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| 8-K - 8-K - First Internet Bancorp | inbk-4q2017xer8k.htm |
First Internet Bancorp Reports Record Annual Net Income for 2017
Total loans increased 67% and assets increased 49% year-over-year
Fishers, Indiana, January 18, 2018 - First Internet Bancorp (the “Company”) (NASDAQ: INBK), the parent company of First Internet Bank (the “Bank”) (www.firstib.com), announced today financial and operational results for the fourth quarter 2017 and for the twelve month period ended December 31, 2017.
David Becker, Chairman, President and Chief Executive Officer, commented, “I am proud to report our teams produced another year of balance sheet and earnings growth. Our lending efforts, including the additions of public finance and healthcare finance in 2017, had a solid year, which fueled record net interest income. In total, we grew loans by $840 million, or 67%, on a year-over-year basis.
“Credit quality remains very strong. Additionally, our capital, following a common stock offering completed in the third quarter, positions us well to continue to win new customer relationships across the organization in 2018.”
Fourth quarter net income was $3.5 million and diluted earnings per share were $0.41. This compares with third quarter net income of $4.9 million and diluted earnings per share of $0.71 and fourth quarter 2016 net income of $3.7 million and diluted earnings per share of $0.64.
For the twelve month period ended December 31, 2017, net income was a record $15.2 million and diluted earnings per share were $2.13 compared to net income of $12.1 million and diluted earnings per share of $2.30 for the twelve month period ended December 31, 2016.
As a result of the “Tax Cuts and Jobs Act Bill of 2017,” the Company’s net deferred tax asset (“net DTA”) was revalued as of December 31, 2017. The value of the net DTA was reduced by $1.8 million with the amount of the reduction recognized as additional income tax expense in the fourth quarter.
Consequently, this revaluation decreased fourth quarter diluted earnings per share by $0.22 and full year 2017 diluted earnings per share by $0.26.
Adjusted for the net DTA revaluation, fourth quarter net income was $5.3 million and diluted earnings per share were $0.63 and full year 2017 net income was $17.1 million and diluted earnings per share were $2.39.
The Company completed its first sale of single tenant lease financing loans during the fourth quarter which included $24.7 million of loans. The Company is in the process of executing additional single tenant lease financing loan sales with approximately $27.8 million of loans transferred to loans-held-for- sale as of December 31, 2017 in anticipation of these transactions closing during the first quarter 2018.
The loan sales provide the Company an additional strategy to manage balance sheet growth and capital while providing additional liquidity and further diversifying revenue channels.
Highlights for the fourth quarter include:
▪ | Total loan growth of $222.7 million, or 11.9%, compared to September 30, 2017 and $840.4 million, or 67.2%, compared to December 31, 2016 |
▪ | Net interest income of $15.4 million, increasing $1.2 million, or 8.2%, compared to the linked quarter and $4.5 million, or 40.9%, compared to the fourth quarter 2016 |
▪ | Solid profitability after eliminating the impact of the net DTA revaluation |
As Reported | Adjusted | |||
Return on average assets | 0.52% | 0.80% | ||
Return on average shareholders’ equity | 6.23% | 9.52% | ||
Return on average tangible common equity | 6.37% | 9.73% | ||
▪ | Capital levels continued to support the strong balance sheet growth |
Company | Bank | |||
Total shareholders’ equity to assets | 8.10% | 8.07% | ||
Tangible common equity to tangible assets | 7.94% | 7.91% | ||
Tier 1 leverage ratio | 8.45% | 8.42% | ||
Common equity tier 1 capital ratio | 11.43% | 11.40% | ||
Tier 1 capital ratio | 11.43% | 11.40% | ||
Total risk-based capital ratio | 14.07% | 12.16% | ||
▪ | Asset quality remained strong |
• | Nonperforming loans to total loans declined to 0.04% |
• | Nonperforming assets to total assets declined to 0.21% |
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter was $15.4 million compared to $14.2 million for the third quarter and $10.9 million for the fourth quarter 2016. Total interest income for the fourth quarter was $24.6 million, increasing $1.9 million, or 8.6%, compared to the third quarter and $7.9 million, or 47.0%, compared to the fourth quarter 2016. The increase in total interest income compared to the linked quarter was driven primarily by a $175.9 million, or 9.8%, increase in average loan balances. Additionally, the yield earned on the loan portfolio increased 4 bps to 4.17% in the fourth quarter from 4.13% for the third quarter. The increase in the yield earned on the loan portfolio was driven by yield expansion in several loan types and also benefitted from the collection of back interest on a nonaccrual loan that paid down in full during the quarter. In total, the Company’s yield on interest-earning assets increased 8 bps during the fourth quarter to 3.78% from 3.70% for the third quarter.
Total interest expense for the fourth quarter was $9.3 million, increasing $0.8 million, or 9.1%, compared to the third quarter and $3.4 million, or 58.3%, compared to the fourth quarter 2016. The increase in total interest expense compared to the linked quarter was due primarily to an increase of $123.5 million, or 6.7%, in average interest-bearing deposit balances as well as an increase in the cost of funds related to interest-bearing deposits, which increased 7 bps during the fourth quarter to 1.49% from 1.42% for the third quarter. Overall, the total cost of interest-bearing liabilities increased 6 bps during the fourth quarter to 1.55% from 1.49% for the third quarter.
Net interest margin (“NIM”) was 2.35% for the fourth quarter compared to 2.31% for the third quarter and 2.42% for the fourth quarter 2016. On a fully-taxable equivalent basis, NIM increased to 2.59% for the fourth quarter compared to 2.52% for the third quarter and 2.48% for the fourth quarter 2016.
