First Internet Bancorp Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow

inbk-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended June 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From ________ to ________.

Commission File Number 001-35750


First Internet Bancorp
(Exact Name of Registrant as Specified in Its Charter)


Indiana						20-3489991
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

11201 USA Parkway Fishers, IN						46037
(Address of Principal Executive Offices)						(Zip Code)


			(317) 532-7900
			(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Common Stock, without par value

INBK

The Nasdaq Stock Market LLC

6.0% Fixed to Floating Subordinated Notes due 2026

INBKL

The Nasdaq Stock Market LLC

6.0% Fixed to Floating Subordinated Notes due 2029

INBKZ

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ¨			Accelerated Filer þ
Non-accelerated Filer ¨			Smaller Reporting Company ☑
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of July 31, 2020, the registrant had 9,799,047 shares of common stock issued and outstanding.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the federal securities laws. These statements are not historical facts, but rather statements based on the current expectations of First Internet Bancorp and its consolidated subsidiaries (“we,” “our,” “us” or the “Company”) regarding its business strategies, intended results and future performance. Forward-looking statements are generally preceded by terms such as “anticipate,” “attempt,” “believe,” “can,” “continue,” “could,” “effort,” “estimate,” “expect,” “indicate,” “intend,” “likely,” “may,” “objective,” “optimistic,” “pending,” “plan,” “position,” “potential,” “preliminary,” “remain,” “should,” “will,” “would” and 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. The COVID-19 pandemic crisis is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects remains uncertain. Continued deterioration in general business and economic conditions, including further increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Other factors that may cause such differences include: 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 we own or that is the collateral for our loans; failures or breaches of or interruptions in the communication and information systems on which we rely to conduct our business that could reduce our revenues, increase our costs or lead to disruptions in our business; our plans to grow our commercial real estate, commercial and industrial, public finance, U.S. Small Business Administration and healthcare finance loan portfolios, which may carry greater risks of non-payment or other unfavorable consequences; our dependence on capital distributions from First Internet Bank of Indiana (the “Bank”); results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our allowance for loan losses or to write-down assets; changing bank regulatory conditions, policies or programs, whether arising as new legislation or regulatory initiatives, that could lead to restrictions on activities of banks generally, or the Bank in particular; more restrictive regulatory capital requirements; increased costs, including deposit insurance premiums; regulation or prohibition of certain income producing activities or changes in the secondary market for loans and other products; changes in market rates and prices that may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our balance sheet; our liquidity requirements being adversely affected by changes in our assets and liabilities; the effect of legislative or regulatory developments, including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial services industry; competitive factors among financial services organizations, including product and pricing pressures and our ability to attract, develop and retain qualified banking professionals; execution of future acquisition, reorganization or disposition transactions, including without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings and other anticipated benefits from such transactions; changes in applicable tax laws; the growth and profitability of noninterest or fee income being less than expected; the loss of any key members of senior management; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the Securities and Exchange Commission (the “SEC”), the Public Company Accounting Oversight Board and other regulatory agencies; and the effect of fiscal and governmental policies of the United States federal government. Additional factors that may affect our results include those discussed in this Quarterly Report on Form 10-Q, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and our most recent Annual Report on Form 10-K under the heading “Risk Factors” and in other reports filed with the SEC. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The factors listed above could affect our financial performance and could cause our actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

Except as required by law, we do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

PART I

ITEM 1. FINANCIAL STATEMENTS

First Internet Bancorp

Condensed Consolidated Balance Sheets

(Amounts in thousands except share data)


	June 30, 2020		December 31, 2019
	(Unaudited)
Assets
Cash and due from banks	$	7,016	$	5,061
Interest-bearing deposits	491,603		322,300
Total cash and cash equivalents	498,619		327,361

