INDIANAPOLIS, Ind.--(BUSINESS WIRE)--First Internet Bancorp (NASDAQ: INBK), parent company of First Internet Bank of Indiana (www.firstib.com), a premier nationwide provider of online retail banking services and commercial banking services, today announced unaudited financial results for the quarter ended March 31, 2013.
“We are pleased to report another quarter of solid profitability and growth,” said David Becker, Chairman and CEO. “Year over year, first quarter net income rose 30%, our commercial loan portfolio grew 62%, and increased retained earnings boosted shareholders’ equity to $62.76 million, up 10% from first quarter 2012.”
Highlights for the quarter ended March 31, 2013:
- Net income was $1.49 million or $0.77 per diluted share in first quarter 2013 compared with $1.15 million or $0.60 per diluted share in first quarter 2012.
- Return on average assets in first quarter 2013 increased to 0.94% from 0.77% in the prior year’s first quarter, and return on average equity rose to 9.64% compared with 8.12% in first quarter 2012.
- Total assets increased to a record $650.84 at March 31, 2013, compared with $611.84 million at March 31, 2012, and $636.37 million at December 31, 2012.
- Commercial real estate and commercial & industrial loan portfolios grew to $109.09 million compared with $67.33 million at March 31, 2012.
- Net interest income after provision for loan loss, reflecting retained mortgage and commercial loan growth and lower interest expense, was $3.68 million in first quarter 2013 compared with $3.36 million in first quarter 2012.
- Non-interest income for the quarter ended March 31, 2013 was $3.15 million, compared with $2.04 million for the quarter ended March 31, 2012.
- The company’s tangible book value increased to $30.17 per share in first quarter 2013, compared with $27.30 per share in first quarter 2012.
- In first quarter 2013, First Internet became an SEC-reporting corporation, and its common stock began trading on the NASDAQ Capital Market.
- The company paid its first quarterly cash dividend of $0.06 per share of common stock on April 15, 2013
“First Internet’s strong financial performance continues to validate our actions on several fronts to invest in a company capable of considerable growth in assets, earnings, productivity, and efficiency,” Becker commented. “We’ve demonstrated continued success in building our nationwide mortgage origination business, while also building a more diversified revenue stream, including specialty consumer lending and a rapidly growing commercial banking business. We have made meaningful progress over the past few years, with substantial opportunity ahead of us. We expect, and consistently receive, high performance from our team, which is working in unison to build the First Internet brand.”
Becker noted the commercial lending pipeline continues to grow, and that treasury management, ACH services and a corporate credit card were added to product offerings to attract not only loans, but expand commercial banking relationships. “This will enable us to boost fee income sources and grow non-interest bearing commercial deposits, which we anticipate will contribute to a lower cost of funds over time. We expect to demonstrate further gains in non-interest bearing deposits in future periods,” he stated.
Income Statement Reflects Growth in Interest and Non-interest Income Businesses
For the quarter ended March 31, 2013, net income was $1.49 million or $0.77 per diluted share – the highest first quarter earnings in First Internet’s history – compared with net income for the quarter ended March 31, 2012 of $1.15 million or $0.60 per diluted share. Net interest income after provision for loan losses was $3.68 million in first quarter 2013 compared with $3.36 million in first quarter 2012. Loan income rose to $4.97 million in first quarter 2013 compared with $4.73 million in first quarter 2012. The 2013 results reflected a reduction in the company’s loan loss provision to $134,000 compared with $570,000 for the same period in 2012 due to lower delinquency levels.
Total interest expense in first quarter 2013 declined to $1.94 million compared with $2.16 million, reflecting ongoing efforts to re-price interest-bearing accounts as appropriate in the continued low-interest rate environment, and reduced use of higher-cost wholesale funding sources. The ability to grow core deposits to fund lending activity continues to drive a declining use of Federal Home Loan Bank borrowings.
The average cost of funds was 1.39% in first quarter 2013, compared with 1.45% in fourth quarter 2012, and 1.63% in first quarter 2012.
Total non-interest income in first quarter 2013 increased 54.3% to $3.15 million compared with $2.04 million in first quarter 2012. Gains on loans sold drove this growth, up 72% to $3.01 million in first quarter 2013 compared with $1.75 million in first quarter 2012. First quarter 2013 results included a $185,000 one-time loss related to the rebalancing of the mortgage backed securities portfolio. The company ended first quarter 2013 with $61.60 million in loans held for sale, reflecting a continuing strong pipeline of originated loans.
Total non-interest expense in first quarter 2013 was $4.65 million compared with $3.88 million in first quarter 2012. The increase primarily reflected increased salaries and benefits as the year-over year employee count increased from 76 to 105 individuals, primarily in mortgage lending and commercial banking. First quarter 2013 non-interest expense included a one-time $193,000 expense related to listing the company’s common stock on NASDAQ.