Noninterest Income
Noninterest income for the fourth quarter was $2.5 million compared to $3.1 million for the third quarter and $2.9 million for the fourth quarter 2016. The decrease of $0.6 million, or 19.0%, compared to the linked quarter was due primarily to a decline of $1.0 million, or 39.6%, in mortgage banking revenue. The decrease in mortgage banking revenue was driven by lower mortgage origination activity as well as a decline in gain on sale margins related to mandatory commitments. The decrease in mortgage banking revenue was partially offset by a gain of $0.4 million on the sale of single tenant lease financing loans as discussed above.
Noninterest Expense
Noninterest expense for the fourth quarter was $9.7 million compared to $9.4 million for the third quarter and $8.2 million for the fourth quarter 2016. The increase of $0.3 million, or 3.2%, compared to the linked quarter was due primarily to increases in salaries and employee benefits and other expenses, offset by declines in marketing expenses and consulting and professional fees. The increase in salaries and benefits was due to higher incentive compensation related to loan origination activities and employee benefit expenses. The increase in other expenses was due primarily to costs associated with a residential mortgage property classified as other real estate owned.
Income Taxes
Income tax expense was $3.5 million for the fourth quarter, resulting in an effective tax rate of 50.2%, compared to $1.7 million and an effective tax rate of 25.7% for the linked quarter and $1.7 million and an effective tax rate of 31.1% for the fourth quarter 2016. The increase of $1.8 million, or 107.9%, compared to the linked quarter was due primarily to the net DTA revaluation discussed above. Excluding the net DTA revaluation, income tax expense for the fourth quarter was $1.7 million and the effective tax rate declined to 23.9%. The decline in the adjusted effective tax rate compared to the linked quarter was driven by the increase in tax-exempt earning assets due to the strong growth in the public finance loan portfolio.
Loans and Credit Quality
Total loans as of December 31, 2017 were $2.1 billion, increasing $222.7 million, or 11.9%, compared to September 30, 2017 and $840.4 million, or 67.2%, compared to December 31, 2016. Total commercial loan balances were $1.5 billion as of December 31, 2017, increasing $206.4 million, or 15.6%, compared to September 30, 2017 and $695.3 million, or 83.5%, compared to December 31, 2016. The growth in commercial loan balances was driven largely by production in public finance, single tenant lease financing and healthcare finance.
The public finance portfolio increased $169.0 million, or 62.7%, compared to September 30, 2017 with balances totaling $438.3 million at quarter end. Single tenant lease financing (“STL”) balances increased $19.4 million, or 2.5%, compared to September 30, 2017 and $196.7 million, or 32.4%, compared to December 31, 2016. Growth in the STL portfolio was impacted by the transfer of $27.8 million of balances to loans held-for-sale as of December 31, 2017 pursuant to the expected sales of STL loans discussed above. Healthcare finance balances, originated through the partnership with Lendeavor, Inc., increased $19.2 million, or 155.4%, compared to September 30, 2017 and totaled $31.6 million at quarter end. Commercial and industrial and owner-occupied commercial real estate balances increased slightly on a combined basis compared to September 30, 2017 and $38.6 million, or 24.1%, compared to December 31, 2016. During the fourth quarter, new commercial and industrial and owner occupied commercial real estate production was offset by elevated prepayment activity.
Total consumer loan balances were $558.0 million as of December 31, 2017, increasing $14.5 million, or 2.7%, compared to September 30, 2017 and $144.0 million, or 34.8%, compared to December 31, 2016. Residential mortgage balances increased $8.6 million, or 2.9%, compared to September 30, 2017 and $94.4 million, or 45.9%, compared to December 31, 2016. Trailer portfolio balances increased $3.6 million, or 3.6%, compared to September 30, 2017 and $20.2 million, or 24.9%, compared to December 31, 2016. Recreational vehicle balances increased $2.6 million, or 3.9%, compared to September 30, 2017 and $16.8 million, or 32.2%, compared to December 31, 2016. Additionally, other consumer loan balances increased $0.5 million, or 0.8%, compared to September 30, 2017 and $17.1 million, or 42.7%, compared to December 31, 2016.
Credit quality continued to remain sound as total delinquencies 30 days or more past due were 0.05% of total loans as of December 31, 2017, consistent with September 30, 2017 and down from 0.13% as of December 31, 2016. Nonperforming loans to total loans was 0.04% as of December 31, 2017 compared to 0.14% as of September 30, 2017 and 0.09% as of December 31, 2016. Nonperforming assets to total assets was 0.21% as of December 31, 2017 compared to 0.30% as of September 30, 2017 and 0.31% as of December 31, 2016. The decline in both nonperforming loans and nonperforming assets was driven primarily by a nonaccrual commercial and industrial loan that paid down in full during the fourth quarter.
The allowance for loan losses was $15.0 million as of December 31, 2017 compared to $14.1 million as of September 30, 2017 and $11.0 million as of December 31, 2016. The allowance as a percentage of total nonperforming loans was 1,784.3% as of December 31, 2017 compared to 529.2% as of September 30, 2017 and 1,013.9% as of December 31, 2016. The allowance as a percentage of total loans was 0.72% as of December 31, 2017 compared to 0.75% as of September 30, 2017 and 0.88% as of December 31, 2016. The decline in the allowance as a percentage of total loans was due primarily to the strong growth in the public finance portfolio as this loan category has a lower loss reserve factor than other loan types.
Net charge-offs of $0.3 million were recognized during the fourth quarter, resulting in net charge-offs to average loans of 0.06% compared to 0.10% for the third quarter and net recoveries to average loans of 0.05% for the fourth quarter 2016. The provision for loan losses in the fourth quarter was $1.2 million compared to $1.3 million for the third quarter and $0.3 million for the fourth quarter 2016.
