolio towards a more favorable mix of variable rate and higher yielding loans. New origination yields were up significantly during the quarter, positioning us to achieve stronger earnings and profitability once deposit costs stabilize. In addition, our SBA lending team generated a very strong quarter with gain on sale revenue up over 40% compared to the fourth quarter.”

Mr. Becker concluded, “Despite an issue late in the quarter on one commercial participation loan, our exposure to similar-type loans is very limited and all others are performing well. Our overall asset quality remains solid, and our capital levels are strong.”

Net Interest Income and Net Interest Margin

Net interest income for the first quarter of 2023 was $19.6 million, compared to $21.7 million for the fourth quarter of 2022, and $25.8 million for the first quarter of 2022. On a fully-taxable equivalent basis, net interest income for the first quarter of 2023 was $21.0 million, compared to $23.1 million for the fourth quarter of 2022, and $27.1 million for the first quarter of 2022.

Total interest income for the first quarter of 2023 was $52.0 million, an increase of 13.9% compared to the fourth quarter of 2022, and an increase of 44.4% compared to the first quarter of 2022. On a fully-taxable equivalent basis, total interest income for the first quarter of 2023 was $53.4 million, an increase of 13.5% compared to the fourth quarter of 2022, and an increase of 43.0% compared to the first quarter of 2022. The increase from the linked quarter was due primarily to growth in interest income earned on loans, other earning assets and securities. The yield on average interest-earning assets for the first quarter of 2023 increased to 4.69% from 4.40% for the fourth quarter of 2022 due primarily to a 24 basis point (“bp”) increase in the average loan yield, a 94 bp increase in the yield earned on other earning assets and a 36 bp increase in the yield earned on securities. Compared to the linked quarter, average loan balances increased $191.9 million, or 5.7%, while the average balance of other earning assets increased $181.4 million, or 121.0%, and the average balance of securities increased $6.7 million, or 1.2%.

Interest income earned on commercial loans was higher due to increased average balances and the positive impact of higher rates in the variable rate SBA, construction and investor commercial real estate portfolios, as well as strong growth and higher new origination yields in the franchise finance portfolio. This was partially offset by lower average balances and prepayment fees in the healthcare finance portfolio, as well as lower prepayment fees in the single tenant lease financing portfolio.

In the consumer portfolio, interest income was up due to higher new origination yields, increases in the average balance of residential mortgage, trailers and recreational vehicles portfolios, and higher rates in the variable rate home equity portfolio.

The yield on funded portfolio originations was 7.76% in the first quarter, an increase of 161 bps compared to the fourth quarter of 2022 and an increase of 297 basis points compared to the first quarter of 2022. Because of the fixed-rate nature of certain larger portfolios, there is a lagging impact of origination yields on the portfolio, which are expected to increase over time.

Interest earned on cash and other interest-earning balances increased $2.4 million, or 171.6%, during the quarter due to the impact of higher short-term interest rates on cash balances as well as a $181.4 million increase, or 152.5%, in average cash balances. Furthermore, interest income earned on securities increased $0.5 million, or 12.3%, during the first quarter of 2023 as the yield on the portfolio increased 36 bps to 3.05% driven primarily by variable rate securities resetting higher, slower prepayment speeds and an increase in the average balance of the portfolio.

Total interest expense for the first quarter was $32.5 million, an increase of $8.5 million, or 35.2%, compared to the linked quarter, due to increases in both market interest rates and average interest-bearing deposit balances throughout the quarter. Interest expense related to interest-bearing deposits increased $8.5 million, or 45.0%, driven primarily by higher costs on CD and brokered deposits and money market accounts. Average CD balances increased $261.4 million, or 32.9%, while the cost of funds increased 108 bps, as the Company took advantage of strong consumer and small business demand during the quarter and pulled forward origination activity planned for later in the year. The average balance of brokered deposits increased $165.1 million, or 38.6%, driven by a full quarter’s impact of brokered CD issuances in late 2022, and the cost of funds increased 71 bps. Additionally, while average money market balances decreased $64.0 million, or 4.4%, during the quarter, the cost of these deposits increased 73 bps due to the impact of continued Federal Reserve rate increases.

The average balance of BaaS – brokered deposits increased by $10.2 million, reaching $25.7 million by quarter-end. In total, BaaS deposits were $82.4 million as of March 31, 2023 as Fintech programs were onboarded and existing programs grew during the quarter.

Net interest margin (“NIM”) was 1.76% for the first quarter of 2023, down from 2.09% for the fourth quarter of 2022 and 2.56% for the first quarter of 2022. Fully-taxable equivalent NIM (“FTE NIM”) was 1.89% for the first quarter of 2023, down from 2.22% for the fourth quarter of 2022 and 2.69% for the first quarter of 2022. The decreases in NIM and FTE NIM compared to the linked quarter were driven primarily by the effect of higher interest-bearing deposit costs, partially offset by higher yields on loans, other earning assets and securities.