Net interest margin was 2.55% at March 31, 2013, compared with 2.77% at March 31, 2012. An improved securities yield as a result of the restructured investment portfolio is expected to positively impact the net interest margin in future periods.
Kay Whitaker, Senior Vice President and CFO, explained, “During the quarter, we seized an opportunity to mitigate cash flow and interest rate risk within our investment portfolio while improving its overall yield. We regularly and actively review our investment strategy and portfolio and are responding to the challenges the continued low interest rate environment provides. First Internet differs from many banking competitors in that we look at our lending and fee-based business lines holistically. The banking industry operates in cycles, and when low rates challenge one business area, they may provide a clear opportunity in another. We look for opportunities to succeed regardless of the interest rate environment, as evidenced by our strong mortgage operation.”
Balance Sheet, Deposit Growth and Asset Quality
The company’s total assets of $650.84 million at March 31, 2013 represented an all-time high for First Internet. Net loans after allowance for loan losses were $352.62 million, compared with $337.04 million at March 31, 2012. The company grew total deposits to $546.67 million at March 31, 2013, compared with $511.37 million at March 31, 2012, primarily reflecting growth in interest-bearing core deposits.
A primary driver of loan growth continued to be the commercial lending team. CRE loans increased 46% to $89.35 million at March 31, 2013, compared with $61.41 million in first quarter 2012. C&I lending grew to $19.74 compared with $5.92 million at March 31, 2012.
“Our commercial banking business has added depth and diversity to First Internet’s loan portfolio mix,” said Ed Roebuck, Senior Vice President and Chief Credit Officer. “In first quarter 2013, commercial real estate loans comprised 25% of our portfolio compared with 18% the year before, while commercial lending grew to 6% of the total portfolio compared with about 2% the year before. We expect continued asset diversification in all areas of our lending business.”
The company’s loan and asset quality remained strong, with non-performing loans at March 31, 2013 declining to $3.73 million compared with $8.72 million at March 31, 2012. The ratio of non-performing loans to total assets was 0.57% in first quarter 2013 compared with 1.42% in first quarter 2012, reflecting a focus on maintaining asset quality. The allowance for loans and lease losses as a percent of total loans was 1.38% at March 31, 2013, compared with 1.60% at March 31, 2012.
Non-interest bearing demand deposit accounts grew to $16.05 million compared with $12.61 million in first quarter 2012, reflecting more relationship banking business with commercial customers. While the company is focused on building non-interest bearing deposits to bring its overall cost of deposits down, the absence of a traditional bricks and mortar branch structure permits it to offer higher rates for interest-bearing accounts, as needed, in order to fund loan growth.
Capital Position
First Internet exceeds all regulatory capital requirements, with a tier 1 capital to average assets ratio of 8.92% at the bank, which exceeds the level to be considered well capitalized under regulatory capital guidelines, and 9.03% at the holding company, with no TARP or SBLF obligations.
Outlook
Becker concluded: “We anticipate further success in our national residential mortgage origination business in 2013. We are seeing promising signs of accelerated new housing starts in the markets we serve, and this is a positive for mortgage or construction lending, as appropriate. The Federal Reserve has indicated its policy is to maintain a low interest rate environment for a prolonged period, so we expect to see strength in our refinance and purchase mortgage volumes for some time. We also continue to win new loans in our specialty vehicle lending business, in which we have demonstrable expertise.
“Despite increasing local competition for quality commercial lending relationships, our commercial loan pipeline moving into the second quarter is robust. We are also beginning to make a name for ourselves in the credit tenant lease financing space with high-quality CRE credit opportunities nationally. We have also partnered with BancAlliance, a national organization that has paired healthy banks together to Identify, evaluate, and refer C&I loan and lease opportunities.
“We continue to maintain a laser-like focus on building shareholder value through our quarterly cash dividends, continued growth, and prudent risk management practices. We believe becoming an SEC-reporting company and joining the NASDAQ Capital Market will complement our financial outreach and communications, and help support increased investor awareness of our company.”
About First Internet Bancorp
First Internet Bancorp (NASDAQ Capital Market: INBK) is the parent company of First Internet Bank of Indiana. First Internet Bank opened for business in 1999. The Bancorp became the parent of the Bank effective March 21, 2006.
About First Internet Bank
First Internet Bank of Indiana 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 Internet Bank also offers consumer loans, conforming mortgages, jumbo mortgages, home equity loans and lines of credit, and commercial loans. The bank is a wholly owned subsidiary of First Internet Bancorp.
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: changes in interest rates; risks associated with the regulation of financial institutions and holding companies, including capital requirements and the costs of regulatory compliance; failures or interruptions in communications and information systems; general economic conditions and conditions in the lending markets; competition; the plans to grow commercial lending; the loss of key members of management and other matters discussed in the press release. For a further list and description of such risks and uncertainties, see our periodic reports filed with the U.S. Securities and Exchange Commission. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be set forth in our periodic reports.
