First Internet Bancorp (OTCQB:FIBP), 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 and year ended December 31, 2012.
“We achieved our goal of consistent earnings growth throughout the year,
continuing the strong trends of growing our mortgage origination
business and building nationwide visibility of the First Internet
franchise,” said David Becker, Chairman and CEO.
Highlights for the year ended December 31, 2012:
-
Net income increased to $5.61 million or $2.93 per diluted share, up
76% compared with $3.19 million or $1.67 per diluted share in 2011.
Net income for the fourth quarter was $1.55 million or $0.81 per
diluted share, compared with $1.06 million or $0.56 per diluted share
in fourth quarter 2011.
-
Return on average assets increased to 0.91% from 0.59% in the prior
year, and return on average equity rose to 9.56% in 2012 compared with
6.13% in 2011.
-
Total assets increased to $636.37 million, compared with $585.44
million at December 31, 2011. Commercial real estate and commercial &
industrial loan portfolios grew to $107.45 million compared with
$45.71 million at December 31, 2011.
-
Net interest income in 2012, primarily reflecting retail and
commercial loan growth and lower interest expense, was $15.59 million,
up 9% compared with net interest income of $14.32 million in 2011.
-
Non-interest income for the year ended December 31, 2012 was $11.74
million, compared with $3.56 million for the year ended December 31,
2011.
-
The company continued to build shareholder value, with tangible book
value at December 31, 2012 of $29.46 per share, compared with $26.57
per share at December 31, 2011, a 10.8% increase. In the fourth
quarter, the company paid a special dividend of $0.25, the first time
in company history.
-
The company filed a Form 10 with the SEC and applied to list its
common stock on the NASDAQ Capital Market.
“First Internet grew and diversified its sources of revenue while
retaining strong capital ratios, high credit quality, and our efficient
Internet banking model. We focused on increasing shareholder value in
2012 by strategically deploying resources to expand the First Internet
Bank franchise. We strengthened our leadership team and launched new
services.
“Beyond simply fulfilling our strategy to expand and diversify the
bank’s revenue stream, the success of our commercial banking initiative
exceeded our expectations as we more than doubled the size of our
commercial loan portfolio and built relationships to include business
checking and savings products to help drive down our cost of funds. We
are adding treasury management and ACH products and services to further
boost our fee income sources. We anticipate continued growth in
non-interest bearing commercial deposits which will contribute to the
reduction in our cost of funds.
“We are exploring options for rebalancing our available for sale
investment securities portfolio as we look to expand our margin. The
recent addition of Kay Whitaker as our chief financial officer will
greatly expand the company’s expertise in actively managing its
securities portfolio to maximize its yield, while mitigating risk to the
company.
“We maintained our focus on interest rate risk management by continuing
our practice of selling longer-term, lower-yielding, fixed-rate
mortgages to the secondary market, and adding high quality
adjustable-rate commercial and residential loans to our portfolio. This
positions the bank well for a rising interest rate environment in the
future.
“Our strong performance enabled First Internet Bancorp to generate
additional stockholder value and to pay a special dividend of $0.25 per
common share. We continued to invest in leading-edge technology to
support growth and efficiency, and increased strategic marketing
expenditures to drive more traffic to our website and loan sales staff.
We also continued to invest in experienced individuals to support growth
in mortgage and commercial services. We hired a veteran chief credit
officer and chief financial officer to our management ranks, and
expanded our board of directors with two new appointments.”
Edward A. Roebuck, previously a Senior Vice President and Chief Credit
Officer with National City Bank, joined First Internet Bank in August
2012 in the newly created position of Chief Credit Officer and Senior
Vice President. Kay Whitaker, who served as CFO at Central Indiana
Community Foundation and was named 2012 CFO of the Year in the
not-for-profit sector by the Indianapolis Business Journal,
joined First Internet Bank as Chief Financial Officer and Senior Vice
President in January 2013.
In November 2012, John K. Keach, Jr., the former President, CEO, and
Chairman of Indiana Community Bancorp and Indiana Bank & Trust Company,
and a former Director of the Federal Home Loan Bank of Indianapolis, was
appointed to the company’s board of directors. Ann Murtlow, a former
Director of the Federal Reserve Bank of Chicago and past President and
CEO of Indianapolis Power & Light Company from 2002 to 2011, also joined
First Internet Bancorp’s board in January 2013.
This press release is being issued concurrently with the filing of the
bank's Call Report for the fourth quarter of 2012 with the FDIC. The
2012 financial information is unaudited and is expected to be finalized
later in the quarter.