Noninterest Income

Noninterest income for the first quarter of 2023 was $5.4 million, down $0.4 million, or 6.2%, from the fourth quarter of 2022, and down $1.4 million, or 20.1%, from the first quarter of 2022. Gain on sale of loans totaled $4.1 million for the first quarter of 2023, up $1.2 million, or 41.9%, from the linked quarter. Gain on sale revenue in the quarter consisted entirely of gain on the sales of U.S. Small Business Administration (“SBA”) 7(a) guaranteed loans, which increased due to a higher volume of loan sales, as well as higher net premiums. Other income totaled $0.4 million for the first quarter of 2023, down $1.2 million compared to the linked quarter due to distributions received on certain Small Business Investment Company and venture capital fund investments in the fourth quarter. Mortgage banking revenue totaled only $0.1 million for the first quarter as the Company immediately began winding down its existing pipeline following its announced exit from the consumer mortgage business in January 2023.

Noninterest Expense

Noninterest expense for the first quarter of 2023 was $21.0 million, up $2.4 million, or 13.2%, from the fourth quarter of 2022 and up $2.2 million, or 11.6%, from the first quarter of 2022. Excluding $3.1 million of mortgage operations and exit costs, adjusted noninterest expense totaled $17.9 million for the first quarter, declining $0.6 million, or 3.3%, compared to the linked quarter. Excluding the mortgage operations and exit costs, salaries and employee benefits expense decreased by $0.8 million compared to the linked quarter due to lower incentive compensation and bonus accruals. Also, marketing, advertising and promotion expense, consulting and professional fees, premises and equipment costs and other expenses decreased from the linked quarter, while loan expenses and deposit insurance premiums were higher. The increase in loan expenses reflects higher third party loan servicing costs related to franchise finance loan volume. The increase in deposit insurance premium was due primarily to asset growth, as well as the composition of loans and deposits.

Income Taxes

The Company recognized an income tax benefit of $1.8 million for the first quarter of 2023, compared to an income tax expense of $0.5 million and an effective tax rate of 7.3% for the fourth quarter of 2022 and an income tax expense of $1.8 million and an effective tax rate of 13.8% for the first quarter of 2022. The income tax benefit in the first quarter of 2023 reflects the net loss resulting from the partial charge-off of the participation loan and the recognition of mortgage exit costs described above.

Loans and Credit Quality

Total loans as of March 31, 2023 were $3.6 billion, an increase of $110.1 million, or 3.1%, compared to December 31, 2022, and an increase of $728.7 million, or 25.3%, compared to March 31, 2022. Total commercial loan balances were $2.8 billion as of March 31, 2023, an increase of $88.7 million, or 3.3%, compared to December 31, 2022, and an increase of $468.0 million, or 20.0%, compared to March 31, 2022. Compared to the linked quarter, the increase in commercial loan balances was driven primarily by growth in franchise finance, single tenant lease financing and small business lending balances, as well as combined growth in investor commercial real estate and construction balances. These items were partially offset by a decrease in the public finance portfolio as well as continued runoff in the healthcare finance portfolio.

Total consumer loan balances were $756.4 million as of March 31, 2023, an increase of $23.1 million, or 3.1%, compared to December 31, 2022, and an increase of $267.6 million, or 54.7%, compared to March 31, 2022. The increase compared to the linked quarter was due primarily to higher balances in the recreational vehicles and trailers loan portfolios as well as funded residential mortgages that were in the pipeline prior to the announced exiting of the business.

Total delinquencies 30 days or more past due were 0.13% of total loans as of March 31, 2023, compared to 0.17% at December 31, 2022 and 0.03% as of March 31, 2022. The decrease in delinquencies during the first quarter of 2023 was due primarily to a construction loan that became current in the first quarter of 2023. Nonperforming loans to total loans was 0.32% as of March 31, 2023, compared to 0.22% at December 31, 2022 and 0.25% as of March 31, 2022. Nonperforming loans totaled $11.4 million at March 31, 2023, up from $7.5 million at December 31, 2022. The increase was due primarily to one commercial and industrial (“C&I”) credit with a balance of $9.8 million that was moved to nonaccrual status late in the quarter. The Company subsequently recognized a partial charge-off of $4.7 million related to this loan due to negative developments following quarter end.

The allowance for credit losses (“ACL”) as a percentage of total loans was 1.02% as of March 31, 2023, compared to 0.91% as of December 31, 2022 and 0.98% as of March 31, 2022. The increase in the ACL reflects the day one Current Expected Credit Losses (“CECL”) adjustment of $3.0 million, as well as overall growth in the loan portfolio and changes in certain economic forecasts that impacted quantitative factors for certain portfolios.

Net charge-offs were $5.0 million in the first quarter of 2023, compared to net charge-offs of $0.2 million in the fourth quarter 2022. The increase was due almost wholly to the C&I participation loan discussed above. Net charge-offs to average loans totaled 57 bps in the first quarter.

The provision for loan losses in the first quarter was $7.2 million, compared to $2.1 million for the fourth quarter of 2022. The increase in provision for the quarter reflects the partial charge-off of the C&I participation loan discussed above as well as growth in the loan portfolio and the impact of economic forecasts on certain portfolios mentioned above.

