First Internet Bancorp Reports First Quarter 2024 Results

Rhea-AI Summary

First Internet Bancorp, the parent company of First Internet Bank, reports strong financial and operational results for the first quarter of 2024. Net income increased by 25.1% to $5.2 million, with diluted earnings per share rising by 22.9% to $0.59. Net interest income and margin also saw significant increases. Loan growth and deposit growth were notable, with a decrease in the loans to deposits ratio. The company remains focused on optimizing its loan portfolio, strengthening its balance sheet, and driving positive momentum in its SBA business.

Insights

Financial Analyst

Analyzing the financial performance of First Internet Bancorp reveals a robust profitability trend, with a 25.1%> increase in net income and a 22.9%> surge in diluted earnings per share. This level of growth outstrips what many peers in the sector have been reporting recently, signaling that the bank's operations are scaling efficiently in the current economic climate. Notably, the net interest margin expansion is material, increasing by 8 basis points sequentially, indicating an improved spread between the interest income generated by the bank and the interest paid out to depositors. This could be attributed to a strategic focus on higher-yielding loans and controlled deposit costs. However, investors should keep an eye on delinquency rates that have risen from 0.31%> to 0.53%>, although still within an acceptable risk threshold.

Market Analyst

The growth metrics reported by First Internet Bancorp suggest a deepening market penetration, particularly given the enhanced loan and deposit growth rates. The clear strategic move toward higher-yielding, variable rate loans, aligns well with an environment of potential interest rate volatility. For investors, the share repurchase activity coupled with tangible book value growth per share is a positive sign of management's confidence in the company's value proposition and financial health. The mention of 'remaining on offense' suggests proactive business development, especially within the SBA business lines, which could portend well for future growth, albeit adding a layer of market risk exposure that needs to be monitored.

Risk Management Analyst

The increase in nonperforming loans is a slight cause for concern, especially when contextualized within broader economic forecasts. With nonperforming loans moving up to 0.33%>, it's a reminder for investors to balance the positive income statements with the undercurrents of credit risk. It is reassuring, however, that there was a subsequent reduction in delinquencies post-quarter end and the overall capital ratios remain strong, with a CET1 ratio well above regulatory requirements. This suggests a solid capital buffer, which is critical for absorbing potential loan losses in the future. The bank's conservative stance on office real estate exposure, being less than 1%> of total loans, also underscores a prudent approach to volatile market segments.

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, 2024.

First Quarter 2024 Financial Highlights

• Net income of $5.2 million and diluted earnings per share of $0.59, increases of 25.1% and 22.9%, respectively, from the fourth quarter of 2023
• Net interest income of $20.7 million and fully-taxable equivalent net interest income of $21.9 million, increases of 4.7% and 4.2%, respectively, from the fourth quarter of 2023
• Net interest margin of 1.66% and fully-taxable equivalent net interest margin of 1.75%, increases of 8 basis points and 7 basis points, respectively, from the fourth quarter of 2023
• Loan growth of $69.6 million, a 1.8% increase from the fourth quarter of 2023
• Deposit growth of $206.8 million, a 5.1% increase from the fourth quarter of 2023
• Loans to deposits ratio decreased to 91.5% from 94.4% in the fourth quarter of 2023
• Nonperforming loans to total loans of 0.33%; net charge-offs to average loans of 0.05%; office real estate exposure remains less than 1% of total loans
• Tangible common equity to tangible assets of 6.79%; excluding AOCI and adjusting for normalized cash balances, adjusted TCE / TA was 7.61%; CET1 ratio of 9.52%
• Repurchased 10,500 shares at an avg. price of $26.94; repurchased 513,025 shares at an avg. price of $18.58 since the beginning of 2023, reducing share count by 5.7%
• Tangible book value per share of $41.83, a 1.0% increase from the fourth quarter of 2023

“On our third quarter 2023 earnings conference call, we indicated that net interest margin and net interest income had likely bottomed and would soon trend higher,” said David Becker, Chairman and Chief Executive Officer. “Since then, while the rate environment has remained quite volatile, our net interest margin and net interest income have improved by 27 basis points and 19%, respectively, over the past two quarters, driving higher earnings and improved profitability.

“At the same time, we’ve improved the risk profile of our balance sheet by optimizing our loan portfolio, and further diversifying our revenue and earnings streams. Our balance sheet liquidity position has strengthened, our capital position remains sturdy, and asset quality has been maintained. This strong foundation has also positioned us to remain on offense, as we continue to drive positive momentum in our SBA business, with strong production and another record level of gain on sale income during the first quarter. Amidst continued macroeconomic uncertainty, these developments leave us confident in our ability to drive further improvement in earnings and profitability over the remainder of the year.”

