First Internet Bancorp Reports First Quarter 2022 Results
 First Internet Bancorp Reports First Quarter 2022 Results

FISHERS, Ind.–(BUSINESS WIRE)–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, 2022. Net income for the first quarter of 2022 was $11.2 million, or $1.14 diluted earnings per share. This compares to net income of $12.5 million, or $1.25 diluted earnings per share, for the fourth quarter of 2021, and net income of $10.5 million, or $1.05 diluted earnings per share, for the first quarter of 2021.

“We produced solid earnings and positive momentum to start 2022, driven by production in our franchise finance business, further success in driving lower cost deposits and continued excellent credit quality,” said David Becker, Chairman and Chief Executive Officer. “Pipelines in SBA and other key lines of business grew during the quarter, leaving us well-positioned to capitalize on loan growth opportunities for the year ahead.

“We also made significant progress with our Fintech initiatives, establishing our first Banking-as-a-Service deposit relationship during the quarter. We are engaged in a number of discussions with Fintechs to provide deposit and payments services as well as supplement our small business lending and consumer lending platforms, all of which we believe will drive stronger earnings and profitability while advancing our position as a premier technology-forward digital financial services provider.

“We are still waiting on certain regulatory approvals required to complete our acquisition of First Century and, as a result, are in discussions with First Century to extend our outside date to close the transaction. We hope that closing can occur next month,” Mr. Becker added.

Net Interest Income and Net Interest Margin

Net interest income for the first quarter of 2022 was $25.8 million, compared to $23.5 million for the fourth quarter of 2021, and $20.5 million for the first quarter of 2021. On a fully-taxable equivalent basis, net interest income for the first quarter of 2022 was $27.1 million, compared to $24.9 million for the fourth quarter of 2021, and $21.9 million for the first quarter of 2021. Excluding the impact of tax refund advance loan fees, adjusted net interest income on a fully-taxable equivalent basis for the first quarter of 2022 was $24.2 million.

Total interest income for the first quarter of 2022 was $36.0 million, an increase of 5.4% compared to the fourth quarter of 2021, and an increase of 8.3% compared to the first quarter of 2021. On a fully-taxable equivalent basis, total interest income for the first quarter of 2022 was $37.3 million, an increase of 5.1% compared to the fourth quarter of 2021, and an increase of 7.8% compared to the first quarter of 2021. The increase in total interest income compared to the fourth quarter of 2021 was driven primarily by the recognition of $2.9 million of income from tax refund advance loans, partially offset by lower loan fees. The yield on average interest-earning assets for the first quarter of 2022 increased to 3.58% from 3.34% in the linked quarter due primarily to the increase in loan yields and, to a lesser extent, a 25 bp increase in the average yield on securities. Compared to the linked quarter, average loan balances increased $29.0 million, or 1.0%, and the average balance of other earning assets increased $24.3 million, or 5.6%, while the average balance of securities decreased $28.9 million, or 4.3%.

Total interest expense for the first quarter of 2022 was $10.3 million, a decrease of 3.8% compared to the fourth quarter of 2021, and a decrease of 19.4% compared to the first quarter of 2021. The decrease in total interest expense compared to the linked quarter was due primarily to a 3 bp decline in the cost of interest-bearing deposits.

During the first quarter of 2022, the average balance of interest-bearing demand deposits increased $108.0 million, or 51.4%, compared to the fourth quarter of 2021 and the cost of these deposits increased 22 bps. The increase in the average balance and the cost of these deposits was due primarily to approximately $100 million in deposits with a contractual term of five years and a fixed rate of 1.15% pursuant to a new customer relationship. Additionally, the Company generated $50.0 million of new Banking-as-a-Service (“BaaS”) deposits during the quarter at a cost of 0.20%. Aside from these two new deposit relationships, the balance and cost of non-maturity deposits remained relatively stable compared to the linked quarter while the average balance and cost of certificates and brokered deposits decreased by $79.2 million and 6 bps, respectively.

Net interest margin (“NIM”) improved to 2.56% for the first quarter of 2022, up from 2.30% for the fourth quarter of 2021 and 2.04% for the first quarter of 2021. Fully-taxable equivalent NIM (“FTE NIM”) increased by 26 bps to 2.69% for the first quarter of 2022, up from 2.43% for the fourth quarter of 2021 and 2.18% for the first quarter of 2021. Excluding the impact of income from tax refund advance loans, adjusted FTE NIM was 2.41%, down 2 bps from the prior quarter. The slight decrease in adjusted FTE NIM compared to the linked quarter was driven primarily by a decrease in loan fees, partially offset by the effect of higher yields on securities and lower interest-bearing deposit costs.

Noninterest Income

Noninterest income for the first quarter of 2022 was $6.8 million, compared to $7.7 million for the fourth quarter of 2021 and $8.4 million for the first quarter of 2021. The decrease compared to the fourth quarter of 2021 was driven primarily by lower revenues from mortgage banking activities and a decrease in gain on sale of loans. Mortgage banking revenue totaled $1.9 million for the first quarter of 2022, down $0.9 million from the linked quarter due to a decrease in interest rate locks, sold loan volume and margins. Gain on sale of loans totaled $3.8 million for the quarter and included $3.5 million of gains on the sale of U.S. Small Business Administration (“SBA”) 7(a) guaranteed loans, which increased compared to the linked quarter, and a $0.4 million gain on the sale of $14.4 million of single tenant lease financing loans.