Income Statement Reflects Growth in Interest and Non-interest Income
Businesses
Net income in 2012 of $5.61 million was the highest annual income in the
company’s history, and fourth quarter net income of $1.55 million was a
company record for net income in a single quarter. For the year ended
December 31, 2012, net interest income after provision for loan losses
was $12.73 million, compared with $11.88 million in 2011. The growth in
net interest income for both periods reflected increased income from a
growing loan portfolio. Gross loans grew $22.69 million year-over-year;
however, the continued low interest rate environment kept total interest
income growth at a modest level.
As a result of the bank re-pricing accounts to reflect the continuing
low-interest rate environment, and a reduced use of wholesale deposits,
the bank lowered its total interest expense in 2012 to $8.53 million,
compared with $9.62 million in 2011. Deposit interest expense declined
13.2% for the year ended December 31, 2012 compared with 2011.
As noted in the highlight section, total non-interest income in fourth
quarter 2012 and full-year 2012 grew dramatically, primarily reflecting
gains on mortgages sold. Fourth quarter 2012 non-interest income was
$3.94 million, compared with $1.82 million in fourth quarter 2011.
“Our non-interest income reflects success in growing our mortgage
origination business from coast to coast,” said Becker. “We have a
strong loan pipeline and with our growing reputation and increasing
visibility on the Internet, we anticipate we’ll continue to win new loan
business. We will continue to add sales and support staff to our
mortgage lending team and will selectively add talent to our commercial
team to expand our CRE and C&I lending business lines.”
Total non-interest expense in 2012 was $16.68 million, compared with
$11.48 million in 2011. The increase primarily reflected increased
salaries and benefits as the company’s head count increased 31%,
primarily in mortgage lending and commercial banking. In 2012 the bank
upped its marketing expenditures (primarily web-based) to boost its
visibility and position among Internet mortgage referral sites. Expenses
in 2012 also included a one-time $400,000 restructuring expense.
Net interest margin was 2.65% during at December 31, 2012, compared with
2.76% in 2011. The bank’s average cost of funds was 1.56% in 2012,
compared with 2.00% in 2011. Becker explained that the decrease in the
bank’s mortgage backed securities portfolio contributed to the
compression in margin.
Balance Sheet, Deposit Growth and Asset Quality
The company’s total assets of $636.37 million at December 31, 2012
represented an all-time high for First Internet Bancorp. Net loans after
allowance for loan losses were $352.33 million, compared with $329.57
million at December 31, 2011.
The company grew total deposits to $530.69 million at December 31, 2012,
compared with $486.67 million at December 31, 2011, primarily reflecting
growth in interest bearing checking and savings accounts. Becker
explained the bank’s lack of brick and mortar facilities enables it to
attract core deposits with competitive rates to support its lending
activities. The company remains committed to further reducing the bank’s
cost of funds and expects to see an increase in non-interest bearing
deposit accounts through expanded business customer relationships.
A primary driver of loan growth was the bank’s commercial lending team.
CRE loans increased to $82.76 million in at December 31, 2012, compared
with $45.71 million in 2011. C&I lending, a new offering in fourth
quarter 2011, grew to $24.69 million during the year.
Non-performing loans at December 31, 2012 were $3.91 million, compared
with $8.62 million at December 31, 2011. Loans 30 to 89 days past due
declined to $1.17 million at December 31, 2012, compared with $3.36
million in the prior year.
“We believe the company’s strong credit, risk management and
underwriting practices will enable us to maintain low levels of
non-performing assets. Our business model provides for both geographic
and lending product type diversification, which we believe reduces our
dependence on a single banking marketplace,” said Ed Roebuck, the
company’s chief credit officer.
Becker added the company’s asset quality has been consistently higher
than many peers’. Non-performing plus past due loans as a percentage of
total assets declined to 0.87% at December 31, 2012, compared with 2.07%
at December 31, 2011. The allowance for loans and lease losses as a
percent of total loans was 1.63% at December 31, 2012, compared with
1.69% at December 31, 2011.
Capital Position
First Internet is well capitalized under regulatory capital guidelines,
with a tier 1 capital to average assets ratio of 8.77% at the bank and
8.89% at the holding company, with no TARP or SBLF obligations. The
total risk based capital ratio was 10.82% at the bank and 10.97% at the
holding company.