Net Interest Income and Net Interest Margin

Net interest income for the first quarter of 2024 was $20.7 million, compared to $19.8 million for the fourth quarter of 2023, and $19.6 million for the first quarter of 2023. On a fully-taxable equivalent basis, net interest income for the first quarter of 2024 was $21.9 million, compared to $21.0 million for both the fourth and first quarters of 2023.

Total interest income for the first quarter of 2024 was $68.2 million, an increase of 2.9% compared to the fourth quarter of 2023, and an increase of 31.0% compared to the first quarter of 2023. On a fully-taxable equivalent basis, total interest income for the first quarter of 2024 was $69.4 million, an increase of 2.7% compared to the fourth quarter of 2023, and an increase of 29.8% compared to the first quarter of 2023. The yield on average interest-earning assets for the first quarter of 2024 increased to 5.45% from 5.28% for the fourth quarter of 2023, due to a 23 basis point (“bp”) increase in the yield earned on loans and a 9 bp increase in the yield earned on securities, partially offset by a 6 bp decrease in the yield earned on other earning assets. Compared to the linked quarter, average loan balances increased $92.7 million, or 2.4%, and the average balance of securities increased $20.0 million, or 2.9%, while the average balance of other earning assets decreased $66.6 million, or 13.3%.

Interest income earned on commercial loans was higher due to increased average balances and the positive impact of higher rates in the variable rate construction and small business lending portfolios, as well as growth in the higher-yielding franchise finance portfolio. This was partially offset by lower average balances in the public finance and healthcare finance portfolios. The continued shift in the loan mix reflects our focus on variable rate and higher-yielding products, in part, to help improve the interest rate risk profile of our balance sheet.

In the consumer loan portfolio, interest income was up modestly due to the combination of slightly higher average balances and continued higher new origination yields in the trailers, RV and other consumer loan portfolios.

The yield on funded portfolio loan originations was 8.84% in the first quarter of 2024, relatively stable with the fourth quarter of 2023, and an increase of 108 bps compared to the first quarter of 2023.

Interest income earned on securities during the first quarter of 2024 increased $0.3 million, or 4.0%, compared to the fourth quarter of 2023 as the yield on the portfolio increased 9 bps to 3.81%, driven primarily by higher yields on new purchases and continued slower prepayment speeds on mortgage-backed securities. Additionally, the average balance of securities increased $20.0 million, or 2.9%, during the first quarter of 2024. Interest earned on other earning asset balances decreased $1.1 million, or 15.4%, in the first quarter of 2024 compared to the linked quarter, due primarily to lower average cash balances and slightly lower yields.

Total interest expense for the first quarter of 2024 was $47.4 million, an increase of $1.0 million, or 2.1%, compared to the linked quarter as short-term rates remained stable throughout the quarter while average interest-bearing deposit balances increased $51.5 million, or 1.3%. Interest expense related to interest-bearing deposits increased $1.1 million, or 2.6%, driven primarily by higher costs on certificates of deposits (“CDs”), interest-bearing demand deposits and BaaS – brokered deposits. The cost of interest-bearing deposits was 4.25% for the first quarter of 2024, compared to 4.14% for the fourth quarter of 2023.

Average CD balances increased $22.6 million, or 1.4%, compared to the linked quarter, driven by strong consumer demand, while the cost of funds increased 15 bps. The increase in the cost of CDs is the lowest in the past seven quarters, reflecting the narrowing gap between rates on new production and maturities. The average balance of interest-bearing demand deposits increased $32.7 million, or 8.5%, due to growth in fintech partnership deposits, while the cost of funds increased 32 bps. The average balance of BaaS – brokered deposits increased $23.3 million, or 37.5%, due to higher payments volumes, while the cost of funds increased 1 bp.

These increases were partially offset by lower average brokered deposit balances, which decreased $19.4 million, or 3.1%, as excess liquidity was used to redeem $17.9 million of callable brokered CDs.

Net interest margin (“NIM”) was 1.66% for the first quarter of 2024, up from 1.58% for the fourth quarter of 2023 and down from 1.76% for the first quarter of 2023. Fully-taxable equivalent NIM (“FTE NIM”) was 1.75% for the first quarter of 2024, up from 1.68% for the fourth quarter of 2023 and down from 1.89% for the first quarter of 2023. The increases in NIM and FTE NIM compared to the linked quarter were driven primarily by higher yields on loans and securities, as well as higher average loan and securities balances, partially offset by higher interest-bearing deposit costs and lower average cash balances.