Noninterest Expense

Noninterest expense for the first quarter of 2022 was $18.8 million, compared to $17.0 million for the fourth quarter of 2021 and $15.3 million for the first quarter of 2021. The increase of $1.8 million, or 10.8%, compared to the fourth quarter of 2021 was due primarily to higher loan expenses, consulting and professional fees, premises and equipment and other expense, partially offset by a decrease in salaries and employee benefits. The increase in loan expenses was driven primarily by servicing fees related to tax refund advance loans. The increase in consulting and professional fees was due primarily to $0.9 million of nonrecurring consulting fees and $0.2 million of acquisition-related expenses, partially offset by lower third party loan review fees than what were incurred in the linked quarter. The increase in premises and equipment was primarily related to costs associated with the Company’s new corporate headquarters, partially offset by a $0.5 million IT termination fee incurred in the fourth quarter of 2021. The lower salaries and employee benefits expense was due mainly to lower incentive compensation in the Company’s small business lending and mortgage banking divisions and lower medical claims expense, partially offset by higher employee benefits costs due to annual resets.

Income Taxes

The Company reported an income tax expense of $1.8 million for the first quarter of 2022 and an effective tax rate of 13.8%, compared to an income tax expense of $2.0 million and an effective tax rate of 13.8% for the fourth quarter of 2021 and an income tax expense of $1.9 million and an effective tax rate of 15.1% for the first quarter of 2021.

Loans and Credit Quality

Total loans as of March 31, 2022 were $2.9 billion, a decrease of $6.9 million, or 0.2%, compared to December 31, 2021, and a decrease of $177.9 million, or 5.8%, compared to March 31, 2021. Total commercial loan balances were $2.3 billion as of March 31, 2022, a decrease of $23.8 million, or 1.0%, compared to December 31, 2021 and a decrease of $179.7 million, or 7.1%, compared to March 31, 2021. Compared to the linked quarter, the decline in commercial loan balances was driven primarily by net payoffs in healthcare finance, small business lending, owner-occupied commercial real estate and public finance loans, as well as the sale of single tenant lease financing loans discussed above. These items were partially offset by growth in franchise finance, construction, investor commercial real estate and commercial and industrial loan balances.

Total consumer loan balances were $488.8 million as of March 31, 2022, an increase of $18.8 million, or 4.0%, compared to December 31, 2021 and an increase of $10.5 million, or 2.2%, compared to March 31, 2021. The increase compared to the linked quarter was due to higher balances in the residential mortgage, recreational vehicles and trailers loan portfolios as well as the remaining outstanding balance of tax refund advance loans originated during the first quarter of 2022.

Total delinquencies 30 days or more past due decreased to 0.03% of total loans as of March 31, 2022, down from 0.04% as of December 31, 2021 and down from 0.24% as of March 31, 2021. Overall credit quality remained strong as nonperforming loans to total loans was 0.25% as of March 31, 2022, compared to 0.26% at December 31, 2021 and 0.48% as of March 31, 2021.

The allowance for loan losses as a percentage of total loans was 0.98% as of March 31, 2022, both in total and when excluding PPP loans, compared to 0.96% and 0.97%, respectively, as of December 31, 2021 and 1.00% and 1.02%, respectively, as of March 31, 2021.

Net charge-offs of $0.4 million were recognized during the first quarter of 2022, resulting in net charge-offs to average loans of 0.05%, compared to net recoveries to average loans of 0.01% for the fourth quarter of 2021 and net charge-offs to average loans of 0.02% for the first quarter of 2021. Excluding $1.5 million of net charge-offs related to tax refund advance loans, net recoveries of $1.1 million were recognized during the first quarter of 2022, resulting in net recoveries to average loans of 0.16%.

The provision for loan losses in the first quarter of 2022 was $0.8 million, compared to a benefit of $0.2 million for the fourth quarter of 2021 and a provision of $1.3 million for the first quarter of 2021. The provision for the first quarter of 2022 was driven by the provision related to tax refund advance loans, which totaled $1.8 million, and, to a lesser extent, adjustments to qualitative factors that increased the overall allowance as a percentage of loans. This was partially offset by a $1.2 million recovery on a single tenant lease financing relationship that previously had been partially charged-off with the remaining balance transferred to other real estate owned. Excluding the provision related to tax refund advance loans, the Company recognized a benefit of $1.1 million for the first quarter of 2022.