Capital

As of March 31, 2023, total shareholders’ equity was $357.3 million, a decrease of $7.7 million, or 2.1%, compared to December 31, 2022, and a decrease of $17.4 million, or 4.6%, compared to March 31, 2022. The decrease in shareholders’ equity during the first quarter of 2023 was due primarily to stock repurchase activity, the day one CECL adjustment and the net loss during the quarter, partially offset by a decrease in accumulated other comprehensive loss. Book value per common share was $39.95 as of March 31, 2023, down from $40.26 as of December 31, 2022 and up from $38.69 as of March 31, 2022. Tangible book value per share was $39.43, down from $39.74 as of December 31, 2022 and up from $38.21 as of March 31, 2022.

In connection with its previously announced stock repurchase program, the Company repurchased 161,691 shares of its common stock during the first quarter of 2023 at an average price of $24.50 per share. The Company has repurchased $36.2 million of stock under its authorized programs to-date.

The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of March 31, 2023.

As of March 31, 2023

Company

Bank

 

Total shareholders' equity to assets

7.56%

9.32%

Tangible common equity to tangible assets 1

7.47%

9.23%

Tier 1 leverage ratio 2

8.14%

9.92%

Common equity tier 1 capital ratio 2

10.35%

12.63%

Tier 1 capital ratio 2

10.35%

12.63%

Total risk-based capital ratio 2

14.17%

13.62%

 

1 This information represents a non-GAAP financial measure. For a discussion of non-GAAP financial measures, see the section below entitled "Non-GAAP Financial Measures."

2 Regulatory capital ratios are preliminary pending filing of the Company's and the Bank's regulatory reports.

Conference Call and Webcast

The Company will host a conference call and webcast at 2:00 p.m. Eastern Time on Thursday, April 27, 2023 to discuss its quarterly financial results. The call can be accessed via telephone at (833) 470-1428; access code: 192191. A recorded replay can be accessed through May 27, 2023 by dialing (866) 813-9403; access code: 451912.

Additionally, interested parties can listen to a live webcast of the call on the Company's website at www.firstinternetbancorp.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

About First Internet Bancorp

First Internet Bancorp is a financial holding company with assets of $4.7 billion as of March 31, 2023. The Company’s subsidiary, First Internet Bank, opened for business in 1999 as an industry pioneer in the branchless delivery of banking services. First Internet Bank provides consumer and small business deposit, SBA financing, franchise finance, consumer loans, and specialty finance services nationally as well as commercial real estate loans, construction loans, commercial and industrial loans, and treasury management services on a regional basis. First Internet Bancorp’s common stock trades on the Nasdaq Global Select Market under the symbol “INBK” and is a component of the Russell 2000® Index. Additional information about the Company is available at www.firstinternetbancorp.com and additional information about First Internet Bank, including its products and services, is available at www.firstib.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements with respect to the financial condition, results of operations, trends in lending policies and loan programs, plans and prospective business partnerships, objectives, future performance and business of the Company. Forward-looking statements are generally identifiable by the use of words such as “achieve,” “anticipate,” “believe,” “build,” “continue,” “could,” “estimate,” “expect,” “growth,” “help,” “improve,” “may,” “opportunities,” “pending,” “plan,” “position,” “preliminary,” “remain,” “should,” “stabilize,” “strategies,” “thereafter,” “well-positioned,” “will,” or other similar expressions. Forward-looking statements are not a guarantee of future performance or results, are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the information in the forward-looking statements. Such statements are subject to certain risks and uncertainties including: our business and operations and the business and operations of our vendors and customers: general economic conditions, whether national or regional, and conditions in the lending markets in which we participate that may have an adverse effect on the demand for our loans and other products; our credit quality and related levels of nonperforming assets and loan losses, and the value and salability of the real estate that is the collateral for our loans. Other factors that may cause such differences include: failures or breaches of or interruptions in the communications and information systems on which we rely to conduct our business; failure of our plans to grow our commercial and industrial, construction, SBA, and franchise finance loan portfolios; competition with national, regional and community financial institutions; the loss of any key members of senior management; the anticipated impacts of inflation and rising interest rates on the general economy; risks relating to the regulation of financial institutions; and other factors identified in reports we file with the U.S. Securities and Exchange Commission. All statements in this press release, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, total interest income – FTE, net interest income – FTE, net interest margin – FTE, adjusted total revenue, adjusted noninterest income, adjusted noninterest expense, adjusted income before income taxes, adjusted income tax (benefit) provision, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity, 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.”