Capital
During the fourth quarter, total shareholders’ equity increased $3.3 million, due primarily to net income earned during the quarter, partially offset by declared dividends. As of December 31, 2017, the Company’s tier 1 leverage, common equity tier 1, tier 1 and total risk-based capital ratios were 8.45%, 11.43%, 11.43% and 14.07% compared to 8.86%, 11.93%, 11.93% and 14.67% as of September 30, 2017, respectively. The declines in regulatory capital ratios were due primarily to increases in average and risk-weighted assets resulting from the strong quarterly loan growth. Tangible common equity to tangible assets decreased 28 bps during the fourth quarter to 7.94% as of December 31, 2017 due primarily to continued strong balance sheet growth. Tangible book value per share increased to $26.09 as of December 31, 2017 from $25.70 as of September 30, 2017 and $23.04 as of December 31, 2016.
About First Internet Bancorp
First Internet Bancorp is a bank holding company with assets of $2.8 billion as of December 31, 2017. 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 now 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 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.
Safe Harbor Statement
This press release may contain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance or business of the Company. Forward-looking statements are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Forward-looking statements are not a guarantee of future performance or results, are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the information in the forward-looking statements. Factors that may cause such differences include: failures or breaches of or interruptions in the communications and information systems on which we rely to conduct our business; failure of our plans to grow our commercial real estate, commercial and industrial, public finance 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, return on average tangible common equity and tangible common equity to tangible assets, net interest income - FTE and net interest margin - FTE, 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 income tax expense and adjusted effective income tax rate are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the table at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”
Contact Information: | |||
Investors/Analysts | Media | ||
Paula Deemer | Nicole Lorch | ||
Investor Relations | Executive Vice President & Chief Operating Officer | ||
(317) 428-4628 | (317) 532-7906 | ||
investors@firstib.com | nlorch@firstib.com | ||
First Internet Bancorp | ||||||||||||||||||||
Summary Financial Information (unaudited) | ||||||||||||||||||||
Amounts in thousands, except per share data | ||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||
Net income | $ | 3,498 | $ | 4,895 | $ | 3,710 | $ | 15,226 | $ | 12,074 | ||||||||||
Per share and share information | ||||||||||||||||||||
Earnings per share - basic | $ | 0.41 | $ | 0.72 | $ | 0.65 | $ | 2.14 | $ | 2.32 | ||||||||||
Earnings per share - diluted | 0.41 | 0.71 | 0.64 | 2.13 | 2.30 | |||||||||||||||
Dividends declared per share | 0.06 | 0.06 | 0.06 | 0.24 | 0.24 | |||||||||||||||
Book value per common share | 26.65 | 26.26 | 23.76 | 26.65 | 23.76 | |||||||||||||||
Tangible book value per common share | 26.09 | 25.70 | 23.04 | 26.09 | 23.04 | |||||||||||||||
Common shares outstanding | 8,411,077 | 8,411,077 | 6,478,050 | 8,411,077 | 6,478,050 | |||||||||||||||
Average common shares outstanding: | ||||||||||||||||||||
Basic | 8,490,951 | 6,834,011 | 5,722,615 | 7,118,628 | 5,211,209 | |||||||||||||||
Diluted | 8,527,599 | 6,854,614 | 5,761,931 | 7,149,302 | 5,239,082 | |||||||||||||||
Performance ratios | ||||||||||||||||||||
Return on average assets | 0.52 | % | 0.78 | % | 0.81 | % | 0.66 | % | 0.74 | % | ||||||||||
Return on average shareholders' equity | 6.23 | % | 11.20 | % | 10.85 | % | 8.54 | % | 9.74 | % | ||||||||||
Return on average tangible common equity | 6.37 | % | 11.51 | % | 11.24 | % | 8.77 | % | 10.12 | % | ||||||||||
Net interest margin | 2.35 | % | 2.31 | % | 2.42 | % | 2.39 | % | 2.49 | % | ||||||||||
Net interest margin - FTE 1 | 2.59 | % | 2.52 | % | 2.48 | % | 2.57 | % | 2.55 | % | ||||||||||
Capital ratios 2 | ||||||||||||||||||||
Total shareholders' equity to assets | 8.10 | % | 8.39 | % | 8.30 | % | 8.10 | % | 8.30 | % | ||||||||||