Noninterest Income

Noninterest income for the first quarter of 2024 was $8.3 million, compared to $7.4 million for the fourth quarter of 2023, and $5.4 million for the first quarter of 2023. Gain on sale of loans totaled $6.5 million in the first quarter of 2024, increasing $0.5 million, or 8.4%, compared to the linked quarter. Gain on sale revenue consisted almost entirely of sales of U.S. Small Business Administration (“SBA”) 7(a) guaranteed loans during the first quarter of 2024. Loan sale volume was down seasonally, decreasing 11.5% compared to the linked quarter, but was more than offset by a 158 bp increase in net premiums. Net loan servicing revenue increased $0.5 million during the quarter due to growth in the servicing portfolio and the change in the fair value adjustment to the loan servicing asset.

Noninterest Expense

Noninterest expense totaled $21.0 million for the first quarter of 2024, compared to $20.1 million for the fourth quarter of 2023, and $21.0 million for the first quarter of 2023, representing increases of 4.8% and 0.3%, respectively. The increase of $1.0 million compared to the linked quarter was due primarily to higher salaries and employee benefits and marketing expenses.

The increase in salaries and employee benefits was due primarily to annual resets on certain employee benefits, payroll taxes and incentive compensation accruals, as well as annual merit increases and new hires, partially offset by lower small business incentive compensation and lower medical claims. The increase in marketing expenses was due mainly to higher advertising, media and sponsorship costs.

Income Taxes

The Company recorded income tax expense of $0.4 million and an effective tax rate of 7.6% for the first quarter of 2024, compared to income tax benefits of $0.6 million and $2.3 million for the fourth and first quarters of 2023, respectively.

Loans and Credit Quality

Total loans as of March 31, 2024 were $3.9 billion, an increase of $69.6 million, or 1.8%, compared to December 31, 2023, and an increase of $302.6 million, or 8.4%, compared to March 31, 2023. Total commercial loan balances were $3.1 billion as of March 31, 2024, an increase of $75.2 million, or 2.5%, compared to December 31, 2023, and an increase of $275.4 million, or 9.8%, compared to March 31, 2023. Compared to the linked quarter, the increase in commercial loan balances was driven primarily by growth in higher yielding construction, small business lending and franchise finance balances. These items were partially offset by decreases in the fixed-rate public finance and healthcare finance portfolios.

Total consumer loan balances were $793.4 million as of March 31, 2024, a decrease of $3.5 million, or 0.4%, compared to December 31, 2023, and an increase of $37.1 million, or 4.9%, compared to March 31, 2023. The slight decline compared to the linked quarter was due primarily to a decrease in the residential mortgage portfolio, partially offset by an increase in the trailers portfolio.

Total delinquencies 30 days or more past due were 0.53% of total loans as of March 31, 2024, compared to 0.31% at December 31, 2023, and 0.13% as of March 31, 2023. The increase during the first quarter of 2024 was due primarily to an increase in delinquencies in the small business lending and franchise finance portfolios, some of which was due to the timing of principal and interest payments. Subsequent to quarter end, payments were received from a number of borrowers and as of the date of this release, delinquencies 30 days or more past due declined to 0.32% of total loans, relatively consistent with the linked quarter.

Nonperforming loans were 0.33% of total loans as of March 31, 2024, compared to 0.26% as of both December 31, 2023 and March 31, 2023. Nonperforming loans totaled $13.1 million at March 31, 2024, up from $10.0 million at December 31, 2023. The increase in nonperforming loans was due primarily to an increase in nonperforming small business lending loans and, to a lesser extent, an increase in nonperforming residential mortgage loans.

The allowance for credit losses (“ACL”) as a percentage of total loans was 1.05% as of March 31, 2024, compared to 1.01% as of December 31, 2023, and 1.02% as of March 31, 2023. The increase in the ACL reflects the addition of specific reserves on nonperforming small business lending loans, as well as growth in certain loan portfolios, partially offset by the positive impact of economic data on forecasted loss rates and qualitative factors on other portfolios.

Net charge-offs of $0.5 million were recognized during the first quarter of 2024, resulting in net charge-offs to average loans of 0.05%, compared to $1.2 million, or 0.12%, for the fourth quarter of 2023, and $7.2 million, or 0.82%, for the first quarter of 2023. Net charge-offs in the first quarter of 2024 were driven primarily by small business and consumer lending.

The provision for credit losses in the first quarter of 2024 was $2.4 million, compared to $3.6 million for the fourth quarter of 2023, and $9.4 million for the first quarter of 2023. The provision for the first quarter of 2024 was driven primarily by specific reserves, growth in certain loan portfolios and net charge-offs, partially offset by the positive impact of economic forecasts on other portfolios.