First Internet Bancorp
Summary Financial Information (unaudited)
Dollar amounts in thousands, except per share data
 
 
Three Months Ended
 
March 31, December 31, March 31,

 

2023

 

 

2022

 

 

2022

 

 
Net (loss) income

$

(1,305

)

$

6,351

 

$

11,209

 

 
Per share and share information
(Loss) earnings per share - basic

$

(0.14

)

$

0.68

 

$

1.14

 

(Loss) earnings per share - diluted

 

(0.14

)

 

0.68

 

 

1.14

 

Dividends declared per share

 

0.06

 

 

0.06

 

 

0.06

 

Book value per common share

 

39.95

 

 

40.26

 

 

38.69

 

Tangible book value per common share 1

 

39.43

 

 

39.74

 

 

38.21

 

Common shares outstanding

 

8,943,477

 

 

9,065,883

 

 

9,683,727

 

Average common shares outstanding:
Basic

 

9,024,072

 

 

9,281,309

 

 

9,790,122

 

Diluted

 

9,051,890

 

 

9,343,533

 

 

9,870,394

 

Performance ratios
Return on average assets

 

(0.11

%)

 

0.59

%

 

1.08

%

Return on average shareholders' equity

 

(1.46

%)

 

6.91

%

 

11.94

%

Return on average tangible common equity 1

 

(1.48

%)

 

7.00

%

 

12.09

%

Net interest margin

 

1.76

%

 

2.09

%

 

2.56

%

Net interest margin - FTE 1,2

 

1.89

%

 

2.22

%

 

2.69

%

Capital ratios 3
Total shareholders' equity to assets

 

7.56

%

 

8.03

%

 

8.87

%

Tangible common equity to tangible assets 1

 

7.47

%

 

7.94

%

 

8.77

%

Tier 1 leverage ratio

 

8.14

%

 

9.06

%

 

9.26

%

Common equity tier 1 capital ratio

 

10.35

%

 

10.93

%

 

13.16

%

Tier 1 capital ratio

 

10.35

%

 

10.93

%

 

13.16

%

Total risk-based capital ratio

 

14.17

%

 

14.75

%

 

17.62

%

Asset quality
Nonperforming loans

$

11,432

 

$

7,529

 

$

7,084

 

Nonperforming assets

 

11,557

 

 

7,571

 

 

7,085

 

Nonperforming loans to loans

 

0.32

%

 

0.22

%

 

0.25

%

Nonperforming assets to total assets

 

0.24

%

 

0.17

%

 

0.17

%

Allowance for credit losses - loans to:
Loans

 

1.02

%

 

0.91

%

 

0.98

%

Nonperforming loans

 

322.6

%

 

421.5

%

 

398.8

%

Net charge-offs to average loans

 

0.57

%

 

0.03

%

 

0.05

%

Average balance sheet information
Loans

$

3,573,852

 

$

3,382,212

 

$

2,947,924

 

Total securities

 

585,270

 

 

578,608

 

 

648,728

 

Other earning assets

 

331,294

 

 

149,910

 

 

455,960

 

Total interest-earning assets

 

4,499,806

 

 

4,119,897

 

 

4,080,725

 

Total assets

 

4,647,175

 

 

4,263,246

 

 

4,214,918

 

Noninterest-bearing deposits

 

134,988

 

 

135,702

 

 

112,248

 

Interest-bearing deposits

 

3,411,969

 

 

3,041,022

 

 

3,071,420

 

Total deposits

 

3,546,957

 

 

3,176,724

 

 

3,183,668

 

Shareholders' equity

 

363,292

 

 

364,657

 

 

380,767

 

 
1 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below
2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate
3 Regulatory capital ratios are preliminary pending filing of the Company's regulatory reports
 
First Internet Bancorp
Condensed Consolidated Balance Sheets (unaudited, except for December 31, 2022)
Dollar amounts in thousands
 
 
March 31, December 31, March 31,

 

2023

 

 

2022

 

 

2022

 

 
Assets
Cash and due from banks

$

27,741

 

$

17,426

 

$

20,976

 

Interest-bearing deposits

 

276,231

 

 

239,126

 

 

496,573

 

Securities available-for-sale, at fair value

 

395,833

 

 

390,384

 

 

465,288

 

Securities held-to-maturity, at amortized cost, net of allowance for credit losses

 

210,761

 

 

189,168

 

 

163,370

 

Loans held-for-sale

 

18,144

 

 

21,511

 

 

33,991

 

Loans

 

3,609,454

 

 

3,499,401

 

 

2,880,780

 

Allowance for credit losses - loans

 

(36,879

)

 

(31,737

)

 

(28,251

)

Net loans

 

3,572,575

 

 

3,467,664

 

 

2,852,529

 

Accrued interest receivable

 

22,322

 

 

21,069

 

 

15,263

 

Federal Home Loan Bank of Indianapolis stock

 

28,350

 

 

28,350

 

 

25,219

 

Cash surrender value of bank-owned life insurance

 

40,105

 

 

39,859

 

 

39,133

 

Premises and equipment, net

 

74,248

 

 

72,711

 

 

68,632

 

Goodwill

 

4,687

 

 

4,687

 

 

4,687

 

Servicing asset

 

7,312

 

 

6,255

 

 

5,249

 

Other real estate owned

 

106

 

 

-

 

 

-

 

Accrued income and other assets

 

44,616

 

 

44,894

 

 

34,487

 

Total assets

$

4,723,031

 

$

4,543,104

 

$

4,225,397

 