Securities available-for-sale, at fair value (amortized cost of $590,046 and $546,640 in 2020 and 2019, respectively)	589,017		540,852
Securities held-to-maturity, at amortized cost (fair value of $69,152 and $62,560 in 2020 and 2019, respectively)	68,295		61,878
Loans held-for-sale, at fair value	38,813		56,097
Loans	2,973,674		2,963,547
Allowance for loan losses	(24,465)		(21,840)
Net loans	2,949,209		2,941,707
Accrued interest receivable	21,093		18,607
Federal Home Loan Bank of Indianapolis stock	25,650		25,650
Cash surrender value of bank-owned life insurance	37,474		37,002
Premises and equipment, net	23,939		14,630
Goodwill	4,687		4,687
Servicing asset, at fair value	2,522		2,481
Other real estate owned	2,065		2,065
Accrued income and other assets	63,217		67,066
Total assets	$	4,324,600	$	4,100,083
Liabilities and Shareholders’ Equity
Liabilities
Noninterest-bearing deposits	$	82,864	$	57,115
Interest-bearing deposits	3,297,925		3,096,848
Total deposits	3,380,789		3,153,963
Advances from Federal Home Loan Bank	514,913		514,910
Subordinated debt, net of unamortized debt issuance costs of $2,319 and $2,472 in 2020 and 2019, respectively	69,681		69,528
Accrued interest payable	1,073		3,767
Accrued expenses and other liabilities	50,433		53,002
Total liabilities	4,016,889		3,795,170
Commitments and Contingencies
Shareholders’ Equity
Preferred stock, no par value; 4,913,779 shares authorized; issued and outstanding - none	—		—
Voting common stock, no par value; 45,000,000 shares authorized; 9,799,047 and 9,741,800 shares issued and outstanding in 2020 and 2019, respectively	220,418		219,423
Nonvoting common stock, no par value; 86,221 shares authorized; issued and outstanding - none	—		—
Retained earnings	108,431		99,681
Accumulated other comprehensive loss	(21,138)		(14,191)
Total shareholders’ equity	307,711		304,913
Total liabilities and shareholders’ equity	$	4,324,600	$	4,100,083

See Notes to Condensed Consolidated Financial Statements

First Internet Bancorp

Condensed Consolidated Statements of Income – Unaudited

(Amounts in thousands except share and per share data)


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Interest Income
Loans	$	29,730	$	30,842	$	60,138	$	60,060
Securities – taxable	3,276		3,540		6,895		6,864
Securities – non-taxable	457		668		1,029		1,352
Other earning assets	759		1,794		2,404		3,567
Total interest income	34,222		36,844		70,466		71,843
Interest Expense
Deposits	15,763		17,147		32,971		32,533
Other borrowed funds	4,033		3,592		8,051		6,961
Total interest expense	19,796		20,739		41,022		39,494
Net Interest Income	14,426		16,105		29,444		32,349
Provision for Loan Losses	2,491		1,389		3,952		2,674
Net Interest Income After Provision for Loan Losses	11,935		14,716		25,492		29,675
Noninterest Income
Service charges and fees	182		225		394		461
Loan servicing revenue	255		—		506		—
Loan servicing asset revaluation	(90)		—		(269)		—
Mortgage banking activities	3,408		2,664		7,076		4,281



Gain (loss) on sale of loans	762		(66)		2,563		(170)
(Loss) gain on sale of securities	—		(458)		41		(458)
Other	456		1,089		873		1,712
Total noninterest income	4,973		3,454		11,184		5,826
Noninterest Expense
Salaries and employee benefits	7,789		6,642		15,563		12,963
Marketing, advertising and promotion	411		466		786		935
Consulting and professional services	932		835		2,109		1,649
Data processing	339		328		714		645
Loan expenses	399		292		998		606
Premises and equipment	1,602		1,497		3,227		2,997
Deposit insurance premium	435		747		920		1,302
Other	1,337		902		2,413		1,721
Total noninterest expense	13,244		11,709		26,730		22,818
Income Before Income Taxes	3,664		6,461		9,946		12,683
Income Tax (Benefit) Provision	(268)		340		(5)		866
Net Income	$	3,932	$	6,121	$	9,951	$	11,817
Income Per Share of Common Stock
Basic	$	0.40	$	0.60	$	1.02	$	1.16
Diluted	$	0.40	$	0.60	$	1.02	$	1.16
Weighted-Average Number of Common Shares Outstanding
Basic	9,768,227		10,148,285		9,798,528		10,182,770
Diluted	9,768,227		10,148,285		9,802,427		10,186,833
Dividends Declared Per Share	$	0.06	$	0.06	$	0.12	$	0.12

See Notes to Condensed Consolidated Financial Statements

First Internet Bancorp

Condensed Consolidated Statements of Comprehensive Income – Unaudited

(Amounts in thousands)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net income	$	3,932	$	6,121	$	9,951	$	11,817
Other comprehensive (loss) income
Net unrealized holding (losses) gains on securities available-for-sale recorded within other comprehensive (loss) income before income tax	(1,498)		3,667		4,801		10,577

Reclassification adjustment for gains (losses) realized	—		458		(41)		458
Net unrealized holding losses on cash flow hedging derivatives recorded within other comprehensive (loss) income before tax	(509)		(5,892)		(13,967)		(9,464)