Tangible common equity to tangible assets | 7.94 | % | 8.22 | % | 8.07 | % | 7.94 | % | 8.07 | % | ||||||||||
Tier 1 leverage ratio | 8.45 | % | 8.86 | % | 8.65 | % | 8.45 | % | 8.65 | % | ||||||||||
Common equity tier 1 capital ratio | 11.43 | % | 11.93 | % | 11.54 | % | 11.43% | 11.54 | % | |||||||||||
Tier 1 capital ratio | 11.43 | % | 11.93 | % | 11.54 | % | 11.43% | 11.54 | % | |||||||||||
Total risk-based capital ratio | 14.07 | % | 14.67 | % | 15.01 | % | 14.07% | 15.01 | % | |||||||||||
Asset quality | ||||||||||||||||||||
Nonperforming loans | $ | 839 | $ | 2,662 | $ | 1,083 | $ | 839 | $ | 1,083 | ||||||||||
Nonperforming assets | 5,892 | 7,855 | 5,701 | 5,892 | 5,701 | |||||||||||||||
Nonperforming loans to loans | 0.04 | % | 0.14 | % | 0.09 | % | 0.04 | % | 0.09 | % | ||||||||||
Nonperforming assets to total assets | 0.21 | % | 0.30 | % | 0.31 | % | 0.21 | % | 0.31 | % | ||||||||||
Allowance for loan losses to: | ||||||||||||||||||||
Loans | 0.72 | % | 0.75 | % | 0.88 | % | 0.72 | % | 0.88 | % | ||||||||||
Nonperforming loans | 1,784.3 | % | 529.2 | % | 1,013.9 | % | 1,784.3 | % | 1,013.9 | % | ||||||||||
Net charge-offs (recoveries) to average loans | 0.06 | % | 0.10 | % | (0.05 | %) | 0.05 | % | 0.15 | % | ||||||||||
Average balance sheet information | ||||||||||||||||||||
Loans | $ | 1,970,994 | $ | 1,795,118 | $ | 1,219,966 | $ | 1,661,813 | $ | 1,110,483 | ||||||||||
Total securities | 500,627 | 507,873 | 479,330 | 496,143 | 380,560 | |||||||||||||||
Other earning assets | 95,049 | 108,547 | 57,081 | 79,461 | 71,140 | |||||||||||||||
Total interest-earning assets | 2,588,677 | 2,434,799 | 1,790,167 | 2,257,853 | 1,596,387 | |||||||||||||||
Total assets | 2,650,583 | 2,492,751 | 1,831,549 | 2,313,469 | 1,629,800 | |||||||||||||||
Noninterest-bearing deposits | 40,618 | 35,094 | 30,336 | 35,043 | 28,472 | |||||||||||||||
Interest-bearing deposits | 1,963,405 | 1,839,943 | 1,445,737 | 1,713,603 | 1,288,031 | |||||||||||||||
Total deposits | 2,004,023 | 1,875,037 | 1,476,073 | 1,748,646 | 1,316,503 | |||||||||||||||
Shareholders' equity | 222,670 | 173,459 | 135,974 | 178,212 | 124,023 | |||||||||||||||
1 On a fully-taxable equivalent (“FTE”) basis assuming a 35% tax rate
2 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, 2016) | ||||||||||||
Amounts in thousands | ||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||
Assets | ||||||||||||
Cash and due from banks | $ | 4,539 | $ | 4,509 | $ | 2,282 | ||||||
Interest-bearing deposits | 43,442 | 121,195 | 37,170 | |||||||||
Interest-bearing time deposits | — | — | 250 | |||||||||
Securities available-for-sale, at fair value | 473,275 | 492,468 | 456,700 | |||||||||
Securities held-to-maturity, at amortized cost | 19,209 | 19,212 | 16,671 | |||||||||
Loans held-for-sale | 51,407 | 45,487 | 27,101 | |||||||||
Loans | 2,091,193 | 1,868,487 | 1,250,789 | |||||||||
Allowance for loan losses | (14,970 | ) | (14,087 | ) | (10,981 | ) | ||||||
Net loans | 2,076,223 | 1,854,400 | 1,239,808 | |||||||||
Accrued interest receivable | 11,944 | 9,366 | 6,708 | |||||||||
Federal Home Loan Bank of Indianapolis stock | 19,575 | 19,575 | 8,910 | |||||||||
Cash surrender value of bank-owned life insurance | 35,105 | 34,856 | 24,195 | |||||||||
Premises and equipment, net | 10,058 | 9,739 | 10,044 | |||||||||
Goodwill | 4,687 | 4,687 | 4,687 | |||||||||
Other real estate owned | 5,041 | 5,136 | 4,533 | |||||||||
Accrued income and other assets | 13,182 | 12,792 | 15,276 | |||||||||
Total assets | $ | 2,767,687 | $ | 2,633,422 | $ | 1,854,335 | ||||||
Liabilities | ||||||||||||
Noninterest-bearing deposits | $ | 44,686 | $ | 33,734 | $ | 31,166 | ||||||
Interest-bearing deposits | 2,040,255 | 1,963,294 | 1,431,701 | |||||||||
Total deposits | 2,084,941 | 1,997,028 | 1,462,867 | |||||||||
Advances from Federal Home Loan Bank | 410,176 | 365,180 | 189,981 | |||||||||
Subordinated debt | 36,726 | 36,689 | 36,578 | |||||||||
Accrued interest payable | 311 | 237 | 112 | |||||||||
Accrued expenses and other liabilities | 11,406 | 13,421 | 10,855 | |||||||||
Total liabilities | 2,543,560 | 2,412,555 | 1,700,393 | |||||||||
Shareholders' equity | ||||||||||||
Voting common stock | 172,043 | 171,783 | 119,506 | |||||||||
Retained earnings | 57,103 | 54,119 | 43,704 | |||||||||