 
Liabilities
Noninterest-bearing deposits

$

140,449

 

$

175,315

 

$

119,196

 

Interest-bearing deposits

 

3,481,841

 

 

3,265,930

 

 

3,098,783

 

Total deposits

 

3,622,290

 

 

3,441,245

 

 

3,217,979

 

Advances from Federal Home Loan Bank

 

614,929

 

 

614,928

 

 

514,923

 

Subordinated debt

 

104,608

 

 

104,532

 

 

104,306

 

Accrued interest payable

 

2,592

 

 

2,913

 

 

1,532

 

Accrued expenses and other liabilities

 

21,328

 

 

14,512

 

 

12,002

 

Total liabilities

 

4,365,747

 

 

4,178,130

 

 

3,850,742

 

Shareholders' equity
Voting common stock

 

189,202

 

 

192,935

 

 

214,473

 

Retained earnings

 

199,335

 

 

205,675

 

 

183,043

 

Accumulated other comprehensive loss

 

(31,253

)

 

(33,636

)

 

(22,861

)

Total shareholders' equity

 

357,284

 

 

364,974

 

 

374,655

 

Total liabilities and shareholders' equity

$

4,723,031

 

$

4,543,104

 

$

4,225,397

 

 
First Internet Bancorp
Condensed Consolidated Statements of Income (unaudited)
Dollar amounts in thousands, except per share data
 
 
Three Months Ended
 
March 31, December 31, March 31,

 

2023

 

 

2022

 

 

2022

 

 
Interest income
Loans

$

43,843

 

$

40,354

 

$

33,188

 

Securities - taxable

 

3,606

 

 

3,222

 

 

2,221

 

Securities - non-taxable

 

798

 

 

699

 

 

249

 

Other earning assets

 

3,786

 

 

1,394

 

 

376

 

Total interest income

 

52,033

 

 

45,669

 

 

36,034

 

Interest expense
Deposits

 

27,270

 

 

18,807

 

 

6,097

 

Other borrowed funds

 

5,189

 

 

5,193

 

 

4,187

 

Total interest expense

 

32,459

 

 

24,000

 

 

10,284

 

Net interest income

 

19,574

 

 

21,669

 

 

25,750

 

Provision for credit losses

 

7,204

 

 

2,109

 

 

791

 

Net interest income after provision
for credit losses

 

12,370

 

 

19,560

 

 

24,959

 

Noninterest income
Service charges and fees

 

209

 

 

226

 

 

316

 

Loan servicing revenue

 

785

 

 

715

 

 

585

 

Loan servicing asset revaluation

 

(55

)

 

(539

)

 

(297

)

Mortgage banking activities

 

76

 

 

1,010

 

 

1,873

 

Gain on sale of loans

 

4,061

 

 

2,862

 

 

3,845

 

Other

 

370

 

 

1,533

 

 

498

 

Total noninterest income

 

5,446

 

 

5,807

 

 

6,820

 

Noninterest expense
Salaries and employee benefits

 

11,794

 

 

10,404

 

 

9,878

 

Marketing, advertising and promotion

 

844

 

 

837

 

 

756

 

Consulting and professional fees

 

926

 

 

914

 

 

1,925

 

Data processing

 

659

 

 

567

 

 

449

 

Loan expenses

 

1,977

 

 

1,018

 

 

1,582

 

Premises and equipment

 

2,777

 

 

2,921

 

 

2,540

 

Deposit insurance premium

 

543

 

 

355

 

 

281

 

Other

 

1,434

 

 

1,497

 

 

1,369

 

Total noninterest expense

 

20,954

 

 

18,513

 

 

18,780

 

(Loss) income before income taxes

 

(3,138

)

 

6,854

 

 

12,999

 

Income tax (benefit) provision

 

(1,833

)

 

503

 

 

1,790

 

Net (loss) income

$

(1,305

)

$

6,351

 

$

11,209

 

 
Per common share data
(Loss) earnings per share - basic

$

(0.14

)

$

0.68

 

$

1.14

 

(Loss) earnings per share - diluted

$

(0.14

)

$

0.68

 

$

1.14

 

Dividends declared per share

$

0.06

 

$

0.06

 

$

0.06

 

 
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
 
March 31, 2023 December 31, 2022 March 31, 2022
 
Average Interest / Yield / Average Interest / Yield / Average Interest / Yield /
Balance Dividends Cost Balance Dividends Cost Balance Dividends Cost
 
Assets
Interest-earning assets
Loans, including loans held-for-sale 1

$

3,583,242

 

$

43,843

4.96

%

$

3,391,379

 

$

40,354

4.72

%

$

2,976,037

 

$

33,188

4.52

%

Securities - taxable

 

511,923

 

 

3,606

2.86

%

 

508,725

 

 

3,222

2.51

%

 

567,776

 

 

2,221

1.59

%

Securities - non-taxable

 

73,347

 

 

798

4.41

%

 

69,883

 

 

699

3.97

%

 

80,952

 

 

249

1.25

%

Other earning assets

 

331,294

 

 