Capital

As of March 31, 2024, total shareholders’ equity was $366.7 million, an increase of $3.9 million, or 1.1%, compared to December 31, 2023, and an increase of $11.2 million, or 3.1%, compared to March 31, 2023. The increase in shareholders’ equity during the first quarter of 2024 compared to the linked quarter was due primarily to the net income earned during the quarter, partially offset by a slight increase in accumulated other comprehensive loss. Book value per common share increased to $42.37 as of March 31, 2024, up from $41.97 as of December 31, 2023, and $39.76 as of March 31, 2023. Tangible book value per share was $41.83 as of March 31, 2024, up from $41.43 as of December 31, 2023, and $39.23 as of March 31, 2023.

In connection with its previously announced stock repurchase program, the Company repurchased 10,500 shares of its common stock during the first quarter of 2024 at an average price of $26.94 per share. The Company has repurchased $41.7 million of stock under its authorized programs since November of 2021.

The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of March 31, 2024.

		As of March 31, 2024
		Company		Bank
Total shareholders' equity to assets		6.87%		8.39%
Tangible common equity to tangible assets 1		6.79%		8.31%
Tier 1 leverage ratio 2		7.33%		8.92%
Common equity tier 1 capital ratio 2		9.52%		11.60%
Tier 1 capital ratio 2		9.52%		11.60%
Total risk-based capital ratio 2		13.18%		12.66%
1 This information represents a non-GAAP financial measure. For a discussion of non-GAAP financial measures, see the section below entitled "Non-GAAP Financial Measures."
2 Regulatory capital ratios are preliminary pending filing of the Company's and the Bank's regulatory reports.

Conference Call and Webcast

The Company will host a conference call and webcast at 2:00 p.m. Eastern Time on Thursday, April 25, 2024 to discuss its quarterly financial results. The call can be accessed via telephone at (888) 259-6580; access code: 28021175. A recorded replay can be accessed through May 25, 2024 by dialing (877) 674-7070; access code: 021175.

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

About First Internet Bancorp

First Internet Bancorp is a financial holding company with assets of $5.3 billion as of March 31, 2024. The Company’s subsidiary, First Internet Bank, opened for business in 1999 as an industry pioneer in the branchless delivery of banking services. First Internet Bank provides consumer and small business deposit, SBA financing, franchise finance, consumer loans, and specialty finance services nationally as well as commercial real estate loans, construction loans, commercial and industrial loans, and treasury management services on a regional basis. First Internet Bancorp’s common stock trades on the Nasdaq Global Select Market under the symbol “INBK”. Additional information about the Company is available at www.firstinternetbancorp.com and additional information about First Internet Bank, including its products and services, is available at www.firstib.com.