Outlook
Becker concluded: “We anticipate further growth in our national
residential mortgage origination business in 2013. The combination of
continued low interest rates and rising home values may provide for even
higher levels of mortgage refinancing activity during the year. As a
healthy and well-capitalized bank, we also continue to prudently grow
our loan portfolio, with a particular focus on commercial & industrial,
commercial real estate, and niche lending categories.
“Our focus on building shareholder value through retained earnings,
continued growth, and prudent risk management practices remains a top
priority. The company previously announced its application for listing
on the NASDAQ exchange and we expect trading on the exchange to commence
in first quarter 2013. We are excited about the company’s future and
look forward to continuing a strong dialogue with our loyal
shareholders.”
The company's listing application is subject to review and approval by
NASDAQ's listing qualifications department for compliance with all
NASDAQ Capital Market standards.
About First Internet Bancorp
First Internet Bancorp (OTCQB: 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
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: the Company's ability to meet all of the
requirements for listing on the NASDAQ Capital Market; 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.
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.
Financial Tables Follow
|
Consolidated Balance Sheet ($000s) (Unaudited)
|
|
|
|
|
|
|
|
|
|
December 31
|
|
|
|
2011
|
|
2012
|
|
|
|
|
|
|
Cash and due from banks
|
|
|
1,582
|
|
|
2,881
|
|
Interest-bearing deposits
|
|
|
33,196
|
|
|
29,632
|
|
Securities - AFS
|
|
|
149,270
|
|
|
156,693
|
|
Loans held for sale
|
|
|
45,091
|
|
|
63,234
|
|
|
|
|
|
|
|
Gross loans
|
|
|
331,805
|
|
|
354,490
|
|
Net deferred (fees)/expenses
|
|
|
3,421
|
|
|
3,671
|
|
Allowance for loan losses
|
|
|
(5,656
|
)
|
|
(5,833
|
)
|
Net loans
|
|
|
329,570
|
|
|
352,328
|
|
|
|
|
|
|
|
Accrued interest receivable
|
|
|
2,129
|
|
|
2,196
|
|
FHLB stock
|
|
|
2,943
|
|
|
2,943
|
|
Bank owned life insurance
|
|
|
8,161
|
|
|
11,539
|
|
Goodwill
|
|
|
4,687
|
|
|
4,687
|
|
Other real estate owned
|
|
|
1,511
|
|
|
3,666
|
|
Other assets
|
|
|
7,300
|
|
|
6,568
|
|
|
|
|
|
|
|
Total Assets
|
|
|
585,440
|
|
|
636,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing demand deposits
|
|
|
15,870
|
|
|
13,187
|
|
Interest bearing demand deposits
|
|
|
64,006
|
|
|
73,660
|
|
Savings and money market deposits
|
|
|
173,334
|
|
|
213,971
|
|
Time deposits
|
|
|
233,455
|
|
|
229,873
|
|
Total deposits
|
|
|
486,665
|
|
|
530,691
|
|
|
|
|
|
|
|
FHLB advances
|
|
|
40,573
|
|
|
40,686
|
|
Accrued interest payable
|
|
|
120
|
|
|
120
|
|
Accrued payroll and related expenses
|
|
|
1,153
|
|
|
948
|
|
Other liabilities
|
|
|
1,506
|
|
|
2,572
|
|
Total liabilities
|
|
|
530,017
|
|
|
575,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
41,306
|
|
|
41,508
|
|
Accumulated earnings
|
|
|
12,897
|
|
|
18,024
|
|
Accumulated OCI
|
|
|
1,220
|
|
|
1,818
|
|
Shareholder's equity
|
|
|
55,423
|
|
|
61,350
|
|
|
|
|
|
|
|
Total liabilities & equity
|
|
|
585,440
|
|
|
636,367
|
|
|
|
|
|
|
|
|
|
|
Consolidated Income Statement ($000s) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
December 31
|
|
|
|
2011
|
|
2012
|
|
|
|
|
|
|
Securities income
|
|
|
1,151
|