Accumulated other comprehensive loss | (5,019 | ) | (5,035 | ) | (9,268 | ) | ||||||
Total shareholders' equity | 224,127 | 220,867 | 153,942 | |||||||||
Total liabilities and shareholders' equity | $ | 2,767,687 | $ | 2,633,422 | $ | 1,854,335 | ||||||
First Internet Bancorp | |||||||||||||||||||
Condensed Consolidated Statements of Income (unaudited, except for the twelve months ended December 31, 2016) | |||||||||||||||||||
Amounts in thousands, except per share data | |||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
Interest income | |||||||||||||||||||
Loans | $ | 20,971 | $ | 18,922 | $ | 13,660 | $ | 70,465 | $ | 49,054 | |||||||||
Securities - taxable | 2,521 | 2,582 | 2,262 | 10,036 | 7,326 | ||||||||||||||
Securities - non-taxable | 696 | 697 | 686 | 2,786 | 1,856 | ||||||||||||||
Other earning assets | 450 | 493 | 156 | 1,410 | 663 | ||||||||||||||
Total interest income | 24,638 | 22,694 | 16,764 | 84,697 | 58,899 | ||||||||||||||
Interest expense | |||||||||||||||||||
Deposits | 7,358 | 6,594 | 4,667 | 23,975 | 15,853 | ||||||||||||||
Other borrowed funds | 1,920 | 1,909 | 1,193 | 6,740 | 3,357 | ||||||||||||||
Total interest expense | 9,278 | 8,503 | 5,860 | 30,715 | 19,210 | ||||||||||||||
Net interest income | 15,360 | 14,191 | 10,904 | 53,982 | 39,689 | ||||||||||||||
Provision for loan losses | 1,179 | 1,336 | 256 | 4,872 | 4,330 | ||||||||||||||
Net interest income after provision for loan losses | 14,181 | 12,855 | 10,648 | 49,110 | 35,359 | ||||||||||||||
Noninterest income | |||||||||||||||||||
Service charges and fees | 231 | 226 | 196 | 888 | 818 | ||||||||||||||
Mortgage banking activities | 1,530 | 2,535 | 2,407 | 7,836 | 12,398 | ||||||||||||||
Gain on sale of loans | 395 | — | — | 395 | — | ||||||||||||||
Gain (loss) on sale of securities | — | (8 | ) | — | (8 | ) | 177 | ||||||||||||
Other | 383 | 382 | 288 | 1,430 | 684 | ||||||||||||||
Total noninterest income | 2,539 | 3,135 | 2,891 | 10,541 | 14,077 | ||||||||||||||
Noninterest expense | |||||||||||||||||||
Salaries and employee benefits | 5,701 | 5,197 | 4,610 | 21,164 | 17,387 | ||||||||||||||
Marketing, advertising and promotion | 590 | 741 | 471 | 2,393 | 1,823 | ||||||||||||||
Consulting and professional fees | 617 | 897 | 709 | 3,091 | 3,143 | ||||||||||||||
Data processing | 242 | 247 | 292 | 971 | 1,127 | ||||||||||||||
Loan expenses | 303 | 262 | 267 | 1,027 | 891 | ||||||||||||||
Premises and equipment | 1,125 | 1,080 | 955 | 4,183 | 3,699 | ||||||||||||||
Deposit insurance premium | 420 | 375 | 344 | 1,410 | 1,159 | ||||||||||||||
Other | 703 | 602 | 510 | 2,484 | 2,222 | ||||||||||||||
Total noninterest expense | 9,701 | 9,401 | 8,158 | 36,723 | 31,451 | ||||||||||||||
Income before income taxes | 7,019 | 6,589 | 5,381 | 22,928 | 17,985 | ||||||||||||||
Income tax provision | 3,521 | 1,694 | 1,671 | 7,702 | 5,911 | ||||||||||||||
Net income | $ | 3,498 | $ | 4,895 | $ | 3,710 | $ | 15,226 | $ | 12,074 | |||||||||
Per common share data | |||||||||||||||||||
Earnings per share - basic | $ | 0.41 | $ | 0.72 | $ | 0.65 | $ | 2.14 | $ | 2.32 | |||||||||
Earnings per share - diluted | $ | 0.41 | $ | 0.71 | $ | 0.64 | $ | 2.13 | $ | 2.30 | |||||||||
Dividends declared per share | $ | 0.06 | $ | 0.06 | $ | 0.06 | $ | 0.24 | $ | 0.24 | |||||||||
All periods presented have been reclassified to conform to the current period classification.
First Internet Bancorp | ||||||||||||||||||||||||||||||||
Average Balances and Rates (unaudited) | ||||||||||||||||||||||||||||||||
Amounts in thousands | ||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||||
Average Balance | Interest / Dividends | Yield / Cost | Average Balance | Interest / Dividends | Yield / Cost | Average Balance | Interest / Dividends | Yield / Cost | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Interest-earning assets | ||||||||||||||||||||||||||||||||
Loans, including loans held-for-sale | $ | 1,993,001 | $ | 20,971 | 4.17 | % | $ | 1,818,379 | $ | 18,922 | 4.13 | % | $ | 1,253,756 | $ | 13,660 | 4.33 | % | ||||||||||||||
Securities - taxable | 403,905 | 2,521 | 2.48 | % | 410,630 | 2,582 | 2.49 | % | 384,286 | 2,262 | 2.34 | % | ||||||||||||||||||||
Securities - non-taxable | 96,722 | 696 | 2.85 | % | 97,243 | 697 | 2.84 | % | 95,044 | 686 | 2.87 | % | ||||||||||||||||||||
Other earning assets | 95,049 | 450 | 1.88 | % | 108,547 | 493 | 1.80 | % | 57,081 | 156 | 1.09 | % | ||||||||||||||||||||