Other comprehensive (loss) income before income tax	(2,007)		(1,767)		(9,207)		1,571
Income tax (benefit) provision	(735)		(357)		(2,260)		608
Other comprehensive (loss) income	(1,272)		(1,410)		(6,947)		963
Comprehensive income	$	2,660	$	4,711	$	3,004	$	12,780

See Notes to Condensed Consolidated Financial Statements

First Internet Bancorp

Condensed Consolidated Statements of Changes in Shareholders’ Equity - Unaudited

Six Months Ended June 30, 2020 and 2019

(Amounts in thousands except per share data)


	Voting and Nonvoting Common Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
Balance, January 1, 2020	$	219,423	$	99,681	$	(14,191)	$	304,913

Net income	—		9,951		—		9,951

Other comprehensive loss

Price	21.60	EPS	2
Shares	10	P/E	10
MCap	219	P/FCF	-5
Net Debt	-416	EBIT	101
TEV	-198	TEV/EBIT	-2
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-06
10-Q	2020-03-31	Filed 2020-05-08
10-K	2019-12-31	Filed 2020-03-12
10-Q	2019-09-30	Filed 2019-11-08
10-Q	2019-06-30	Filed 2019-08-07
10-Q	2019-03-31	Filed 2019-05-08
10-K	2018-12-31	Filed 2019-03-14
10-Q	2018-09-30	Filed 2018-11-09
10-Q	2018-06-30	Filed 2018-08-08
10-Q	2018-03-31	Filed 2018-05-08
10-K	2017-12-31	Filed 2018-03-08
10-Q	2017-09-30	Filed 2017-11-07
10-Q	2017-06-30	Filed 2017-08-03
10-Q	2017-03-31	Filed 2017-05-03
10-K	2016-12-31	Filed 2017-03-14
10-Q	2016-09-30	Filed 2016-11-07
10-Q	2016-06-30	Filed 2016-08-02
10-Q	2016-03-31	Filed 2016-05-04
10-K	2015-12-31	Filed 2016-03-10
10-Q	2015-09-30	Filed 2015-11-03
10-Q	2015-06-30	Filed 2015-08-05
10-Q	2015-03-31	Filed 2015-05-07
10-K	2014-12-31	Filed 2015-03-13
10-Q	2014-09-30	Filed 2014-11-12
10-Q	2014-06-30	Filed 2014-08-12
10-Q	2014-03-31	Filed 2014-05-14
10-K	2013-12-31	Filed 2014-03-31
10-Q	2013-09-30	Filed 2013-11-04
10-Q	2013-06-30	Filed 2013-08-14
10-Q	2013-03-31	Filed 2013-05-15
10-K	2012-12-31	Filed 2013-03-28

8-K	2020-09-08	Regulation FD, Exhibits
8-K	2020-07-27	Regulation FD, Exhibits
8-K	2020-07-22	Earnings, Exhibits
8-K	2020-06-16
8-K	2020-05-22
8-K	2020-05-18
8-K	2020-04-22
8-K	2020-03-30
8-K	2020-03-17
8-K	2020-03-16
8-K	2020-02-05
8-K	2020-01-27
8-K	2020-01-22
8-K	2019-12-17
8-K	2019-11-01
8-K	2019-10-23
8-K	2019-09-17
8-K	2019-07-29
8-K	2019-07-24
8-K	2019-06-18
8-K	2019-06-12
8-K	2019-06-05
8-K	2019-05-28
8-K	2019-05-21
8-K	2019-05-20
8-K	2019-05-20
8-K	2019-04-24
8-K	2019-03-19
8-K	2019-01-29
8-K	2019-01-23
8-K	2019-01-04
8-K	2018-12-19
8-K	2018-12-18
8-K	2018-11-06
8-K	2018-10-24
8-K	2018-09-18
8-K	2018-07-30
8-K	2018-07-19
8-K	2018-06-19
8-K	2018-06-11
8-K	2018-06-07
8-K	2018-06-06
8-K	2018-05-22
8-K	2018-05-21
8-K	2018-05-17
8-K	2018-04-19
8-K	2018-03-20
8-K	2018-01-30
8-K	2018-01-18
8-K	2018-01-10

EX-31.1	ex311-2020q2.htm
EX-31.2	ex312-2020q2.htm
EX-32.1	ex321-2020q2.htm

INBK 10Q Quarterly Report

First Internet Bancorp Earnings 2020-06-30