Forward-Looking Statements

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

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, total interest income – FTE, net interest income – FTE, net interest margin – FTE, adjusted total revenue, adjusted noninterest income, adjusted noninterest expense, adjusted income before income taxes, adjusted income tax provision (benefit), adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity and adjusted return on average tangible common equity 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,
					2024				2023				2023
Net income (loss)				$	5,181			$	4,143			$	(3,017	)
Per share and share information
	Earnings (loss) per share - basic			$	0.60			$	0.48			$	(0.33	)
	Earnings (loss) per share - diluted				0.59				0.48				(0.33	)
	Dividends declared per share				0.06				0.06				0.06
	Book value per common share				42.37				41.97				39.76
	Tangible book value per common share 1				41.83				41.43				39.23
	Common shares outstanding				8,655,854				8,644,451				8,943,477
	Average common shares outstanding:
		Basic			8,679,429				8,683,331				9,024,072
		Diluted			8,750,297				8,720,078				9,024,072
Performance ratios
	Return on average assets				0.40	%			0.32	%			(0.26	%)
	Return on average shareholders' equity				5.64	%			4.66	%			(3.37	%)
	Return on average tangible common equity1				5.71	%			4.72	%			(3.41	%)
	Net interest margin				1.66	%			1.58	%			1.76	%
	Net interest margin - FTE1,2				1.75	%			1.68	%			1.89	%
Capital ratios3
	Total shareholders' equity to assets				6.87	%			7.02	%			7.53	%
	Tangible common equity to tangible assets1				6.79	%			6.94	%			7.44	%
	Tier 1 leverage ratio				7.33	%			7.33	%			8.10	%
	Common equity tier 1 capital ratio				9.52	%			9.60	%			10.30	%
	Tier 1 capital ratio				9.52	%			9.60	%			10.30	%
	Total risk-based capital ratio				13.18	%			13.23	%			14.13	%
Asset quality
	Nonperforming loans			$	13,050			$	9,962			$	9,221
	Nonperforming assets				13,425				10,354				9,346
	Nonperforming loans to loans				0.33	%			0.26	%			0.26	%
	Nonperforming assets to total assets				0.25	%			0.20	%			0.20	%
	Allowance for credit losses - loans to:
		Loans			1.05	%			1.01	%			1.02	%
		Nonperforming loans			313.3	%			389.2	%			400.0	%
	Net charge-offs to average loans				0.05	%			0.12	%			0.82	%
Average balance sheet information
	Loans			$	3,889,667			$	3,799,211			$	3,573,827
	Total securities				703,509			$	683,468			$	585,270
	Other earning assets				434,118			$	500,733			$	331,294
	Total interest-earning assets				5,030,216			$	4,984,133			$	4,499,782
	Total assets				5,207,936			$	5,154,285			$	4,647,156
	Noninterest-bearing deposits				113,341			$	123,351			$	134,988
	Interest-bearing deposits				3,987,009			$	3,935,519			$	3,411,969
	Total deposits				4,100,350			$	4,058,870			$	3,546,957
	Shareholders' equity				369,371			$	353,037			$	363,273
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, 2023)
Dollar amounts in thousands
				March 31,				December 31,				March 31,
					2024				2023				2023
Assets
	Cash and due from banks			$	6,638			$	8,269			$	27,741
	Interest-bearing deposits				474,626				397,629				276,231
	Securities available-for-sale, at fair value				482,431				474,855				395,833
	Securities held-to-maturity, at amortized cost, net of allowance for credit losses				235,738				227,153				210,761
	Loans held-for-sale				22,589				22,052				18,144
	Loans				3,909,804				3,840,220				3,607,242
	Allowance for credit losses - loans				(40,891	)			(38,774	)			(36,879	)
		Net loans			3,868,913				3,801,446				3,570,363
	Accrued interest receivable				26,809				26,746				22,322
	Federal Home Loan Bank of Indianapolis stock				28,350				28,350				28,350
	Cash surrender value of bank-owned life insurance				41,154				40,882				40,105
	Premises and equipment, net				73,231				73,463				74,248
	Goodwill				4,687				4,687				4,687
	Servicing asset				11,760				10,567				7,312
	Other real estate owned				375				375				106
	Accrued income and other assets				63,366				51,098				45,116
		Total assets		$	5,340,667			$	5,167,572			$	4,721,319
Liabilities
	Noninterest-bearing deposits			$	130,760			$	123,464			$	140,449
	Interest-bearing deposits				4,143,008				3,943,509				3,481,841
		Total deposits			4,273,768				4,066,973				3,622,290
	Advances from Federal Home Loan Bank				574,936				614,934				614,929
	Subordinated debt				104,915				104,838				104,608
	Accrued interest payable				3,382				3,848				2,592
	Accrued expenses and other liabilities				16,927				14,184				21,328
		Total liabilities			4,973,928				4,804,777				4,365,747
Shareholders' equity
	Voting common stock				184,720				184,700				189,202
	Retained earnings				212,121				207,470				197,623
	Accumulated other comprehensive loss				(30,102	)			(29,375	)			(31,253	)
		Total shareholders' equity			366,739				362,795				355,572
		Total liabilities and shareholders' equity		$	5,340,667			$	5,167,572			$	4,721,319