|
|
1,017
|
|
Loan income
|
|
|
4,764
|
|
|
5,035
|
|
Other interest income
|
|
|
20
|
|
|
14
|
|
Total interest income
|
|
|
5,935
|
|
|
6,066
|
|
|
|
|
|
|
|
Deposit interest expense
|
|
|
1,895
|
|
|
1,697
|
|
Other interest expense
|
|
|
342
|
|
|
341
|
|
Total interest expense
|
|
|
2,237
|
|
|
2,038
|
|
|
|
|
|
|
|
Net interest income
|
|
|
3,698
|
|
|
4,028
|
|
|
|
|
|
|
|
Provision for loan losses
|
|
|
947
|
|
|
744
|
|
|
|
|
|
|
|
Net interest income after provision
|
|
|
2,751
|
|
|
3,284
|
|
|
|
|
|
|
|
Service charges and fees
|
|
|
282
|
|
|
223
|
|
Gain on loans sold
|
|
|
2,263
|
|
|
3,656
|
|
Other-than-temporary impairment loss
|
|
|
(70
|
)
|
|
(47
|
)
|
Gain(Loss) on asset disposals
|
|
|
(729
|
)
|
|
(58
|
)
|
Other non-interest income
|
|
|
77
|
|
|
163
|
|
Total non-interest income
|
|
|
1,823
|
|
|
3,937
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
1,440
|
|
|
2,462
|
|
Marketing, advertising and promotion
|
|
|
399
|
|
|
353
|
|
Consulting and professional fees
|
|
|
264
|
|
|
385
|
|
Data processing
|
|
|
220
|
|
|
215
|
|
Loan expenses
|
|
|
154
|
|
|
228
|
|
Premises and equipment
|
|
|
345
|
|
|
683
|
|
Deposit insurance premiums
|
|
|
119
|
|
|
114
|
|
Other non-interest expense
|
|
|
238
|
|
|
453
|
|
Total non-interest expense
|
|
|
3,179
|
|
|
4,893
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
1,395
|
|
|
2,328
|
|
|
|
|
|
|
|
Tax provision
|
|
|
334
|
|
|
774
|
|
|
|
|
|
|
|
Net Income
|
|
|
1,061
|
|
|
1,554
|
|
|
|
|
|
|
|
Weighted average shares
|
|
|
1,908,323
|
|
|
1,916,078
|
|
|
|
|
|
|
|
EPS
|
|
|
0.56
|
|
|
0.81
|
|
|
|
|
|
|
|
|
|
|
Consolidated Income Statement ($000s) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31
|
|
|
|
2011
|
|
2012
|
|
|
|
|
|
|
Securities income
|
|
|
5,128
|
|
|
4,745
|
|
Loan income
|
|
|
18,752
|
|
|
19,303
|
|
Other interest income
|
|
|
64
|
|
|
69
|
|
Total interest income
|
|
|
23,944
|
|
|
24,117
|
|
|
|
|
|
|
|
Deposit interest expense
|
|
|
8,266
|
|
|
7,172
|
|
Other interest expense
|
|
|
1,355
|
|
|
1,360
|
|
Total interest expense
|
|
|
9,621
|
|
|
8,532
|
|
|
|
|
|
|
|
Net interest income
|
|
|
14,323
|
|
|
15,585
|
|
|
|
|
|
|
|
Provision for loan losses
|
|
|
2,440
|
|
|
2,852
|
|
|
|
|
|
|
|
Net interest income after provision
|
|
|
11,883
|
|
|
12,733
|
|
|
|
|
|
|
|
Service charges and fees
|
|
|
1,157
|
|
|
942
|
|
Gain on loans sold
|
|
|
3,690
|
|
|
10,647
|
|
Other-than-temporary impairment loss
|
|
|
(626
|
)
|
|
(252
|
)
|
Gain(Loss) on asset disposals
|
|
|
(968
|
)
|
|
(45
|
)
|
Other non-interest income
|
|
|
306
|
|
|
452
|
|
Total non-interest income
|
|
|
3,559
|
|
|
11,744
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
5,311
|
|
|
8,529
|
|
Marketing, advertising and promotion
|
|
|
936
|
|
|
1,362
|
|
Consulting and professional fees
|
|
|
777
|
|
|
1,422
|
|
Data processing
|
|
|
915
|
|
|
897
|
|
Loan expenses
|
|
|
526
|
|
|
1,097
|
|
Premises and equipment
|
|
|
1,481
|
|
|
1,775
|
|
Deposit insurance premiums
|
|
|
727
|
|
|
455
|
|
Other non-interest expense
|
|
|
810
|
|
|
1,140
|
|
Total non-interest expense
|
|
|
11,483
|
|
|
16,677
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
3,959
|
|
|
7,800
|
|
|
|
|
|
|
|
Tax provision
|
|
|
773
|
|
|
2,194
|
|
|
|
|
|
|
|
Net Income
|
|
|
3,186
|
|
|
5,606
|
|
|
|
|
|
|
|
Weighted average shares
|
|
|
1,906,289
|
|
|
1,912,910
|
|
|
|
|
|
|
|
EPS
|
|
|
1.67
|
|
|
2.93
|
|