First Internet Bancorp Reports Strong Year-over-Year Growth in Earnings, Loan Sales, Deposits and Assets

First Internet Bancorp (OTCBB:FIBP), parent company of First Internet Bank of Indiana (, a premier provider of online retail and business banking services nationwide, today announced unaudited results for the quarter and first half ended June 30, 2012.


  • Net income increased to $2.43 million or $1.27 per diluted share in first half 2012, a company record for first half income, compared with net income of $1.36 million or $0.71 per diluted share in first half 2011.
  • The company grew total assets to a record $623.95 million at June 30, 2012, up from $538.49 million at June 30, 2011.
  • Non-interest income, reflecting strong growth in gain on loans sold, was $4.28 million in first half 2012 compared with $920,000 in first half 2011.
  • At June 30, 2012, loans held for sale totaled $34.96 million at June 30, 2012 compared with $9.53 million at June 30, 2011.
  • Total deposits grew to $522.03 million at June 30, 2012 compared with $443.64 million at June 30, 2011.
  • The company closed second quarter 2012 with a tangible book value of $28.00 per share compared with $24.80 per share at June 30, 2011.
  • Tier 1 capital ratio of 8.34% at the bank and 8.54% at the holding company with no TARP or SBLF funds accepted.

“First Internet Bank continues to build its reputation as the premier Web-based resource for residential mortgage loans,” stated David Becker, chairman and CEO. “In today’s interest rate environment, mortgage refinancings comprise the majority of our mortgages originated. Our accelerated Web-based marketing, however, is building First Internet’s visibility among homebuyers as well, resulting in those borrowers turning to us as a leading resource for their mortgage loans. We anticipate this trend will continue, which will be a positive for creating balance in our mortgage business.

“From mortgages to everyday banking services, our retail customers tend to be technologically savvy, mobile, and maintain balances significantly above average,” said Becker. “We definitely see customers looking for an alternative to the largest banks – one that gives them the convenience of leading-edge Internet capabilities combined with high quality service and fewer and lower transaction and account fees. We don’t want to depend on service charges and fees to generate income. We strive to offer a lending and banking experience with no surprises and lots of satisfaction.”

He explained First Internet Bank’s efficient Internet-based operational model has enabled the bank to offer competitive rates and options such as no-fee and interest-bearing checking accounts. Without any bricks and mortar locations, the bank can profitably work with a lower net interest margin than can traditional community banks. He pointed out that by operating in all 50 states, First Internet can target particularly promising markets for both loans and deposits.

Income Statement, Investment and Margins

Net income for second quarter 2012 was $1.28 million or $0.67 per fully diluted share compared with $828,000 or $0.43 per fully diluted share in second quarter 2011. Net interest income after provision for loan losses was $3.27 million in second quarter 2012 compared with $3.16 million in second quarter 2011.

By re-pricing accounts to reflect the continuing low-interest rate environment and a reduced use of wholesale deposits, the company lowered its total interest expense in second quarter 2012 to $2.16 million compared with $2.47 million in second quarter 2011.

Becker commented: “We are generating tremendous growth while maintaining a very acceptable net interest margin in an environment with significant margin pressure. Because we don’t have to support a bricks and mortar network, we can accept lower margins than community banks and still generate strong profits.”

Total noninterest income in second quarter 2012 was $2.24 million compared with $601,000 in second quarter 2011, primarily reflecting growth in gain on loans sold of $2.03 million compared with $407,000 in the prior year’s second quarter.

Total noninterest expense in second quarter 2012 was $3.80 million compared with $2.71 million in second quarter 2011. Non-interest expense in first half 2012 was $7.68 million compared with $5.36 million in first half 2011. Becker explained this increase was due to an increase in marketing expenditures to drive mortgage growth, new hires, performance-based compensation increases, and a one-time restructuring expense of approximately $400,000 taken in first half.

“While keeping our operations extremely efficient, we have hired a number of loan processors and account representatives to drive growth in our residential mortgage business and handle the increased volume of incoming loan requests,” said Becker. “We have also built an outstanding commercial and industrial and commercial real estate team to serve high quality mid-sized commercial customers.

“As the economy recovers, there is tremendous opportunity to serve businesses that have been stripped of borrowing options,” Becker remarked. “The large banks have focused on the largest customers, while many community banks lack the capital to make commercial loans. We’ve hired experienced commercial bankers eager to work with what has now become a very underserved market.”

He said the company anticipates that, over time, increased commercial lending will add balance to the loan portfolio and may contribute to non-interest bearing deposits. “It’s a relatively small percentage of our business at this time,” he explained, “but the team has well exceeded its benchmarks. Between current market conditions and our strong capital base, we believe we are poised for growth and success.”

Balance Sheet Growth and Capital Position

The company’s reported assets of $623.95 million was an all-time high for First Internet Bancorp and represented a 15.9% increase over total assets of $538.49 million at June 30, 2011. Net loans after allowance for loan losses were $341.57 million at June 30, 2012 compared with $343.55 million at June 30, 2011. This reflected the company’s focus on originating and selling residential loans to the secondary market, rather than retaining those loans.

Becker said the company’s asset quality, which has been consistently higher than many peers’ because the company did not engage in speculative or high-risk real estate lending in past years, continues to improve. Nonperforming loans plus past due loans as a percentage of total assets was 1.77% at June 30, 2012 compared with 2.07% at June 30, 2011. As a percentage of total loans, nonperforming loans plus past due loans declined to 2.90% at June 30, 2012 compared with 3.10% at June 30, 2011.