3,786

4.63

%

 

149,910

 

 

1,394

3.69

%

 

455,960

 

 

376

0.33

%

Total interest-earning assets

 

4,499,806

 

 

52,033

4.69

%

 

4,119,897

 

 

45,669

4.40

%

 

4,080,725

 

 

36,034

3.58

%

 
Allowance for credit losses - loans

 

(35,075

)

 

(30,543

)

 

(27,974

)

Noninterest-earning assets

 

182,444

 

 

173,892

 

 

162,167

 

Total assets

$

4,647,175

 

$

4,263,246

 

$

4,214,918

 

 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits

$

333,642

 

$

900

1.09

%

$

326,102

 

$

628

0.76

%

$

318,281

 

$

412

0.52

%

Savings accounts

 

38,482

 

 

82

0.86

%

 

47,799

 

 

104

0.86

%

 

60,616

 

 

53

0.35

%

Money market accounts

 

1,377,600

 

 

12,300

3.62

%

 

1,441,583

 

 

10,508

2.89

%

 

1,454,436

 

 

1,503

0.42

%

BaaS - brokered deposits

 

14,741

 

 

138

3.80

%

 

4,563

 

 

13

1.13

%

 

12,111

 

 

6

0.20

%

Certificates and brokered deposits

 

1,647,504

 

 

13,850

3.41

%

 

1,220,975

 

 

7,554

2.45

%

 

1,225,976

 

 

4,123

1.36

%

Total interest-bearing deposits

 

3,411,969

 

 

27,270

3.24

%

 

3,041,022

 

 

18,807

2.45

%

 

3,071,420

 

 

6,097

0.81

%

Other borrowed funds

 

719,499

 

 

5,189

2.92

%

 

712,465

 

 

5,193

2.89

%

 

619,191

 

 

4,187

2.74

%

Total interest-bearing liabilities

 

4,131,468

 

 

32,459

3.19

%

 

3,753,487

 

 

24,000

2.54

%

 

3,690,611

 

 

10,284

1.13

%

 
Noninterest-bearing deposits

 

134,988

 

 

135,702

 

 

112,248

 

Other noninterest-bearing liabilities

 

17,427

 

 

9,400

 

 

31,292

 

Total liabilities

 

4,283,883

 

 

3,898,589

 

 

3,834,151

 

 
Shareholders' equity

 

363,292

 

 

364,657

 

 

380,767

 

Total liabilities and shareholders' equity

$

4,647,175

 

$

4,263,246

 

$

4,214,918

 

 
Net interest income

$

19,574

$

21,669

$

25,750

 
Interest rate spread

1.50

%

1.86

%

2.45

%

 
Net interest margin

1.76

%

2.09

%

2.56

%

 
Net interest margin - FTE 2,3

1.89

%

2.22

%

2.69

%

 
1 Includes nonaccrual loans
2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate
3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below
 
First Internet Bancorp
Loans and Deposits (unaudited)
Dollar amounts in thousands
 
 
March 31, 2023 December 31, 2022 March 31, 2022
 
Amount Percent Amount Percent Amount Percent
 
Commercial loans
Commercial and industrial

$

115,410

3.2

%

$

126,108

3.6

%

$

99,808

3.5

%

Owner-occupied commercial real estate

 

59,643

1.7

%

 

61,836

1.8

%

 

56,752

2.0

%

Investor commercial real estate

 

142,174

3.9

%

 

93,121

2.7

%

 

34,627

1.2

%

Construction

 

158,147

4.4

%

 

181,966

5.2

%

 

149,662

5.2

%

Single tenant lease financing

 

952,533

26.3

%

 

939,240

26.8

%

 

852,519

29.6

%

Public finance

 

604,898

16.8

%

 

621,032

17.7

%

 

587,817

20.4

%

Healthcare finance

 

256,670

7.1

%

 

272,461

7.8

%

 

354,574

12.3

%

Small business lending

 

136,382

3.8

%

 

123,750

3.5

%

 

97,040

3.4

%

Franchise finance

 

382,161

10.6

%

 

299,835

8.6

%

 

107,246

3.7

%

Total commercial loans

 

2,808,018

77.8

%

 

2,719,349

77.7

%

 

2,340,045

81.3

%

 
Consumer loans
Residential mortgage

 

392,062

10.9

%

 

383,948

11.0

%

 

191,153

6.6

%

Home equity

 

26,160

0.7

%

 

24,712

0.7

%

 

18,100

0.6

%

Trailers

 

172,640

4.8

%

 

167,326

4.8

%

 

148,870

5.2

%

Recreational vehicles

 

128,307

3.6

%

 

121,808

3.5

%

 

93,458

3.2

%

Other consumer loans

 

37,186

1.0

%

 

35,464

1.0

%

 

28,002

1.0

%

Tax refund advance loans

 

-

0.0

%

 

-

0.0

%

 

9,177

0.3

%

Total consumer loans

 

756,355

21.0

%

 

733,258

21.0

%

 

488,760

16.9

%

 
Net deferred loan fees, premiums, discounts and other 1

 