Financial Tables Follow
| Consolidated Balance Sheet ($000s) (Unaudited) | ||||||
| 03/31/12 | 12/31/12 | 03/31/13 | ||||
| Cash and due from banks | 1,644 | 2,881 | 1,427 | |||
| Interest-bearing deposits | 48,472 | 29,632 | 34,479 | |||
| Securities – Available for Sale | 173,764 | 156,693 | 164,275 | |||
| Loans held for sale | 22,164 | 63,234 | 61,596 | |||
| Gross loans | 338,726 | 354,490 | 354,881 | |||
| Net deferred expenses | 4,103 | 3,671 | 3,483 | |||
| Allowance for loan losses | (5,788) | (5,833) | (5,748) | |||
| Net loans | 337,041 | 352,328 | 352,616 | |||
| Accrued interest receivable | 2,248 | 2,196 | 2,137 | |||
| FHLB stock | 2,943 | 2,943 | 2,943 | |||
| Bank owned life insurance | 11,251 | 11,539 | 11,636 | |||
| Goodwill | 4,687 | 4,687 | 4,687 | |||
| Other real estate owned | 1,462 | 3,666 | 4,208 | |||
| Premises and equipment | 942 | 793 | 4,848 | |||
| Other assets | 5,221 | 5,775 | 5,984 | |||
| Total assets | 611,839 | 636,367 | 650,836 | |||
| Non-interest bearing demand deposits | 12,614 | 13,187 | 16,047 | |||
| Interest bearing demand deposits | 67,703 | 73,660 | 75,217 | |||
| Savings and money market deposits | 191,788 | 213,971 | 223,743 | |||
| Time deposits | 239,268 | 229,873 | 231,660 | |||
| Total deposits | 511,373 | 530,691 | 546,667 | |||
| FHLB advances | 40,601 | 40,686 | 25,713 | |||
| Accrued interest payable | 103 | 120 | 91 | |||
| Accrued payroll and related expenses | 937 | 948 | 1,323 | |||
| Other liabilities | 1,977 | 2,572 | 14,286 | |||
| Total liabilities | 554,991 | 575,017 | 588,080 | |||
| Common stock | 41,321 | 41,508 | 41,537 | |||
| Retained earnings | 14,043 | 18,024 | 19,512 | |||
| Accumulated other comprehensive income | 1,484 | 1,818 | 1,707 | |||
| Shareholders’ equity | 56,848 | 61,350 | 62,756 | |||
| Total liabilities & equity | 611,839 | 636,367 | 650,836 | |||
| Consolidated Income Statement ($000s) (Unaudited) | ||||||
| Quarter Ended | ||||||
| 03/31/12 | 12/31/12 | 03/31/13 | ||||
| Securities income | 1,346 | 1,017 | 769 | |||
| Loan income | 4,728 | 5,035 | 4,967 | |||
| Other interest income | 17 | 14 | 18 | |||
| Total interest income | 6,091 | 6,066 | 5,754 | |||
| Deposit interest expense | 1,821 | 1,697 | 1,628 | |||
| Other interest expense | 338 | 341 | 308 | |||
| Total interest expense | 2,159 | 2,038 | 1,936 | |||
| Net interest income | 3,932 | 4,028 | 3,818 | |||
| Provision for loan losses | 570 | 744 | 134 | |||
| Net interest income after provision | 3,362 | 3,284 | 3,684 | |||
| Service charges and fees | 265 | 223 | 234 | |||
| Gain on loans sold | 1,750 | 3,656 | 3,011 | |||
| Other-than-temporary impairment loss | - | (47) | (34) | |||
| Gain (Loss) on securities | 40 | (2) | (185) | |||
| Loss on asset disposals | (110) | (56) | (79) | |||
| Other non-interest income | 93 | 163 | 198 | |||
| Total non-interest income | 2,038 | 3,937 | 3,145 | |||
| Salaries and employee benefits | 1,991 | 2,462 | 2,379 | |||
| Marketing, advertising and promotion | 391 | 353 | 372 | |||
| Consulting and professional fees | 328 | 385 | 653 | |||
| Data processing | 230 | 215 | 214 | |||
| Loan expenses | 185 | 228 | 80 | |||
| Premises and equipment | 412 | 683 | 401 | |||
| Deposit insurance premiums | 98 | 114 | 112 | |||
| Other non-interest expense | 247 | 453 | 435 | |||
| Total non-interest expense | 3,882 | 4,893 | 4,646 | |||
| Income before taxes | 1,518 | 2,328 | 2,183 | |||
| Tax provision | 372 | 774 | 695 | |||
| Net Income | 1,146 | 1,554 | 1,488 | |||
| Weighted average shares | 1,909,723 | 1,916,078 | 1,924,148 | |||
| Earnings Per Share | 0.60 | 0.81 | 0.77 | |||
| NON RECURRING ITEMS (pre-tax) | ||||||
| NASDAQ listing expenses | 193 | |||||
| Loss on rebalance of securities portfolio | 185 | |||||
| 378 | ||||||