Total interest-earning assets | 2,588,677 | 24,638 | 3.78 | % | 2,434,799 | 22,694 | 3.70 | % | 1,790,167 | 16,764 | 3.73 | % | ||||||||||||||||||||
Allowance for loan losses | (14,486 | ) | (13,657 | ) | (10,711 | ) | ||||||||||||||||||||||||||
Noninterest-earning assets | 76,392 | 71,609 | 52,093 | |||||||||||||||||||||||||||||
Total assets | $ | 2,650,583 | $ | 2,492,751 | $ | 1,831,549 | ||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 86,744 | $ | 119 | 0.54 | % | $ | 88,633 | $ | 122 | 0.55 | % | $ | 83,930 | $ | 116 | 0.55 | % | ||||||||||||||
Savings accounts | 52,092 | 132 | 1.01 | % | 42,308 | 97 | 0.91 | % | 28,157 | 41 | 0.58 | % | ||||||||||||||||||||
Money market accounts | 479,201 | 1,428 | 1.18 | % | 440,293 | 1,187 | 1.07 | % | 360,166 | 648 | 0.72 | % | ||||||||||||||||||||
Certificates and brokered deposits | 1,345,368 | 5,679 | 1.67 | % | 1,268,709 | 5,188 | 1.62 | % | 973,484 | 3,862 | 1.58 | % | ||||||||||||||||||||
Total interest-bearing deposits | 1,963,405 | 7,358 | 1.49 | % | 1,839,943 | 6,594 | 1.42 | % | 1,445,737 | 4,667 | 1.28 | % | ||||||||||||||||||||
Other borrowed funds | 411,283 | 1,920 | 1.85 | % | 431,738 | 1,909 | 1.75 | % | 213,109 | 1,193 | 2.23 | % | ||||||||||||||||||||
Total interest-bearing liabilities | 2,374,688 | 9,278 | 1.55 | % | 2,271,681 | 8,503 | 1.49 | % | 1,658,846 | 5,860 | 1.41 | % | ||||||||||||||||||||
Noninterest-bearing deposits | 40,618 | 35,094 | 30,336 | |||||||||||||||||||||||||||||
Other noninterest-bearing liabilities | 12,607 | 12,517 | 6,393 | |||||||||||||||||||||||||||||
Total liabilities | 2,427,913 | 2,319,292 | 1,695,575 | |||||||||||||||||||||||||||||
Shareholders' equity | 222,670 | 173,459 | 135,974 | |||||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,650,583 | $ | 2,492,751 | $ | 1,831,549 | ||||||||||||||||||||||||||
Net interest income | $ | 15,360 | $ | 14,191 | $ | 10,904 | ||||||||||||||||||||||||||
Interest rate spread | 2.23 | % | 2.21 | % | 2.32 | % | ||||||||||||||||||||||||||
Net interest margin | 2.35 | % | 2.31 | % | 2.42 | % | ||||||||||||||||||||||||||
Net interest margin - FTE 1 | 2.59 | % | 2.52 | % | 2.48 | % | ||||||||||||||||||||||||||
First Internet Bancorp | |||||||||||||||||||||
Average Balances and Rates (unaudited) | |||||||||||||||||||||
Amounts in thousands | |||||||||||||||||||||
Twelve Months Ended | |||||||||||||||||||||
December 31, 2017 | December 31, 2016 | ||||||||||||||||||||
Average Balance | Interest / Dividends | Yield / Cost | Average Balance | Interest / Dividends | Yield / Cost | ||||||||||||||||
Assets | |||||||||||||||||||||
Interest-earning assets | |||||||||||||||||||||
Loans, including loans held-for-sale | $ | 1,682,249 | $ | 70,465 | 4.19 | % | $ | 1,144,687 | $ | 49,054 | 4.29 | % | |||||||||
Securities - taxable | 400,449 | 10,036 | 2.51 | % | 315,661 | 7,326 | 2.32 | % | |||||||||||||
Securities - non-taxable | 95,694 | 2,786 | 2.91 | % | 64,899 | 1,856 | 2.86 | % | |||||||||||||
Other earning assets | 79,461 | 1,410 | 1.77 | % | 71,140 | 663 | 0.93 | % | |||||||||||||
Total interest-earning assets | 2,257,853 | 84,697 | 3.75 | % | 1,596,387 | 58,899 | 3.69 | % | |||||||||||||
Allowance for loan losses | (12,964 | ) | (9,808 | ) | |||||||||||||||||
Noninterest-earning assets | 68,580 | 43,221 | |||||||||||||||||||
Total assets | $ | 2,313,469 | $ | 1,629,800 | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||
Interest-bearing demand deposits | $ | 89,081 | $ | 488 | 0.55 | % | $ | 82,533 | $ | 452 | 0.55 | % | |||||||||
Savings accounts | 39,393 | 342 | 0.87 | % | 27,174 | 158 | 0.58 | % | |||||||||||||
Money market accounts | 415,910 | 4,227 | 1.02 | % | 360,976 | 2,563 | 0.71 | % | |||||||||||||
Certificates and brokered deposits | 1,169,219 | 18,918 | 1.62 | % | 817,348 | 12,680 | 1.55 | % | |||||||||||||
Total interest-bearing deposits | 1,713,603 | 23,975 | 1.40 | % | 1,288,031 | 15,853 | 1.23 | % | |||||||||||||
Other borrowed funds | 376,470 | 6,740 | 1.79 | % | 183,410 | 3,357 | 1.83 | % | |||||||||||||
Total interest-bearing liabilities | 2,090,073 | 30,715 | 1.47 | % | 1,471,441 | 19,210 | 1.31 | % | |||||||||||||
Noninterest-bearing deposits | 35,043 | 28,472 | |||||||||||||||||||
Other noninterest-bearing liabilities | 10,141 | 5,864 | |||||||||||||||||||