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,
						2024				2023				2023
Interest income
	Loans				$	55,435			$	52,690			$	43,843
	Securities - taxable					5,694				5,447				3,606
	Securities - non-taxable					969				962				798
	Other earning assets					6,067				7,173				3,786
		Total interest income				68,165				66,272				52,033
Interest expense
	Deposits					42,129				41,078				27,270
	Other borrowed funds					5,302				5,387				5,189
		Total interest expense				47,431				46,465				32,459
		Net interest income				20,734				19,807				19,574
Provision for credit losses						2,448				3,594				9,415
		Net interest income after provision
			for credit losses			18,286				16,213				10,159
Noninterest income
	Service charges and fees					220				216				209
	Loan servicing revenue					1,323				1,134				785
	Loan servicing asset revaluation					(434	)			(793	)			(55	)
	Mortgage banking activities					-				-				76
	Gain on sale of loans					6,536				6,028				4,061
	Other					702				816				370
		Total noninterest income				8,347				7,401				5,446
Noninterest expense
	Salaries and employee benefits					11,796				11,055				11,794
	Marketing, advertising and promotion					736				518				844
	Consulting and professional fees					853				893				926
	Data processing					564				493				659
	Loan expenses					1,445				1,371				1,977
	Premises and equipment					2,826				2,846				2,777
	Deposit insurance premium					1,145				1,334				543
	Other					1,658				1,546				1,434
		Total noninterest expense				21,023				20,056				20,954
Income (loss) before income taxes						5,610				3,558				(5,349	)
Income tax provision (benefit)						429				(585	)			(2,332	)
Net income (loss)					$	5,181			$	4,143			$	(3,017	)
Per common share data
Earnings (loss) per share - basic					$	0.60			$	0.48			$	(0.33	)
Earnings (loss) per share - diluted					$	0.59			$	0.48			$	(0.33	)
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, 2024										December 31, 2023										March 31, 2023
					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-sale1			$	3,892,589			$	55,435		5.73	%		$	3,799,932			$	52,690		5.50	%		$	3,583,218			$	43,843		4.96	%
		Securities - taxable				627,216				5,694		3.65	%			611,664				5,447		3.53	%			511,923				3,606		2.86	%
		Securities - non-taxable				76,293				969		5.11	%			71,804				962		5.32	%			73,347				798		4.41	%
		Other earning assets				434,118				6,067		5.62	%			500,733				7,173		5.68	%			331,294				3,786		4.63	%
			Total interest-earning assets			5,030,216				68,165		5.45	%			4,984,133				66,272		5.28	%			4,499,782				52,033		4.69	%
	Allowance for credit losses - loans					(38,611	)									(36,792	)									(35,075	)
	Noninterest-earning assets					216,331										206,944										182,449
		Total assets			$	5,207,936									$	5,154,285									$	4,647,156
Liabilities
	Interest-bearing liabilities
		Interest-bearing demand deposits			$	415,106			$	2,091		2.03	%		$	382,427			$	1,646		1.71	%		$	333,642			$	900		1.09	%
		Savings accounts				22,521				48		0.86	%			22,394				48		0.85	%			38,482				82		0.86	%
		Money market accounts				1,217,966				12,671		4.18	%			1,225,781				12,739		4.12	%			1,377,600				12,300		3.62	%
		BaaS - brokered deposits				85,366				931		4.39	%			62,098				685		4.38	%			14,741				138		3.80	%
		Certificates and brokered deposits				2,246,050				26,388		4.73	%			2,242,819				25,960		4.59	%			1,647,504				13,850		3.41	%
			Total interest-bearing deposits			3,987,009				42,129		4.25	%			3,935,519				41,078		4.14	%			3,411,969				27,270		3.24	%
		Other borrowed funds				716,735				5,302		2.98	%			719,733				5,387		2.97	%			719,499				5,189		2.92	%
			Total interest-bearing liabilities			4,703,744				47,431		4.06	%			4,655,252				46,465		3.96	%			4,131,468				32,459		3.19	%
	Noninterest-bearing deposits					113,341										123,351										134,988
	Other noninterest-bearing liabilities					21,480										22,645										17,427
		Total liabilities				4,838,565										4,801,248										4,283,883
Shareholders' equity						369,371										353,037										363,273
Total liabilities and shareholders' equity					$	5,207,936									$	5,154,285									$	4,647,156
Net interest income									$	20,734									$	19,807									$	19,574
Interest rate spread												1.39	%									1.32	%									1.50	%
Net interest margin												1.66	%									1.58	%									1.76	%
Net interest margin - FTE2,3												1.75	%									1.68	%									1.89	%
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, 2024						December 31, 2023						March 31, 2023
				Amount			Percent			Amount			Percent			Amount			Percent
Commercial loans
	Commercial and industrial			$	133,897		3.4	%		$	129,349		3.4	%		$	113,198		3.1	%
	Owner-occupied commercial real estate				57,787		1.5	%			57,286		1.5	%			59,643		1.7	%
	Investor commercial real estate				128,276		3.3	%			132,077		3.4	%			142,174		3.9	%
	Construction				325,597		8.3	%			261,750		6.8	%			158,147		4.4	%
	Single tenant lease financing				941,597		24.1	%			936,616		24.4	%			952,533		26.4	%
	Public finance				498,262		12.7	%			521,764		13.6	%			604,898		16.8	%
	Healthcare finance				213,332		5.5	%			222,793		5.8	%			256,670		7.1	%
	Small business lending				239,263		6.1	%			218,506		5.7	%			136,382		3.8	%
	Franchise finance				543,122		13.9	%			525,783		13.7	%			382,161		10.6	%
		Total commercial loans			3,081,133		78.8	%			3,005,924		78.3	%			2,805,806		77.8	%
Consumer loans
	Residential mortgage				390,009		10.0	%			395,648		10.3	%			392,062		10.9	%
	Home equity				22,753		0.6	%			23,669		0.6	%			26,160		0.7	%
	Trailers				191,353		4.9	%			188,763		4.9	%			172,640		4.8	%
	Recreational vehicles				145,475		3.7	%			145,558		3.8	%			128,307		3.6	%
	Other consumer loans				43,847		1.1	%			43,293		1.1	%			37,186		1.0	%
		Total consumer loans			793,437		20.3	%			796,931		20.7	%			756,355		21.0	%
Net deferred loan fees, premiums, discounts and other1					35,234		0.9	%			37,365		1.0	%			45,081		1.2	%