Capital

As of March 31, 2022, total shareholders’ equity was $374.7 million, a decrease of $5.7 million, or 1.5%, compared to December 31, 2021, due primarily to an increase in accumulated other comprehensive loss resulting from a decline in the value of the available-for-sale securities portfolio resulting from the rapid rise in interest rates, as well as stock repurchase activity, during the quarter. This was partially offset by the net income earned during the quarter as well as an increase in the value of interest rate swaps classified as cash flow hedges. Book value per common share decreased to $38.69 as of March 31, 2022, down from $38.99 as of December 31, 2021 and up from $35.07 as of March 31, 2021. Tangible book value per share decreased to $38.21, down from $38.51 and up from $34.60, each as of the same reference dates.

In connection with its previously announced stock repurchase program, the Company repurchased 103,703 shares of its common stock during the first quarter of 2022 at an average price of $49.35 per share. Including shares repurchased during the fourth quarter of 2021, the Company has repurchased a total of 203,703 shares at an average price of $46.90 per share under the program through March 31, 2022.

The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of March 31, 2022.

As of March 31, 2022

Company

Bank

 

Total shareholders’ equity to assets

8.87

%

10.18

%

Tangible common equity to tangible assets 1

8.77

%

10.08

%

Tier 1 leverage ratio 2

9.26

%

10.57

%

Common equity tier 1 capital ratio 2

13.16

%

15.03

%

Tier 1 capital ratio 2

13.16

%

15.03

%

Total risk-based capital ratio 2

17.62

%

15.99

%

 

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, April 21, 2022 to discuss its quarterly financial results. The call can be accessed via telephone at (844) 200-6205; access code: 139463. A recorded replay can be accessed through May 21, 2022 by dialing (866) 813-9403; access code: 231818.

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 $4.2 billion as of March 31, 2022. 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, SBA financing, franchise finance, residential mortgage loans, 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 the Bank, including its products and services, is available at www.firstib.com.

Forward-Looking Statements

This press release contains forward-looking statements, including statements with respect to the pending acquisition of First Century Bancorp. and its effects on the future performance of the Company and the Bank, the expected timing of completion of the transaction and other statements concerning 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 “ahead,” “anticipate,” “believe,” “capitalize,” “confidence in,” “continue,” “could,” “designed,” “effort,” “estimate,” “expect,” “growth,” “help,” “hope,” “intend,” “looking forward,” “may,” “opportunities,” “optimistic,” “pending,” “plan,” “position,” “preliminary,” “remain,” “should,” “waiting on,” “well-positioned,” “will,” “working on,” “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. Such statements 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. 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 real estate, commercial and industrial, public finance, SBA, healthcare finance and franchise finance loan portfolios; competition with national, regional and community financial institutions; the loss of any key members of senior management; execution of pending and future acquisition, reorganization or disposition transactions, including without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings and other anticipated benefits from such transactions; the failure of any of the closing conditions in the definitive merger agreement with First Century Bancorp to be satisfied on a timely basis or at all; fluctuations in interest rates; 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, adjusted total interest income, net interest income – FTE, adjusted net interest income, adjusted net interest income – FTE, net interest margin – FTE, adjusted net interest margin, adjusted net interest margin – FTE, (benefit) provision for loan losses, excluding tax refund advance loans, average loans, excluding tax refund advance loans, net (recoveries) charge-offs to average loans, excluding tax refund advance loans, allowance for loan losses to loans, excluding PPP loans, adjusted noninterest expense, 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, adjusted effective income tax rate, income before income taxes, excluding tax refund advance loans, income tax provision, excluding tax refund advance loans and net income, excluding tax refund advance loans 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,

 

 

2022

 

2021

 

2021

 
Net income

$

11,209

 

$

12,478

 

$

10,450

 

 
Per share and share information
Earnings per share – basic

$

1.14

 

$

1.26

 

$

1.06

 

Earnings per share – diluted

 

1.14

 

 

1.25

 

 

1.05

 

Dividends declared per share

 

0.06

 

 

0.06

 

 

0.06

 

Book value per common share

 

38.69

 

 

38.99

 

 

35.07

 

Tangible book value per common share 1

 

38.21

 

 

38.51

 

 

34.60

 

Common shares outstanding

 

9,683,727

 

 

9,754,455

 

 

9,823,831

 

Average common shares outstanding:
Basic

 

9,790,122

 

 

9,903,856

 

 

9,899,230

 

Diluted

 

9,870,394

 

 

9,989,951

 

 

9,963,036

 

Performance ratios
Return on average assets

 

1.08

%

 

1.19

%

 

1.02

%

Return on average shareholders’ equity

 

11.94

%

 

13.14

%

 

12.61

%

Return on average tangible common equity 1

 

12.09

%

 

13.30

%

 

12.79

%

Net interest margin

 

2.56

%

 

2.30

%

 

2.04

%

Net interest margin – FTE 1,2

 

2.69

%

 

2.43

%

 

2.18

%

Capital ratios 3
Total shareholders’ equity to assets

 

8.87

%

 

9.03

%

 

8.23

%

Tangible common equity to tangible assets 1

 

8.77

%

 

8.93

%

 

8.12

%

Tier 1 leverage ratio

 

9.26

%

 

9.22

%

 

8.46

%

Common equity tier 1 capital ratio

 

13.16

%

 

12.92

%

 