Total liabilities | 2,135,257 | 1,505,777 | |||||||||||||||||||
Shareholders' equity | 178,212 | 124,023 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,313,469 | $ | 1,629,800 | |||||||||||||||||
Net interest income | $ | 53,982 | $ | 39,689 | |||||||||||||||||
Interest rate spread | 2.28 | % | 2.38 | % | |||||||||||||||||
Net interest margin | 2.39 | % | 2.49 | % | |||||||||||||||||
Net interest margin - FTE 1 | 2.57 | % | 2.55 | % | |||||||||||||||||
1 On a fully-taxable equivalent (“FTE”) basis assuming a 35% tax rate
First Internet Bancorp | |||||||||||||||||||||
Loans and Deposits (unaudited) | |||||||||||||||||||||
Amounts in thousands | |||||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | |||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||
Commercial loans | |||||||||||||||||||||
Commercial and industrial | $ | 122,940 | 5.9 | % | $ | 122,587 | 6.5 | % | $ | 102,437 | 8.2 | % | |||||||||
Owner-occupied commercial real estate | 75,768 | 3.6 | % | 75,986 | 4.1 | % | 57,668 | 4.6 | % | ||||||||||||
Investor commercial real estate | 7,273 | 0.4 | % | 7,430 | 0.4 | % | 13,181 | 1.0 | % | ||||||||||||
Construction | 49,213 | 2.4 | % | 50,367 | 2.7 | % | 53,291 | 4.3 | % | ||||||||||||
Single tenant lease financing | 803,299 | 38.4 | % | 783,918 | 41.9 | % | 606,568 | 48.5 | % | ||||||||||||
Public finance | 438,341 | 21.0 | % | 269,347 | 14.4 | % | — | 0.0 | % | ||||||||||||
Healthcare finance | 31,573 | 1.5 | % | 12,363 | 0.7 | % | — | 0.0 | % | ||||||||||||
Total commercial loans | 1,528,407 | 73.2 | % | 1,321,998 | 70.7 | % | 833,145 | 66.6 | % | ||||||||||||
Consumer loans | |||||||||||||||||||||
Residential mortgage | 299,935 | 14.3 | % | 291,382 | 15.6 | % | 205,554 | 16.4 | % | ||||||||||||
Home equity | 30,554 | 1.5 | % | 31,236 | 1.7 | % | 35,036 | 2.8 | % | ||||||||||||
Trailers | 101,369 | 4.8 | % | 97,811 | 5.2 | % | 81,186 | 6.5 | % | ||||||||||||
Recreational vehicles | 69,196 | 3.3 | % | 66,619 | 3.6 | % | 52,350 | 4.2 | % | ||||||||||||
Other consumer loans | 59,968 | 2.7 | % | 56,490 | 3.0 | % | 39,913 | 3.2 | % | ||||||||||||
Total consumer loans | 558,022 | 26.6 | % | 543,538 | 29.1 | % | 414,039 | 33.1 | % | ||||||||||||
Net deferred loan fees, premiums and discounts | 4,764 | 0.2 | % | 2,951 | 0.2 | % | 3,605 | 0.3 | % | ||||||||||||
Total loans | $ | 2,091,193 | 100.0 | % | $ | 1,868,487 | 100.0 | % | $ | 1,250,789 | 100.0 | % | |||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | |||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||
Deposits | |||||||||||||||||||||
Noninterest-bearing deposits | $ | 44,686 | 2.1% | $ | 33,734 | 1.7 | % | $ | 31,166 | 2.1 | % | ||||||||||
Interest-bearing demand deposits | 94,674 | 4.5% | 89,748 | 4.5 | % | 93,074 | 6.4 | % | |||||||||||||
Savings accounts | 49,939 | 2.4% | 49,913 | 2.5 | % | 27,955 | 1.9 | % | |||||||||||||
Money market accounts | 499,501 | 24.0% | 499,160 | 25.0 | % | 340,240 | 23.3 | % | |||||||||||||
Certificates of deposits | 1,319,488 | 63.3% | 1,300,952 | 65.1 | % | 964,819 | 65.9 | % | |||||||||||||
Brokered deposits | 76,653 | 3.7% | 23,521 | 1.2 | % | 5,613 | 0.4 | % | |||||||||||||
Total deposits | $ | 2,084,941 | 100.0 | % | $ | 1,997,028 | 100.0 | % | $ | 1,462,867 | 100.0 | % | |||||||||
First Internet Bancorp | ||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
Amounts in thousands, except per share data | ||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||
Total equity - GAAP | $ | 224,127 | $ | 220,867 | $ | 153,942 | $ | 224,127 | $ | 153,942 | ||||||||||
Adjustments: | ||||||||||||||||||||
Goodwill | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | ||||||||||
Tangible common equity | $ | 219,440 | $ | 216,180 | $ | 149,255 | $ | 219,440 | $ | 149,255 | ||||||||||
Total assets - GAAP | $ | 2,767,687 | $ | 2,633,422 | $ | 1,854,335 | $ | 2,767,687 | $ | 1,854,335 | ||||||||||
Adjustments: | ||||||||||||||||||||
Goodwill | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | ||||||||||
Tangible assets | $ | 2,763,000 | $ | 2,628,735 | $ | 1,849,648 | $ | 2,763,000 | $ | 1,849,648 | ||||||||||
Common shares outstanding | 8,411,077 | 8,411,077 | 6,478,050 | 8,411,077 | 6,478,050 | |||||||||||||||
Book value per common share | $ | 26.65 | $ | 26.26 | $ | 23.76 | $ | 26.65 | $ | 23.76 | ||||||||||
Effect of goodwill | (0.56 | ) | (0.56 | ) | (0.72 | ) | (0.56 | ) | (0.72 | ) | ||||||||||
