First Internet Bancorp Reports 2015 Net Income Up 106%

Full year 2015 EPS up 104% over 2014

Fourth quarter net income and EPS up 55% and 56% year-over-year

FISHERS, Ind.--(BUSINESS WIRE)-- First Internet Bancorp (the “Company”) (NASDAQ: INBK), the parent company of First Internet Bank (www.firstib.com), today announced record annual net income for the twelve month period ended December 31, 2015.

David Becker, Chairman, President and Chief Executive Officer, commented, “We had a tremendous 2015. Executing our growth strategy, we increased loans by 30% and deposits by 26%. This drove net interest income up 38% for the year. On the bottom line, 2015 net income was up 106% and EPS was up 104% over 2014.

“Commercial loans grew by $232 million, or 66%, for the year and now make up more than 60% of our loan portfolio. Net interest income and our efficiency ratio improved each quarter. As we enter 2016, credit quality is solid and our pipeline is strong.

“Across the organization, we have talented people, focused on building and expanding relationships with our customers. We have a strategy and the team to continue our efforts to deliver positive returns to our shareholders,” Becker concluded.

For the twelve month period ended December 31, 2015, net income was a record $8.9 million and diluted earnings per share were a record $1.96, compared to net income of $4.3 million and diluted earnings per share of $0.96 for the twelve month period ended December 31, 2014. Fourth quarter net income was $2.3 million and diluted earnings per share were $0.50. This compares with third quarter net income of $2.3 million and diluted earnings per share of $0.51 and fourth quarter 2014 net income of $1.5 million and diluted earnings per share of $0.32.

Highlights for the fourth quarter 2015 included:

• Diluted earnings per share of $0.50, decreasing $0.01, or 2.0%, compared to the linked quarter and increasing $0.18, or 56.3%, compared to the fourth quarter 2014
  • During the fourth quarter, the Company recognized $0.12 million of pre-tax compensation expenses associated with a discretionary bonus award and staffing-related changes which negatively impacted diluted earnings per share by $0.02
• Solid quarterly performance
  • Return on average assets of 0.74%
  • Return on average shareholders’ equity of 8.73%
  • Return on average tangible common equity of 9.14%
• Total loan growth of $77.3 million, or 8.8%, compared to September 30, 2015 and $221.4 million, or 30.2%, compared to December 31, 2014
• Continued strong growth in net interest income, increasing $0.7 million, or 9.3%, compared to the linked quarter and $2.2 million, or 34.4%, compared to the fourth quarter 2014
• Net interest margin of 2.85% compared to 2.84% for the linked quarter and 2.78% for the fourth quarter 2014
• Capital levels continue to support loan and balance sheet growth
  • Tangible common equity to tangible assets of 7.88%
  • Tier 1 leverage ratio of 8.28%
  • Common equity tier 1 capital ratio of 10.11%
  • Tier 1 capital ratio of 10.11%
  • Total risk-based capital ratio of 12.25 %
• Strong asset quality
  • Nonperforming loans to total loans receivable totaled 0.02% as of December 31, 2015
  • The allowance for loan losses as a percentage of nonperforming loans was 5,000.6% as of December 31, 2015

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter was $8.6 million compared to $7.8 million for the third quarter and $6.4 million for the fourth quarter 2014. Total interest income for the fourth quarter was $11.6 million, increasing $1.1 million, or 10.0%, compared to the third quarter and $3.0 million, or 34.5%, compared to the fourth quarter 2014. The increase in total interest income compared to the linked quarter was driven by a $76.3 million, or 9.1%, increase in average loans receivable and a $16.2 million, or 8.5%, increase in average investment balances. Additionally, the yield earned on the loan portfolio increased 5 bps during the fourth quarter to 4.36% from 4.31% for the third quarter. The yield earned on the investment portfolio during the fourth quarter was 2.30%, consistent with the linked quarter’s yield.

Total interest expense for the fourth quarter was $3.0 million, increasing $0.3 million, or 12.2%, compared to the third quarter and $0.8 million, or 34.6%, compared to the fourth quarter 2014. Average interest-bearing deposit balances increased $61.1 million, or 7.1%, compared to the linked quarter with the related cost of funds decreasing 1 bp from 1.05% in the third quarter to 1.04% in the fourth quarter. Average Federal Home Loan Bank advances increased $23.1 million, or 16.9%, during the fourth quarter compared to the third quarter while the cost of funds associated with these borrowings declined 5 bps to 0.98%. Additionally, during the fourth quarter, the Company issued $10.0 million of subordinated notes bearing an annual fixed rate of interest of 6.4375% which contributed $0.1 million to the quarterly increase in interest expense.

Net interest margin was 2.85% for the fourth quarter compared to 2.84% for the third quarter and 2.78% for the fourth quarter 2014.

Noninterest Income

Noninterest income for the fourth quarter was $2.1 million compared to $2.4 million for the third quarter and $2.1 million for the fourth quarter 2014. The decrease of $0.2 million, or 9.7%, compared to the linked quarter was driven by a decline of $0.3 million, or 13.8%, in mortgage banking revenue resulting primarily from seasonally lower origination volumes.

Noninterest Expense

Noninterest expense for the fourth quarter was $6.5 million compared to $6.2 million for the third quarter and $5.9 million for the fourth quarter 2014. The increase of $0.3 million, or 4.6%, compared to the linked quarter was due to higher consulting and professional fees, premises and equipment costs, loan expenses and other expenses, partially offset by lower marketing expenses. Excluding the expense impact of the discretionary bonus award and staffing-related changes noted above, salaries and employee benefits decreased $0.1 million, or 3.2%, and total noninterest expense increased $0.2 million, or 2.6%, compared to the linked quarter.