11.81

%

Tier 1 capital ratio

 

13.16

%

 

12.92

%

 

11.81

%

Total risk-based capital ratio

 

17.62

%

 

17.36

%

 

15.18

%

Asset quality
Nonperforming loans

$

7,084

 

$

7,401

 

$

14,649

 

Nonperforming assets

 

7,085

 

 

8,618

 

 

14,678

 

Nonperforming loans to loans

 

0.25

%

 

0.26

%

 

0.48

%

Nonperforming assets to total assets

 

0.17

%

 

0.20

%

 

0.35

%

Allowance for loan losses to:
Loans

 

0.98

%

 

0.96

%

 

1.00

%

Loans, excluding PPP loans 1

 

0.98

%

 

0.97

%

 

1.02

%

Nonperforming loans

 

398.8

%

 

376.2

%

 

209.2

%

Net charge-offs (recoveries) to average loans

 

0.05

%

 

(0.01

%)

 

0.02

%

Average balance sheet information
Loans

$

2,947,924

 

$

2,914,858

 

$

3,047,915

 

Total securities

 

648,728

 

 

677,580

 

 

548,429

 

Other earning assets

 

455,960

 

 

431,621

 

 

446,045

 

Total interest-earning assets

 

4,080,725

 

 

4,056,254

 

 

4,073,604

 

Total assets

 

4,214,918

 

 

4,177,578

 

 

4,173,273

 

Noninterest-bearing deposits

 

112,248

 

 

113,887

 

 

90,764

 

Interest-bearing deposits

 

3,071,420

 

 

3,032,435

 

 

3,115,987

 

Total deposits

 

3,183,668

 

 

3,146,322

 

 

3,206,751

 

Shareholders’ equity

 

380,767

 

 

376,832

 

 

335,968

 

 
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, 2021)
Dollar amounts in thousands
 

March 31,

 

December 31,

 

March 31,

2022

 

2021

 

2021

 
Assets
Cash and due from banks

$

20,976

 

$

7,492

 

$

4,440

 

Interest-bearing deposits

 

496,573

 

 

435,468

 

 

411,765

 

Securities available-for-sale, at fair value

 

465,288

 

 

603,044

 

 

462,376

 

Securities held-to-maturity, at amortized cost

 

163,370

 

 

59,565

 

 

68,190

 

Loans held-for-sale

 

33,991

 

 

47,745

 

 

30,235

 

Loans

 

2,880,780

 

 

2,887,662

 

 

3,058,694

 

Allowance for loan losses

 

(28,251

)

 

(27,841

)

 

(30,642

)

Net loans

 

2,852,529

 

 

2,859,821

 

 

3,028,052

 

Accrued interest receivable

 

15,263

 

 

16,037

 

 

16,433

 

Federal Home Loan Bank of Indianapolis stock

 

25,219

 

 

25,650

 

 

25,650

 

Cash surrender value of bank-owned life insurance

 

39,133

 

 

38,900

 

 

38,185

 

Premises and equipment, net

 

68,632

 

 

59,842

 

 

42,381

 

Goodwill

 

4,687

 

 

4,687

 

 

4,687

 

Servicing asset

 

5,249

 

 

4,702

 

 

3,817

 

Other real estate owned

 

 

 

1,188

 

 

 

Accrued income and other assets

 

34,487

 

 

46,853

 

 

52,359

 

Total assets

$

4,225,397

 

$

4,210,994

 

$

4,188,570

 

 
Liabilities
Noninterest-bearing deposits

$

119,196

 

$

117,531

 

$

100,700

 

Interest-bearing deposits

 

3,098,783

 

 

3,061,428

 

 

3,116,903

 

Total deposits

 

3,217,979

 

 

3,178,959

 

 

3,217,603

 

Advances from Federal Home Loan Bank

 

514,923

 

 

514,922

 

 

514,917

 

Subordinated debt

 

104,306

 

 

104,231

 

 

69,794

 

Accrued interest payable

 

1,532

 

 

2,018

 

 

1,418

 

Accrued expenses and other liabilities

 

12,002

 

 

30,526

 

 

40,272

 

Total liabilities

 

3,850,742

 

 

3,830,656

 

 

3,844,004

 

Shareholders’ equity
Voting common stock

 

214,473

 

 

218,946

 

 

221,911

 

Retained earnings

 

183,043

 

 

172,431

 

 

136,575

 

Accumulated other comprehensive loss

 

(22,861

)

 

(11,039

)

 

(13,920

)

Total shareholders’ equity

 

374,655

 

 

380,338

 

 

344,566

 

Total liabilities and shareholders’ equity

$

4,225,397

 

$

4,210,994

 

$

4,188,570

 

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,

2022

 

2021

 

2021

 
Interest income
Loans

$

33,188

 

$

31,621

 

$

30,885

 

Securities – taxable

 

2,221

 

 

1,973

 

 

1,779

 

Securities – non-taxable

 

249

 

 

236

 

 

281

 

Other earning assets

 

376

 

 

362

 

 

335

 

Total interest income

 

36,034

 

 

34,192

 