45,081

1.2

%

 

46,794

1.3

%

 

51,975

1.8

%

 
Total loans

$

3,609,454

100.0

%

$

3,499,401

100.0

%

$

2,880,780

100.0

%

 
 
March 31, 2023 December 31, 2022 March 31, 2022
 
Amount Percent Amount Percent Amount Percent
 
Deposits
Noninterest-bearing deposits

$

140,449

3.9

%

$

175,315

5.1

%

$

119,197

3.7

%

Interest-bearing demand deposits

 

351,641

9.7

%

 

335,611

9.8

%

 

334,723

10.4

%

Savings accounts

 

32,762

0.9

%

 

44,819

1.3

%

 

66,320

2.1

%

Money market accounts

 

1,254,013

34.6

%

 

1,418,599

41.2

%

 

1,475,857

45.8

%

BaaS - brokered deposits

 

25,725

0.7

%

 

13,607

0.4

%

 

50,006

1.6

%

Certificates of deposits

 

1,170,094

32.3

%

 

874,490

25.4

%

 

889,789

27.6

%

Brokered deposits

 

647,606

17.9

%

 

578,804

16.8

%

 

282,087

8.8

%

 
Total deposits

$

3,622,290

100.0

%

$

3,441,245

100.0

%

$

3,217,979

100.0

%

 
1 Includes carrying value adjustments of $31.5 million, $32.5 million and $36.4 million related to terminated interest rate swaps associated with public finance loans as of March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
 
 
First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Dollar amounts in thousands, except per share data
 
 
Three Months Ended
 
March 31, December 31, March 31,

 

2023

 

 

2022

 

 

2022

 

 
Total equity - GAAP

$

357,284

 

$

364,974

 

$

374,655

 

Adjustments:
Goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

Tangible common equity

$

352,597

 

$

360,287

 

$

369,968

 

 
Total assets - GAAP

$

4,723,031

 

$

4,543,104

 

$

4,225,397

 

Adjustments:
Goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

Tangible assets

$

4,718,344

 

$

4,538,417

 

$

4,220,710

 

 
Common shares outstanding

 

8,943,477

 

 

9,065,883

 

 

9,683,727

 

 
Book value per common share

$

39.95

 

$

40.26

 

$

38.69

 

Effect of goodwill

 

(0.52

)

 

(0.52

)

 

(0.48

)

Tangible book value per common share

$

39.43

 

$

39.74

 

$

38.21

 

 
Total shareholders' equity to assets

 

7.56

%

 

8.03

%

 

8.87

%

Effect of goodwill

 

(0.09

%)

 

(0.09

%)

 

(0.10

%)

Tangible common equity to tangible assets

 

7.47

%

 

7.94

%

 

8.77

%

 
Total average equity - GAAP

$

363,292

 

$

364,657

 

$

380,767

 

Adjustments:
Average goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

Average tangible common equity

$

358,605

 

$

359,970

 

$

376,080

 

 
Return on average shareholders' equity

 

(1.46

%)

 

6.91

%

 

11.94

%

Effect of goodwill

 

(0.02

%)

 

0.09

%

 

0.15

%

Return on average tangible common equity

 

(1.48

%)

 

7.00

%

 

12.09

%

 
Total interest income

$

52,033

 

$

45,669

 

$

36,034

 

Adjustments:
Fully-taxable equivalent adjustments 1

 

1,383

 

 

1,384

 

 

1,314

 

Total interest income - FTE

$

53,416

 

$

47,053

 

$

37,348

 

 
Net interest income

$

19,574

 

$

21,669

 

$

25,750

 

Adjustments:
Fully-taxable equivalent adjustments 1

 

1,383

 

 

1,384

 

 

1,314

 

Net interest income - FTE

$

20,957

 

$

23,053

 

$

27,064

 

 
Net interest margin

 

1.76

%

 

2.09

%

 

2.56

%

Effect of fully-taxable equivalent adjustments 1

 

0.13

%

 

0.13

%

 

0.13

%

Net interest margin - FTE

 

1.89

%

 

2.22

%

 

2.69

%

 
1 Assuming a 21% tax rate
 
First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Dollar amounts in thousands, except per share data
 
 
Three Months Ended
 
March 31, December 31, March 31,

2023

2022

2022

 
Total revenue - GAAP

$

25,020

 

$

27,476

$

32,570

 

Adjustments:
Mortgage-related revenue

 

(65

)

 

-

 

-

 

Adjusted total revenue

$

24,955

 

$

27,476

$

32,570

 

 
Noninterest income - GAAP

$

5,446

 

$

5,807

$

6,820

 

Adjustments:
Mortgage-related revenue

 

(65

)

 

-

 

-

 

Adjusted noninterest income

$

5,381

 

$

5,807

$

6,820

 

 
Noninterest expense - GAAP

$

20,954

 

$

18,513

$

18,780

 

Adjustments:
Mortgage-related costs

 

(3,052

)

 

-

 

-

 

Acquisition-related expenses

 

-

 

 

-

 

(170

)