Total loans				$	3,909,804		100.0	%		$	3,840,220		100.0	%		$	3,607,242		100.0	%
				March 31, 2024						December 31, 2023						March 31, 2023
				Amount			Percent			Amount			Percent			Amount			Percent
Deposits
	Noninterest-bearing deposits			$	130,760		3.1	%		$	123,464		3.0	%		$	140,449		3.9	%
	Interest-bearing demand deposits				423,529		9.9	%			402,976		9.9	%			351,641		9.7	%
	Savings accounts				23,554		0.6	%			21,364		0.5	%			32,762		0.9	%
	Money market accounts				1,251,230		29.2	%			1,248,319		30.8	%			1,254,013		34.6	%
	BaaS - brokered deposits				107,911		2.5	%			74,401		1.8	%			25,725		0.7	%
	Certificates of deposits				1,738,996		40.7	%			1,605,156		39.5	%			1,170,094		32.3	%
	Brokered deposits				597,788		14.0	%			591,293		14.5	%			647,606		17.9	%
Total deposits				$	4,273,768		100.0	%		$	4,066,973		100.0	%		$	3,622,290		100.0	%
1 Includes carrying value adjustments of $26.9 million, $27.8 million and $31.5 million related to terminated interest rate swaps associated with public finance loans as of March 31, 2024, December 31, 2023 and March 31, 2023, 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,
					2024				2023				2023
Total equity - GAAP				$	366,739			$	362,795			$	355,572
Adjustments:
		Goodwill			(4,687	)			(4,687	)			(4,687	)
Tangible common equity				$	362,052			$	358,108			$	350,885
Total assets - GAAP				$	5,340,667			$	5,167,572			$	4,721,319
Adjustments:
		Goodwill			(4,687	)			(4,687	)			(4,687	)
Tangible assets				$	5,335,980			$	5,162,885			$	4,716,632
Common shares outstanding					8,655,854				8,644,451				8,943,477
Book value per common share				$	42.37			$	41.97			$	39.76
Effect of goodwill					(0.54	)			(0.54	)			(0.53	)
Tangible book value per common share				$	41.83			$	41.43			$	39.23
Total shareholders' equity to assets					6.87	%			7.02	%			7.53	%
Effect of goodwill					(0.08	%)			(0.08	%)			(0.09	%)
Tangible common equity to tangible assets					6.79	%			6.94	%			7.44	%
Total average equity - GAAP				$	369,371			$	353,037			$	363,273
Adjustments:
		Average goodwill			(4,687	)			(4,687	)			(4,687	)
Average tangible common equity				$	364,684			$	348,350			$	358,586
Return on average shareholders' equity					5.64	%			4.66	%			(3.37	%)
Effect of goodwill					0.07	%			0.06	%			(0.04	%)
Return on average tangible common equity					5.71	%			4.72	%			(3.41	%)
Total interest income				$	68,165			$	66,272			$	52,033
Adjustments:
		Fully-taxable equivalent adjustments1			1,190				1,238				1,383
Total interest income - FTE				$	69,355			$	67,510			$	53,416
Net interest income				$	20,734			$	19,807			$	19,574
Adjustments:
		Fully-taxable equivalent adjustments1			1,190				1,238				1,383
Net interest income - FTE				$	21,924			$	21,045			$	20,957
Net interest margin					1.66	%			1.58	%			1.76	%
Effect of fully-taxable equivalent adjustments1					0.09	%			0.10	%			0.13	%
Net interest margin - FTE					1.75	%			1.68	%			1.89	%
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,
					2024			2023				2023
Total revenue - GAAP				$	29,081		$	27,208			$	25,020
Adjustments:
		Mortgage-related revenue			-			-				(65	)
Adjusted total revenue				$	29,081		$	27,208			$	24,955
Noninterest income - GAAP				$	8,347		$	7,401			$	5,446
Adjustments:
		Mortgage-related revenue			-			-				(65	)
Adjusted noninterest income				$	8,347		$	7,401			$	5,381
Noninterest expense - GAAP				$	21,023		$	20,056			$	20,954
Adjustments:
		Mortgage-related costs			-			-				(3,052	)
Adjusted noninterest expense				$	21,023		$	20,056			$	17,902
Income (loss) before income taxes - GAAP				$	5,610		$	3,558			$	(5,349	)
Adjustments:1
		Mortgage-related revenue			-			-				(65	)
		Mortgage-related costs			-			-				3,052
		Partial charge-off of C&I participation loan			-			-				6,914
Adjusted income before income taxes				$	5,610		$	3,558			$	4,552
Income tax provision (benefit) - GAAP				$	429		$	(585	)		$	(2,332	)
Adjustments:1
		Mortgage-related revenue			-			-				(14	)
		Mortgage-related costs			-			-				641
		Partial charge-off of C&I participation loan			-			-				1,452
Adjusted income tax provision (benefit)				$	429		$	(585	)		$	(253	)
Net income (loss) - GAAP				$	5,181		$	4,143			$	(3,017	)
Adjustments:
		Mortgage-related revenue			-			-				(51	)
		Mortgage-related costs			-			-				2,411
		Partial charge-off of C&I participation loan			-			-				5,462
Adjusted net income				$	5,181		$	4,143			$	4,805
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,
					2024				2023				2023
Diluted average common shares outstanding					8,750,297				8,720,078				9,024,072
Diluted earnings (loss) per share - GAAP				$	0.59			$	0.48			$	(0.33	)
Adjustments:
		Effect of mortgage-related revenue			-				-				(0.01	)
		Effect of mortgage-related costs			-				-				0.27
		Effect of partial charge-off of C&I participation loan			-				-				0.60
Adjusted diluted earnings per share				$	0.59			$	0.48			$	0.53
Return on average assets					0.40	%			0.32	%			(0.26	%)
		Effect of mortgage-related revenue			0.00	%			0.00	%			0.00	%
		Effect of mortgage-related costs			0.00	%			0.00	%			0.21	%
		Effect of partial charge-off of C&I participation loan			0.00	%			0.00	%			0.48	%
Adjusted return on average assets					0.40	%			0.32	%			0.43	%
Return on average shareholders' equity					5.64	%			4.66	%			(3.37	%)
		Effect of mortgage-related revenue			0.00	%			0.00	%			(0.06	%)
		Effect of mortgage-related costs			0.00	%			0.00	%			2.69	%
		Effect of partial charge-off of C&I participation loan			0.00	%			0.00	%			6.10	%
Adjusted return on average shareholders' equity					5.64	%			4.66	%			5.36	%
Return on average tangible common equity					5.71	%			4.72	%			(3.41	%)
		Effect of mortgage-related revenue			0.00	%			0.00	%			(0.06	%)
		Effect of mortgage-related costs			0.00	%			0.00	%			2.73	%
		Effect of partial charge-off of C&I participation loan			0.00	%			0.00	%			6.18	%
Adjusted return on average tangible common equity					5.71	%			4.72	%			5.44	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240422407933/en/