 

33,280

 

Interest expense
Deposits

 

6,097

 

 

6,399

 

 

8,628

 

Other borrowed funds

 

4,187

 

 

4,288

 

 

4,127

 

Total interest expense

 

10,284

 

 

10,687

 

 

12,755

 

Net interest income

 

25,750

 

 

23,505

 

 

20,525

 

Provision (benefit) for loan losses

 

791

 

 

(238

)

 

1,276

 

Net interest income after provision (benefit) for loan losses

 

24,959

 

 

23,743

 

 

19,249

 

Noninterest income
Service charges and fees

 

316

 

 

292

 

 

266

 

Loan servicing revenue

 

585

 

 

544

 

 

422

 

Loan servicing asset revaluation

 

(297

)

 

(400

)

 

(155

)

Mortgage banking activities

 

1,873

 

 

2,776

 

 

5,750

 

Gain on sale of loans

 

3,845

 

 

4,137

 

 

1,723

 

Other

 

498

 

 

345

 

 

369

 

Total noninterest income

 

6,820

 

 

7,694

 

 

8,375

 

Noninterest expense
Salaries and employee benefits

 

9,878

 

 

10,183

 

 

9,492

 

Marketing, advertising and promotion

 

756

 

 

896

 

 

680

 

Consulting and professional fees

 

1,925

 

 

1,262

 

 

986

 

Data processing

 

449

 

 

425

 

 

462

 

Loan expenses

 

1,582

 

 

654

 

 

534

 

Premises and equipment

 

2,540

 

 

2,188

 

 

1,601

 

Deposit insurance premium

 

281

 

 

283

 

 

425

 

Other

 

1,369

 

 

1,064

 

 

1,137

 

Total noninterest expense

 

18,780

 

 

16,955

 

 

15,317

 

Income before income taxes

 

12,999

 

 

14,482

 

 

12,307

 

Income tax provision

 

1,790

 

 

2,004

 

 

1,857

 

Net income

$

11,209

 

$

12,478

 

$

10,450

 

 
Per common share data
Earnings per share – basic

$

1.14

 

$

1.26

 

$

1.06

 

Earnings per share – diluted

$

1.14

 

$

1.25

 

$

1.05

 

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, 2022

 

December 31, 2021

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

$

2,976,037

 

$

33,188

4.52

%

$

2,947,053

 

$

31,621

4.26

%

$

3,079,130

 

$

30,885

4.07

%

Securities – taxable

 

567,776

 

 

2,221

1.59

%

 

595,024

 

 

1,973

1.32

%

 

461,300

 

$

1,779

1.56

%

Securities – non-taxable

 

80,952

 

 

249

1.25

%

 

82,556

 

 

236

1.13

%

 

87,129

 

$

281

1.31

%

Other earning assets

 

455,960

 

 

376

0.33

%

 

431,621

 

 

362

0.33

%

 

446,045

 

$

335

0.30

%

Total interest-earning assets

 

4,080,725

 

 

36,034

3.58

%

 

4,056,254

 

 

34,192

3.34

%

 

4,073,604

 

 

33,280

3.31

%

 
Allowance for loan losses

 

(27,974

)

 

(27,946

)

 

(29,884

)

Noninterest-earning assets

 

162,167

 

 

149,270

 

 

129,553

 

Total assets

$

4,214,918

 

$

4,177,578

 

$

4,173,273

 

 
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits

$

318,281

 

$

412

0.52

%

$

210,283

 

$

158

0.30

%

$

180,746

 

$

133

0.30

%

Savings accounts

 

60,616

 

 

53

0.35

%

 

63,575

 

 

58

0.36

%

 

46,035

 

 

40

0.35

%

Money market accounts

 

1,454,436

 

 

1,503

0.42

%

 

1,453,447

 

 

1,507

0.41

%

 

1,369,626

 

 

1,391

0.41

%

BaaS – brokered deposits

 

12,111

 

 

6

0.20

%

 

 

 

0.00

%

 

 

 

0.00

%

Certificates and brokered deposits

 

1,225,976

 

 

4,123

1.36

%

 

1,305,130

 

 

4,676

1.42

%

 

1,519,580

 

 

7,064

1.89

%

Total interest-bearing deposits

 

3,071,420

 

 

6,097

0.81

%

 

3,032,435

 

 

6,399

0.84

%

 

3,115,987

 

 

8,628

1.12

%

Other borrowed funds

 

619,191

 

 

4,187

2.74

%

 

619,115

 

 

4,288

2.75

%

 

583,780

 

 

4,127

2.87

%

Total interest-bearing liabilities

 

3,690,611

 

 

10,284

1.13

%

 

3,651,550

 

 

10,687

1.16

%

 

3,699,767

 

 

12,755

1.40

%

 
Noninterest-bearing deposits

 

112,248

 

 

113,887

 

 

90,764

 

Other noninterest-bearing liabilities

 

31,292

 

 

35,309

 

 

46,774

 

Total liabilities

 

3,834,151

 

 

3,800,746

 

 

3,837,305

 