Nonrecurring consulting fee

 

-

 

 

-

 

(875

)

Adjusted noninterest expense

$

17,902

 

$

18,513

$

17,735

 

 
(Loss) income before income taxes - GAAP

$

(3,138

)

$

6,854

$

12,999

 

Adjustments:1
Mortgage-related revenue

 

(65

)

 

-

 

-

 

Mortgage-related costs

 

3,052

 

 

-

 

-

 

Acquisition-related expenses

 

-

 

 

-

 

170

 

Nonrecurring consulting fee

 

-

 

 

-

 

875

 

Partial charge-off of C&I participation loan

4,703

-

-

 
Adjusted income before income taxes

$

4,552

$

6,854

$

14,044

 

 
Income tax (benefit) provision - GAAP

$

(1,833

)

$

503

$

1,790

 

Adjustments:1
Mortgage-related revenue

 

(14

)

 

-

 

-

 

Mortgage-related costs

 

641

 

 

-

 

-

 

Acquisition-related expenses

 

-

 

 

-

 

36

 

Nonrecurring consulting fee

 

-

 

 

-

 

184

 

Partial charge-off of C&I participation loan

988

-

-

 
Adjusted income tax (benefit) provision

$

(218

)

$

503

$

2,010

 

 
Net (loss) income - GAAP

$

(1,305

)

$

6,351

$

11,209

 

Adjustments:
Mortgage-related revenue

 

(51

)

 

-

 

-

 

Mortgage-related costs

 

2,411

 

 

-

 

-

 

Acquisition-related expenses

 

-

 

 

-

 

134

 

Nonrecurring consulting fee

 

-

 

 

-

 

691

 

Partial charge-off of C&I participation loan

3,715

-

-

 
Adjusted net income

$

4,770

 

$

6,351

$

12,034

 

 
1 Assuming a 21% tax rate
 
First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Dollar amounts in thousands, except per share data
 
 
Three Months Ended
 
March 31, December 31, March 31,

 

2023

 

 

2022

 

 

2022

 

 
Diluted average common shares outstanding

 

9,051,890

 

 

9,343,533

 

 

9,870,394

 

 
Diluted (loss) earnings per share - GAAP

$

(0.14

)

$

0.68

 

$

1.14

 

Adjustments:
Effect of mortgage-related revenue

 

(0.01

)

 

-

 

 

-

 

Effect of mortgage-related costs

 

0.27

 

 

-

 

 

-

 

Effect of acquisition-related expenses

 

-

 

 

-

 

 

0.01

 

Effect of nonrecurring consulting fee

 

-

 

 

-

 

 

0.07

 

Effect of partial charge-off of C&I participation loan

0.41

-

-

 
Adjusted diluted (loss) earnings per share

$

0.53

 

$

0.68

 

$

1.22

 

 
Return on average assets

 

(0.11

%)

 

0.59

%

 

1.08

%

Effect of mortgage-related revenue

 

0.00

%

 

0.00

%

 

0.00

%

Effect of mortgage-related costs

 

0.21

%

 

0.00

%

 

0.00

%

Effect of acquisition-related expenses

 

0.00

%

 

0.00

%

 

0.01

%

Effect of nonrecurring consulting fee

 

0.00

%

 

0.00

%

 

0.07

%

Effect of partial charge-off of C&I participation loan

0.32

%

0.00

%

0.00

Adjusted return on average assets

 

0.42

%

 

0.59

%

 

1.16

%

 
Return on average shareholders' equity

 

(1.46

%)

 

6.91

%

 

11.94

%

Effect of mortgage-related revenue

 

(0.06

%)

 

0.00

%

 

0.00

%

Effect of mortgage-related costs

 

2.69

%

 

0.00

%

 

0.00

%

Effect of acquisition-related expenses

 

0.00

%

 

0.00

%

 

0.14

%

Effect of nonrecurring consulting fee

 

0.00

%

 

0.00

%

 

0.74

%

Effect of partial charge-off of C&I participation loan

4.15

%

0.00

%

0.00

Adjusted return on average shareholders' equity

 

5.32

%

 

6.91

%

 

12.82

%

 
Return on average tangible common equity

 

(1.48

%)

 

7.00

%

 

12.09

%

Effect of mortgage-related revenue

 

(0.06

%)

 

0.00

%

 

0.00

%

Effect of mortgage-related costs

 

2.73

%

 

0.00

%

 

0.00

%

Effect of acquisition-related expenses

 

0.00

%

 

0.00

%

 

0.14

%

Effect of nonrecurring consulting fee

 

0.00

%

 

0.00

%

 

0.75

%

Effect of partial charge-off of C&I participation loan

4.20

%

0.00

%

0.00

Adjusted return on average tangible common equity

 

5.39

%

 

7.00

%

 

12.98

%

 

Contacts

Investors/Analysts

Paula Deemer

Director of Corporate Administration

(317) 428-4628

investors@firstib.com

Media

Nicole Lorch

President & Chief Operating Officer

(317) 532-7906

nlorch@firstib.com Investors/Analysts                                            

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