Income Taxes

Income tax expense was $1.2 million for the fourth quarter, resulting in an effective tax rate of 34.4%, compared to $1.2 million and an effective tax rate of 34.6% for the linked quarter and $0.7 million and an effective tax rate of 33.6% for the fourth quarter 2014.

Loans and Credit Quality

Total loans as of December 31, 2015 were $953.9 million, increasing $77.3 million, or 8.8%, compared to September 30, 2015 and $221.4 million, or 30.2%, compared to December 31, 2014. Total commercial loan balances were $582.9 million as of December 31, 2015, increasing $74.2 million, or 14.6%, compared to September 30, 2015 and $231.8 million, or 66.0%, compared to December 31, 2014. Continued strong production in single tenant lease financing balances contributed significantly to the growth as balances increased $45.2 million, or 13.7%, compared to September 30, 2015 and $181.7 million, or 94.4%, compared to December 31, 2014. Construction loan originations also continued to grow during the fourth quarter as balances increased $15.7 million, or 52.0%, compared to September 30, 2015 and $21.0 million, or 84.5%, compared to December 31, 2014. Commercial and industrial and owner-occupied commercial real estate production was strong as well as balances increased $14.6 million on a combined basis, or 11.1%, compared to September 30, 2015 and $34.9 million, or 31.3%, compared to December 31, 2014.

Total consumer loan balances were $366.2 million as of December 31, 2015, increasing $3.1 million, or 0.9%, compared to September 30, 2015 and declining $10.0 million, or 2.7%, compared to December 31, 2014. Compared to the linked quarter, growth during the fourth quarter was driven by increases of $5.1 million, or 2.4%, in residential mortgages, $1.8 million, or 4.9%, in recreational vehicles and $0.6 million, or 0.9%, in trailers, partially offset by a decline in home equity loans of $4.0 million, or 8.5%.

Credit quality continued to remain strong as nonperforming loans to total loans receivable were 0.02% as of December 31, 2015, consistent with the prior quarter and down 2 bps from 0.04% as of December 31, 2014. Additionally, nonperforming assets to total assets declined to 0.37% as of December 31, 2015 from 0.41% as of September 30, 2015 and 0.50% as of December 31, 2014. The allowance for loan losses was $8.4 million as of December 31, 2015 compared to $7.7 million as of September 30, 2015 and $5.8 million as of December 31, 2014. The allowance as a percentage of total nonperforming loans was 5,000.6% as of December 31, 2015 compared to 3,723.8% as of September 30, 2015 and 1,959.5% as of December 31, 2014. The allowance as a percentage of total loans receivable was 0.88% as of December 31, 2015 compared to 0.88% as of September 30, 2015 and 0.79% as of December 31, 2014.

Net charge-offs of $0.1 million were recognized during the fourth quarter, resulting in net charge-offs to average loans of 0.03% compared to net recoveries of 0.07% for the third quarter and net charge-offs of 0.03% for the fourth quarter 2014. The provision for loan losses in the fourth quarter was $0.7 million compared to $0.5 million for the third quarter and $0.4 million for the fourth quarter 2014. The increase of $0.3 million, or 64.3%, compared to the linked quarter was primarily due to the strong commercial loan growth experienced in the fourth quarter.

Capital

During the fourth quarter, total shareholders’ equity increased $1.4 million, due primarily to net income earned during the quarter, partially offset by the change in the unrealized gain/loss related to the investment portfolio and declared dividends. As of December 31, 2015, the Company’s tier 1 leverage, common equity tier 1, tier 1 and total risk-based capital ratios were 8.28%, 10.11%, 10.11% and 12.25% compared to 8.81%, 10.74%, 10.74% and 11.90% as of September 30, 2015, respectively. The decline in the tier 1 leverage ratio was due to an increase in average assets driven primarily by commercial loan growth during the quarter. The declines in the common equity tier 1 and tier 1 capital ratios were due to an increase in risk-weighted assets resulting primarily from commercial loan growth for the quarter. The total risk-based capital ratio increased compared to the linked quarter as the impact of the increase in risk-weighted assets was more than offset by the issuance of the subordinated notes which qualify as tier 2 capital, a component of total capital. Tangible common equity to tangible assets declined 58 bps during the fourth quarter to 7.88% due primarily to strong balance sheet growth. Tangible book value per share increased to $22.24 as of December 31, 2015 from $21.90 as of September 30, 2015 and $20.74 as of December 31, 2014.

About First Internet Bancorp

First Internet Bancorp is the parent company of First Internet Bank, which opened for business in 1999 as the nation’s first state-chartered, FDIC-insured institution to operate solely via the Internet. With customers in all 50 states, First Internet Bank offers consumers services including checking, savings, money market, certificates of deposit and IRA accounts as well as consumer loans, residential mortgages, residential construction loans and home equity products. For commercial clients, it provides commercial real estate loans, commercial and industrial loans and treasury management services. First Internet Bank has been recognized as one of the “Best Banks to Work For” by American Banker Magazine as well as a “Top Workplace” by The Indianapolis Star. 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 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 and commercial and industrial 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 are used by the Company’s management to measure the strength of its capital and its ability to generate earnings on tangible capital invested by its shareholders. Although management believes these non-GAAP measures provide 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.”

View source version on businesswire.com: http://www.businesswire.com/news/home/20160121006477/en/

First Internet Bancorp
Investors/Analysts
Paula Deemer, 317-428-4628
[email protected]
or
Media
Nicole Lorch, 317-532-7906
Senior Vice President, Retail Banking
[email protected]

Source: First Internet Bancorp

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