 
Shareholders’ equity

 

380,767

 

 

376,832

 

 

335,968

 

Total liabilities and shareholders’ equity

$

4,214,918

 

$

4,177,578

 

$

4,173,273

 

 
Net interest income

$

25,750

$

23,505

$

20,525

 
Interest rate spread

2.45

%

2.18

%

1.91

%

 
Net interest margin

2.56

%

2.30

%

2.04

%

 
Net interest margin – FTE 2,3

2.69

%

2.43

%

2.18

%

 
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, 2022

 

December 31, 2021

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

 
Commercial loans
Commercial and industrial

$

99,808

3.5

%

$

96,008

3.3

%

$

71,835

2.3

%

Owner-occupied commercial real estate

 

56,752

2.0

%

 

66,732

2.3

%

 

87,930

2.9

%

Investor commercial real estate

 

34,627

1.2

%

 

28,019

1.0

%

 

14,832

0.5

%

Construction

 

149,662

5.2

%

 

136,619

4.7

%

 

123,483

4.0

%

Single tenant lease financing

 

852,519

29.6

%

 

865,854

30.0

%

 

941,322

30.8

%

Public finance

 

587,817

20.4

%

 

592,665

20.5

%

 

637,600

20.8

%

Healthcare finance

 

354,574

12.3

%

 

387,852

13.4

%

 

510,237

16.8

%

Small business lending

 

97,040

3.4

%

 

108,666

3.8

%

 

132,490

4.3

%

Franchise finance

 

107,246

3.7

%

 

81,448

2.8

%

 

 

Total commercial loans

 

2,340,045

81.3

%

 

2,363,863

81.8

%

 

2,519,729

82.4

%

 
Consumer loans
Residential mortgage

 

191,153

6.6

%

 

186,770

6.5

%

 

190,148

6.2

%

Home equity

 

18,100

0.6

%

 

17,665

0.6

%

 

17,949

0.6

%

Trailers

 

148,870

5.2

%

 

146,267

5.1

%

 

143,454

4.7

%

Recreational vehicles

 

93,458

3.2

%

 

90,654

3.1

%

 

92,221

3.0

%

Other consumer loans

 

28,002

1.0

%

 

28,557

1.0

%

 

34,534

1.1

%

Tax refund advance loans

 

9,177

0.3

%

 

0.0

%

 

0.0

%

Total consumer loans

 

488,760

16.9

%

 

469,913

16.3

%

 

478,306

15.6

%

 
Net deferred loan fees, premiums, discounts and other 1

 

51,975

1.8

%

 

53,886

1.9

%

 

60,659

2.0

%

 
Total loans

$

2,880,780

100.0

%

$

2,887,662

100.0

%

$

3,058,694

100.0

%

 
 

March 31, 2022

 

December 31, 2021

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

 
Deposits
Noninterest-bearing deposits

$

119,197

3.7

%

$

117,532

3.7

%

$

100,700

3.1

%

Interest-bearing demand deposits

 

334,723

10.4

%

 

247,966

7.8

%

 

186,015

5.8

%

Savings accounts

 

66,320

2.1

%

 

59,998

1.9

%

 

51,251

1.6

%

Money market accounts

 

1,475,857

45.8

%

 

1,483,936

46.7

%

 

1,397,449

43.4

%

BaaS – brokered deposits

 

50,006

1.6

%

 

0.0

%

 

0.0

%

Certificates of deposits

 

889,789

27.6

%

 

970,107

30.5

%

 

1,174,764

36.5

%

Brokered deposits

 

282,087

8.8

%

 

299,420

9.4

%

 

307,424

9.6

%

 
Total deposits

$

3,217,979

100.0

%

$

3,178,959

100.0

%

$

3,217,603

100.0

%

 
1 Includes carrying value adjustments of $36.4 million, $37.5 million and $41.6 million related to terminated interest rate swaps associated with public finance loans as of March 31, 2022, December 31, 2021 and March 31, 2021, 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,

2022

 

2021

 

2021

 
Total equity – GAAP

$

374,655

 

$

380,338

 

$

344,566

 

Adjustments:
Goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

Tangible common equity

$

369,968

 

$

375,651

 

$

339,879

 

 
Total assets – GAAP

$

4,225,397

 

$

4,210,994

 

$

4,188,570

 

Adjustments:
Goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

Tangible assets

$

4,220,710

 

$

4,206,307

 

$

4,183,883

 

 
Common shares outstanding

 

9,683,727

 

 

9,754,455

 

 

9,823,831

 

 
Book value per common share

$

38.69

 

$

38.99

 

$

35.07

 

Effect of goodwill

 

(0.48

)

 

(0.48

)

 

(0.47

)

Tangible book value per common share

$

38.21

 

$

38.51

 

$

34.60

 

 
Total shareholders’ equity to assets

 

8.87

%

 

9.03

%

 

8.23

%

Effect of goodwill

 

(0.10

%)

 

(0.10

%)

 

(0.11

%)

Tangible common equity to tangible assets

 

8.77

%

 

8.93

%

 