Tangible book value per common share | $ | 26.09 | $ | 25.70 | $ | 23.04 | $ | 26.09 | $ | 23.04 | ||||||||||
Total shareholders' equity to assets ratio | 8.10 | % | 8.39 | % | 8.30 | % | 8.10 | % | 8.30 | % | ||||||||||
Effect of goodwill | (0.16 | %) | (0.17 | %) | (0.23 | %) | (0.16 | )% | (0.23 | )% | ||||||||||
Tangible common equity to tangible assets ratio | 7.94 | % | 8.22 | % | 8.07 | % | 7.94 | % | 8.07 | % | ||||||||||
Total average equity - GAAP | $ | 222,670 | $ | 173,459 | $ | 135,974 | $ | 178,212 | $ | 124,023 | ||||||||||
Adjustments: | ||||||||||||||||||||
Average goodwill | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | (4,687 | ) | ||||||||||
Average tangible common equity | $ | 217,983 | $ | 168,772 | $ | 131,287 | $ | 173,525 | $ | 119,336 | ||||||||||
Return on average shareholders' equity | 6.23 | % | 11.20 | % | 10.85 | % | 8.54 | % | 9.74 | % | ||||||||||
Effect of goodwill | 0.14 | % | 0.31 | % | 0.39 | % | 0.23 | % | 0.38 | % | ||||||||||
Return on average tangible common equity | 6.37 | % | 11.51 | % | 11.24 | % | 8.77 | % | 10.12 | % | ||||||||||
Net interest income | $ | 15,360 | $ | 14,191 | $ | 10,904 | $ | 53,982 | $ | 39,689 | ||||||||||
Adjustments: | ||||||||||||||||||||
Fully-taxable equivalent adjustments 1 | 1,555 | 1,280 | 256 | 4,053 | 1,090 | |||||||||||||||
Net interest income - FTE | $ | 16,915 | $ | 15,471 | $ | 11,160 | $ | 58,035 | $ | 40,779 | ||||||||||
Net interest margin | 2.35 | % | 2.31 | % | 2.42 | % | 2.39 | % | 2.49 | % | ||||||||||
Effect of fully-taxable equivalent adjustments 1 | 0.24 | % | 0.21 | % | 0.06 | % | 0.18 | % | 0.06 | % | ||||||||||
Net interest margin - FTE | 2.59 | % | 2.52 | % | 2.48 | % | 2.57 | % | 2.55 | % | ||||||||||
1 Assuming a 35% tax rate
First Internet Bancorp | ||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
Amounts in thousands, except per share data | ||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||
Net income - GAAP | $ | 3,498 | $ | 4,895 | $ | 3,710 | $ | 15,226 | $ | 12,074 | ||||||||||
Adjustments: | ||||||||||||||||||||
Net deferred tax asset revaluation | 1,846 | — | — | 1,846 | — | |||||||||||||||
Adjusted net income | $ | 5,344 | $ | 4,895 | $ | 3,710 | $ | 17,072 | $ | 12,074 | ||||||||||
Diluted average common shares outstanding | $ | 8,527,599 | $ | 6,854,614 | $ | 5,761,931 | $ | 7,149,302 | $ | 5,239,082 | ||||||||||
Diluted earnings per share - GAAP | $ | 0.41 | $ | 0.71 | $ | 0.64 | $ | 2.13 | $ | 2.30 | ||||||||||
Adjustments: | ||||||||||||||||||||
Effect of net deferred tax asset revaluation | 0.22 | — | — | 0.26 | — | |||||||||||||||
Adjusted diluted earnings per share | $ | 0.63 | $ | 0.71 | $ | 0.64 | $ | 2.39 | $ | 2.30 | ||||||||||
Return on average assets | 0.52 | % | 0.78 | % | 0.81 | % | 0.66 | % | 0.74 | % | ||||||||||
Effect of net deferred tax asset revaluation | 0.28 | % | 0.00 | % | 0.00 | % | 0.08 | % | 0.00 | % | ||||||||||
Adjusted return on average assets | 0.80 | % | 0.78 | % | 0.81 | % | 0.74 | % | 0.74 | % | ||||||||||
Return on average shareholders' equity | 6.23 | % | 11.20 | % | 10.85 | % | 8.54 | % | 9.74 | % | ||||||||||
Effect of net deferred tax asset revaluation | 3.29 | % | 0.00 | % | 0.00 | % | 1.04 | % | 0.00 | % | ||||||||||
Adjusted return on average shareholders' equity | 9.52 | % | 11.20 | % | 10.85 | % | 9.58 | % | 9.74 | % | ||||||||||
Return on tangible common equity | 6.37 | % | 11.51 | % | 11.24 | % | 8.77 | % | 10.12 | % | ||||||||||
Effect of net deferred tax asset revaluation | 3.36 | % | 0.00 | % | 0.00 | % | 1.07 | % | 0.00 | % | ||||||||||
Adjusted return on average tangible common equity | 9.73 | % | 11.51 | % | 11.24 | % | 9.84 | % | 10.12 | % | ||||||||||
Income tax expense - GAAP | $ | 3,521 | $ | 1,694 | $ | 1,671 | $ | 7,702 | $ | 5,911 | ||||||||||
Adjustments: | ||||||||||||||||||||
Net deferred tax asset revaluation | (1,846 | ) | — | — | (1,846 | ) | — | |||||||||||||
Adjusted income tax expense | $ | 1,675 | $ | 1,694 | $ | 1,671 | $ | 5,856 | $ | 5,911 | ||||||||||
Effective income tax rate | 50.2 | % | 25.7 | % | 31.1 | % | 33.6 | % | 32.9 | % | ||||||||||
Effect of net deferred tax asset revaluation | (26.3 | )% | 0.0 | % | 0.0 | % | (8.1 | )% | 0.0 | % | ||||||||||
Adjusted effective income tax rate | 23.9 | % | 25.7 | % | 31.1 | % | 25.5 | % | 32.9 | % | ||||||||||