Investors/Analysts

Paula Deemer

Director of Corporate Administration

(317) 428-4628

investors@firstib.com

Media

BLASTmedia for First Internet Bank

Zach Weismiller

firstib@blastmedia.com

Source: First Internet Bancorp

FAQ

What are the financial highlights of First Internet Bancorp for the first quarter of 2024?

Net income increased by 25.1% to $5.2 million, with diluted earnings per share rising by 22.9% to $0.59. Net interest income was $20.7 million, and interest margin was 1.66%. Loan growth was $69.6 million, and deposit growth was $206.8 million.

How did the net interest income and margin of First Internet Bancorp change in the first quarter of 2024?

Net interest income for the first quarter of 2024 was $20.7 million, with a net interest margin of 1.66%. On a fully-taxable equivalent basis, net interest income was $21.9 million, with a margin of 1.75%.

What was the total interest income for First Internet Bancorp in the first quarter of 2024?

Total interest income for the first quarter of 2024 was $68.2 million, a 2.9% increase compared to the fourth quarter of 2023.

What was the noninterest income for First Internet Bancorp in the first quarter of 2024?

Noninterest income for the first quarter of 2024 was $8.3 million, with gain on sale of loans totaling $6.5 million.

What was the total shareholders' equity and book value per share for First Internet Bancorp as of March 31, 2024?

Total shareholders' equity was $366.7 million, with book value per common share at $42.37 and tangible book value per share at $41.83.

What was the provision for credit losses for First Internet Bancorp in the first quarter of 2024?

The provision for credit losses in the first quarter of 2024 was $2.4 million, compared to $3.6 million for the fourth quarter of 2023.

What regulatory and other capital ratios were reported by First Internet Bancorp as of March 31, 2024?

The tangible common equity to tangible assets ratio was 6.79%, with a CET1 ratio of 9.52% and total risk-based capital ratio of 13.18%.