8.12

%

 
Total average equity – GAAP

$

380,767

 

$

376,832

 

$

335,968

 

Adjustments:
Average goodwill

 

(4,687

)

 

(4,687

)

 

(4,687

)

Average tangible common equity

$

376,080

 

$

372,145

 

$

331,281

 

 
Return on average shareholders’ equity

 

11.94

%

 

13.14

%

 

12.61

%

Effect of goodwill

 

0.15

%

 

0.16

%

 

0.18

%

Return on average tangible common equity

 

12.09

%

 

13.30

%

 

12.79

%

 
Total interest income

$

36,034

 

$

34,192

 

$

33,280

 

Adjustments:
Fully-taxable equivalent adjustments 1

 

1,314

 

 

1,348

 

 

1,356

 

Total interest income – FTE

$

37,348

 

$

35,540

 

$

34,636

 

 
Total interest income – FTE

$

37,348

 

$

35,540

 

$

34,636

 

Adjustments:
Income from tax refund advance loans

 

(2,864

)

 

 

 

 

Total interest income – FTE

$

34,484

 

$

35,540

 

$

34,636

 

 
Net interest income

$

25,750

 

$

23,505

 

$

20,525

 

Adjustments:
Fully-taxable equivalent adjustments 1

 

1,314

 

 

1,348

 

 

1,356

 

Net interest income – FTE

$

27,064

 

$

24,853

 

$

21,881

 

 
Net interest income

$

25,750

 

$

23,505

 

$

20,525

 

Adjustments:
Income from tax refund advance loans

 

(2,864

)

 

 

 

 

Adjusted net interest income

$

22,886

 

$

23,505

 

$

20,525

 

 
Net interest income

$

25,750

 

$

23,505

 

$

20,525

 

Adjustments:
Fully-taxable equivalent adjustments 1

 

1,314

 

 

1,348

 

 

1,356

 

Income from tax refund advance loans

 

(2,864

)

 

 

 

 

Adjusted net interest income – FTE

$

24,200

 

$

24,853

 

$

21,881

 

 
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,

2022

 

2021

 

2021

 
Net interest margin

 

2.56

%

 

2.30

%

 

2.04

%

Effect of fully-taxable equivalent adjustments 1

 

0.13

%

 

0.13

%

 

0.14

%

Net interest margin – FTE

 

2.69

%

 

2.43

%

 

2.18

%

 
Net interest margin

 

2.56

%

 

2.30

%

 

2.04

%

Effect of income from tax refund advance loans

 

(0.28

%)

 

0.00

%

 

0.00

%

Adjusted net interest margin

 

2.28

%

 

2.30

%

 

2.04

%

 
Net interest margin

 

2.56

%

 

2.30

%

 

2.04

%

Effect of fully-taxable equivalent adjustments 1

 

0.13

%

 

0.13

%

 

0.14

%

Effect of income from tax refund advance loans

 

(0.28

%)

 

0.00

%

 

0.00

%

Adjusted net interest margin – FTE

 

2.41

%

 

2.43

%

 

2.18

%

 
Provision (benefit) for loan losses

$

791

 

$

(238

)

$

1,276

 

Adjustments:
Provision for tax refund advance loans losses

 

(1,842

)

 

 

 

 

(Benefit) provision for loan losses, excluding tax refund advance loans

$

(1,051

)

$

(238

)

$

1,276

 

 
Average loans

$

2,947,924

 

$

2,914,858

 

$

3,047,915

 

Adjustments:
Average tax refund advance loans

 

(60,499

)

 

 

 

 

Average loans, excluding tax refund advance loans

$

2,887,425

 

$

2,914,858

 

$

3,047,915

 

 
Net charge-offs (recoveries) to average loans

 

0.05

%

 

(0.01

%)

 

0.02

%

Adjustments:
Effect of tax refund advance lending net charge-offs to average loans

 

(0.21

%)

 

0.00

%

 

0.00

%

Net (recoveries) charge-offs to average loans, excluding tax refund advance loans

 

(0.16

%)

 

(0.01

%)

 

0.02

%

 
Allowance for loan losses

$

28,251

 

$

27,841

 

$

30,642

 

 
Loans

$

2,880,780

 

$

2,887,662

 

$

3,058,694

 

Adjustments:
PPP loans

 

(1,003

)

 

(3,152

)

 

(53,365

)

Loans, excluding PPP loans

$

2,879,777

 

$

2,884,510

 

$

3,005,329

 

 
Allowance for loan losses to loans

 

0.98

%

 

0.96

%

 

1.00

%

Effect of PPP loans

 

0.00

%

 

0.01

%

 

0.02

%

Allowance for loan losses to loans, excluding PPP loans

 

0.98

%

 

0.97

%

 

1.02

%

 
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,

2022

 

2021

 

2021

 
Noninterest expense – GAAP

$

18,780

 

$

16,955

 

$

15,317

 

Adjustments:
Acquisition-related expenses

 

(170

)

 

(163

)

 

 

IT termination fee

 

 

 

(475

)

 

 

Nonrecurring consulting fee

 

(875

)

 