“We’re at the point where our non-performing assets are approaching the parameters of what’s expected in a robust and healthy loan portfolio,” Becker noted. “Most of our mortgage originations are sold to the secondary market, and we believe the continuing strong demand for these originated loans reflects the quality of the loans we generate through our strong credit culture and risk management procedures.”

First Internet is well capitalized under regulatory capital guidelines, with Tier 1 capital to average assets ratio of 8.34% at the bank and 8.54% at the holding company.

About First Internet Bancorp

First Internet Bancorp (OTC Bulletin Board: FIBP), the parent company of First Internet Bank of Indiana, is privately capitalized with over 220 private and corporate investors. First Internet Bank opened for business in 1999. The Bancorp became effective March 21, 2006.

About First Internet Bank

First Internet Bank of Indiana (First IB) is the first state-chartered, FDIC-insured institution to operate solely via the Internet and has customers in all 50 states. Deposit services include checking accounts, regular and money market savings accounts with industry-leading interest rates, CDs and IRAs. First IB also offers consumer loans, conforming mortgages, jumbo mortgages, home equity loans and lines of credit, and commercial loans. First IB is a wholly owned subsidiary of First Internet Bancorp.

Safe Harbor Statement

Statements in this press release which express “belief,” “intention,” “expectation,” and similar expressions, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company’s management, as well as assumptions made by, and information currently available to, such management. Such statements are inherently uncertain and there can be no assurance that the underlying assumptions will prove to be accurate. Actual results could differ materially from those contemplated by the forward-looking statements. Any forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Financial Tables Follow

Consolidated Balance Sheet ($000s) (Unaudited1)
June 30
2011 2012
Cash and due from banks 623 1,344
Interest-bearing deposits 7,677 34,658
Securities - AFS 150,267 182,670
Loans held for sale 9,529 34,960
Gross loans 345,752 343,340
Net deferred (fees)/expenses 3,881 3,954
Allowance for loan losses (6,080 ) (5,727 )
Net loans 343,553 341,567
Accrued interest receivable 2,187 2,263
FHLB stock 2,943 2,943
Bank owned life insurance 8,013 11,346
Goodwill 4,687 4,687
Other real estate owned 2,293 750
Other assets 6,713 6,757
538,485 623,945
Non-interest bearing demand deposits 12,784 13,588
Interest bearing demand deposits 57,357 64,458
Savings and money market deposits 160,226 200,287
Time deposits 213,274 243,692
Total deposits 443,641 522,025
FHLB advances 40,514 40,629
Accrued interest payable 116 115
Accrued payroll and related expenses 954 1,140
Other liabilities 1,288 1,786
Total liabilities 486,513 565,695
Common stock 41,276 41,346
Accumulated earnings 11,072 15,323
Accumulated OCI (376 ) 1,581
Shareholder's equity 51,972 58,250
Total liabilities & equity 538,485 623,945
Consolidated Income Statement ($000s) (Unaudited1)
Quarter Ended June 30
2011 2012
Securities income 1,334 1,320
Loan income 4,621 4,654
Other interest income 17 19
Total interest income 5,972 5,993
Deposit interest expense 2,139 1,826
Other interest expense 335 338
Total interest expense 2,474 2,164
Net interest income 3,498 3,829
Provision for loan losses 336 564
Net interest income after provision 3,162 3,265
Service charges and fees 298 228
Gain on loans sold 407 2,034
Other-than-temporary impairment loss (150 ) (92 )
Loss on asset disposals (30 ) (31 )
Other non-interest income 76 98
Total non-interest income 601 2,237
Salaries and employee benefits 1,283 1,929
Marketing, advertising and promotion 190 341
Consulting and professional fees 170 272
Data processing 227 238
Loan expenses 96 303
Premises and equipment 313 350
Deposit insurance premiums 251 121
Other non-interest expense 184 241
Total non-interest expense 2,714 3,795
Income before taxes 1,049 1,707
Tax provision 221 428
Net Income 828 1,279
Weighted average shares 1,905,595 1,911,842
Income per share: Basic and diluted 0.43 0.67
Consolidated Income Statement ($000s) (Unaudited1)
Six Months Ended June 30
2011 2012
Securities income 2,649 2,666
Loan income 9,215 9,381
Other interest income 32 37
Total interest income 11,896 12,084
Deposit interest expense 4,307 3,646
Other interest expense 670 677
Total interest expense 4,977 4,323
Net interest income 6,919 7,761
Provision for loan losses 859 1,134
Net interest income after provision 6,060 6,627
Service charges and fees 592 493
Gain on loans sold 790 3,785
Other-than-temporary impairment loss (433 ) (92 )
Loss on asset disposals (179 ) (101 )
Other non-interest income 150 190
Total non-interest income 920 4,275
Salaries and employee benefits 2,504 3,920
Marketing, advertising and promotion 294 732
Consulting and professional fees 337 599
Data processing 458 468
Loan expenses 218 488
Premises and equipment 680 762
Deposit insurance premiums 499 219
Other non-interest expense 365 489
Total non-interest expense 5,355 7,677
Income before taxes 1,625 3,225
Tax provision 265 800
Net Income 1,360 2,425
Weighted average shares 1,904,917 1,910,866
Income per share: Basic and diluted 0.71 1.27

1 Financial results for the Bancorp are audited by external accountants on an annual basis; however, external auditors are not engaged to review quarterly information.


First Internet Bancorp
Laurinda Swank, 317-532-7909
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