 

 

 

Adjusted noninterest expense

$

17,735

 

$

16,317

 

$

15,317

 

 
Income before income taxes – GAAP

$

12,999

 

$

14,482

 

$

12,307

 

Adjustments:
Acquisition-related expenses

 

170

 

 

163

 

 

 

IT termination fee

 

 

 

475

 

 

 

Nonrecurring consulting fee

 

875

 

 

 

 

 

Adjusted income before income taxes

$

14,044

 

$

15,120

 

$

12,307

 

 
Income tax provision – GAAP

$

1,790

 

$

2,004

 

$

1,857

 

Adjustments:
Acquisition-related expenses

 

36

 

 

34

 

 

 

IT termination fee

 

 

 

100

 

 

 

Nonrecurring consulting fee

 

184

 

 

 

 

 

Adjusted income tax provision

$

2,010

 

$

2,138

 

$

1,857

 

 
Net income – GAAP

$

11,209

 

$

12,478

 

$

10,450

 

Adjustments:
Acquisition-related expenses

 

134

 

 

129

 

 

 

IT termination fee

 

 

 

375

 

 

 

Nonrecurring consulting fee

 

691

 

 

 

 

 

Adjusted net income

$

12,034

 

$

12,982

 

$

10,450

 

 
Diluted average common shares outstanding

 

9,870,394

 

 

9,989,951

 

 

9,963,036

 

 
Diluted earnings per share – GAAP

$

1.14

 

$

1.25

 

$

1.05

 

Adjustments:
Effect of acquisition-related expenses

 

0.01

 

 

0.01

 

 

 

Effect of IT termination fee

 

 

 

0.04

 

 

 

Effect of nonrecurring consulting fee

 

0.07

 

 

 

 

 

Adjusted diluted earnings per share

$

1.22

 

$

1.30

 

$

1.05

 

 
Return on average assets

 

1.08

%

 

1.12

%

 

1.02

%

Effect of acquisition-related expenses

 

0.01

%

 

0.00

%

 

0.00

%

Effect of IT termination fee

 

0.00

%

 

0.04

%

 

0.00

%

Effect of nonrecurring consulting fee

 

0.07

%

 

0.00

%

 

0.00

%

Adjusted return on average assets

 

1.16

%

 

1.16

%

 

1.02

%

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,

2022

 

2021

 

2021

 
Return on average shareholders’ equity

 

11.94

%

 

13.14

%

 

12.61

%

Effect of acquisition-related expenses

 

0.14

%

 

0.14

%

 

0.00

%

Effect of IT termination fee

 

0.00

%

 

0.39

%

 

0.00

%

Effect of nonrecurring consulting fee

 

0.74

%

 

0.00

%

 

0.00

%

Adjusted return on average shareholders’ equity

 

12.82

%

 

13.67

%

 

12.61

%

 
Return on average tangible common equity

 

12.09

%

 

13.30

%

 

12.79

%

Effect of acquisition-related expenses

 

0.14

%

 

0.14

%

 

0.00

%

Effect of IT termination fee

 

0.00

%

 

0.40

%

 

0.00

%

Effect of nonrecurring consulting fee

 

0.75

%

 

0.00

%

 

0.00

%

Adjusted return on average tangible common equity

 

12.98

%

 

13.84

%

 

12.79

%

 
Effective income tax rate

 

13.8

%

 

13.8

%

 

15.1

%

Effect of acquisition-related expenses

 

0.3

%

 

0.1

%

 

0.0

%

Effect of IT termination fee

 

0.0

%

 

0.2

%

 

0.0

%

Effect of nonrecurring consulting fee

 

1.3

%

 

0.0

%

 

0.0

%

Adjusted effective income tax rate

 

15.4

%

 

14.1

%

 

15.1

%

 
Income before income taxes – GAAP

$

12,999

 

$

14,482

 

$

12,307

 

Adjustments:
Income from tax refund advance lending

 

(2,864

)

 

 

 

 

Provision for tax refund advance lending losses

 

1,842

 

 

 

 

 

Tax refund advance lending servicing fee

 

921

 

 

 

 

 

Income before taxes, excluding tax refund advance loans

$

12,898

 

$

14,482

 

$

12,307

 

 
Income tax provision – GAAP

$

1,790

 

$

2,004

 

$

1,857

 

Adjustments:
Income from tax refund advance lending

 

(601

)

 

 

 

 

Provision for tax refund advance lending losses

 

387

 

 

 

Tax refund advance lending servicing fee

 

193

 

 

 

 

 

Income tax provision, excluding tax refund advance loans

$

1,769

 

$

2,004

 

$

1,857

 

 
Net income – GAAP

$

11,209

 

$

12,478

 

$

10,450

 

Adjustments:
Income from tax refund advance lending

 

(2,263

)

 

 

 

 

Provision for tax refund advance lending losses

 

1,455

 

 

 

 

 

Tax refund advance lending servicing fee

 

728

 

 

 

 

 

Net income, excluding tax refund advance loans

$

11,129

 

$

12,478

 

$

10,450

 

 

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