First Internet Bancorp [INBK] Filings

10-Q 1 inbk-20240930.htm 10-Q inbk-20240930

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 September 30, 2024


☐			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.)

8701 East 116th Street Fishers, IN						46038
(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 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 November 1, 2024, the registrant had 8,667,894 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 (the “Company,” “we,” “our,” or “us”) regarding our business strategies, intended results and future performance, including without limitation statements concerning 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 preceded by terms such as “acquire”, “anticipate,” “attempt,” “believe,” “can,” “change,” “continue,” “could,” “decline,” “decrease,” “differentiate,” “diversify,” “driving,” “effort,” “emerging,” “estimate,” “expect,” “grow,” “increase,” “intend,” “likely,” “may,” “objective,” “plan,” “position,” “potential,” “preliminary,” “pursue,” “remain,” “retain,” “should,” “slowest,” “succeed,” “will,” “win,” “would” or other similar expressions. Such statements are subject to certain risks and uncertainties, including without limitation: 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; changes in bank regulatory conditions, policies or programs, whether arising as a result of new legislation or regulatory initiatives, that could lead to restrictions on activities of banks generally or First Internet Bank (the “Bank”) in particular; changes in the enforcement and interpretation of applicable laws and regulations by governmental and self-regulatory agencies, which could require us to change certain business practices, increase compliance risk, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses; more restrictive regulatory capital requirements; increased costs, including deposit insurance premiums; increased regulatory scrutiny resulting from bank failures; risks related to potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings or enforcement actions; the risk that we may be required to make substantial expenditures to keep pace with regulatory initiatives and the rapid technology changes in the financial services market; other 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 credit losses, and the value and salability of the real estate 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 dependence on capital distributions from 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 credit losses or to write-down assets; regulation or prohibition of certain income producing activities or changes in the secondary market for loans and other products; 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; 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 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)


	September 30, 2024		December 31, 2023
	(Unaudited)
Assets
Cash and due from banks	$	6,539	$	8,269
Interest-bearing deposits	705,940		397,629
Total cash and cash equivalents	712,479		405,898

Securities available-for-sale, at fair value (amortized cost of $605,722 and $513,315 in 2024 and 2023, respectively)	575,257		474,855
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $0.2 million and $0.3 million in 2024 and 2023, respectively, (fair value of $249,618 and $207,572 in 2024 and 2023, respectively)	263,320		227,153
Loans held-for-sale	32,996		22,052
Loans	4,035,880		3,840,220
Allowance for credit losses - loans	(45,721)		(38,774)
Net loans	3,990,159		3,801,446
Accrued interest receivable	27,750		26,746
Federal Home Loan Bank of Indianapolis stock	28,350		28,350
Cash surrender value of bank-owned life insurance	41,111		40,882
Premises and equipment, net	72,150		73,463
Goodwill	4,687		4,687
Servicing asset, at fair value	14,662		10,567
Other real estate owned	251		375
Accrued income and other assets	60,087		51,098
Total assets	$	5,823,259	$	5,167,572
Liabilities and Shareholders’ Equity
Liabilities
Noninterest-bearing deposits	$	111,591	$	123,464
Interest-bearing deposits	4,686,119		3,943,509
Total deposits	4,797,710		4,066,973
Advances from Federal Home Loan Bank	515,000		614,934
Subordinated debt, net of unamortized debt issuance costs of $1,929 and $2,162 in 2024 and 2023, respectively	105,071		104,838
Accrued interest payable	2,808		3,848
Accrued expenses and other liabilities	17,541		14,184
Total liabilities	5,438,130		4,804,777
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; 8,667,894 and 8,644,451 shares issued and outstanding in 2024 and 2023, respectively	185,631		184,700
Nonvoting common stock, no par value; 86,221 shares authorized; issued and outstanding - none	—		—
Retained earnings	223,824		207,470
Accumulated other comprehensive loss	(24,326)		(29,375)
Total shareholders’ equity	385,129		362,795
Total liabilities and shareholders’ equity	$	5,823,259	$	5,167,572

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				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Interest Income
Loans	$	59,792	$	48,898	$	172,321	$	139,647
Securities – taxable	6,953		4,301		19,123		11,742
Securities – non-taxable	1,042		912		2,981		2,570
Other earning assets	7,203		8,904		19,691		19,211
Total interest income	74,990		63,015		214,116		173,170
Interest Expense
Deposits	47,415		40,339		134,039		102,285
Other borrowed funds	5,810		5,298		16,251		15,788
Total interest expense	53,225		45,637		150,290		118,073
Net Interest Income	21,765		17,378		63,826		55,097
Provision for credit losses - loans	3,858		1,850		10,360		11,976
Benefit for credit losses - debt securities held to maturity	(29)		(15)		(93)		(15)
(Benefit) Provision for credit losses - off-balance sheet commitments	(439)		111		(398)		1,098
Net Interest Income After Provision for Credit Losses	18,375		15,432		53,957		42,038
Noninterest Income
Service charges and fees	245		208		711		635
Loan servicing revenue	1,570		1,064		4,363		2,699
Loan servicing asset revaluation	(846)		(257)		(2,109)		(670)
Mortgage banking activities	—		—		—		76



Gain on sale of loans	9,933		5,569		24,761		14,498


Other	1,127		823		3,683		1,486
Total noninterest income	12,029		7,407		31,409		18,724
Noninterest Expense
Salaries and employee benefits	13,456		11,767		37,714		34,267
Marketing, advertising and promotion	548		500		1,893		2,049
Consulting and professional services	902		552		2,777		2,189
Data processing	675		701		1,845		1,880
Loan expenses	1,524		1,336		4,566		4,385
Premises and equipment	2,918		2,315		8,898		7,753
Deposit insurance premium	1,219		1,067		3,536		2,546

Other	1,552		1,518		4,924		4,311
Total noninterest expense	22,794		19,756		66,153		59,380
Income Before Income Taxes	7,610		3,083		19,213		1,382
Income Tax Provision (Benefit)	620		(326)		1,267		(2,892)
Net Income	$	6,990	$	3,409	$	17,946	$	4,274
Income Per Share of Common Stock
Basic	$	0.80	$	0.39	$	2.07	$	0.48
Diluted	$	0.80	$	0.39	$	2.05	$	0.48
Weighted-Average Number of Common Shares Outstanding
Basic	8,696,634		8,744,385		8,688,304		8,889,532
Diluted	8,768,731		8,767,217		8,756,544		8,907,748
Dividends Declared Per Share	$	0.06	$	0.06	$	0.18	$	0.18

See Notes to Condensed Consolidated Financial Statements

First Internet Bancorp

Condensed Consolidated Statements of Comprehensive Income (Loss) – Unaudited

(Amounts in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income	$	6,990	$	3,409	$	17,946	$	4,274
Other comprehensive income (loss)
Securities available-for-sale
Net unrealized holding gains (losses) recorded within other comprehensive income (loss) before income tax	10,620		(11,308)		7,995		(11,006)

Income tax provision (benefit)	2,442		(2,600)		1,841		(2,537)
Net effect on other comprehensive income (loss)	8,178		(8,708)		6,154		(8,469)

Securities held-to-maturity

Amortization of net unrealized holding losses on securities transferred from available-for-sale to held-to-maturity	185		173		607		537
Income tax provision	46		45		149		140
Net effect on other comprehensive income	139		128		458		397

Cash flow hedges
Net unrealized holding (losses) gains on cash flow hedging derivatives recorded within other comprehensive income (loss) before income tax	(2,670)		740		(2,030)		664
Income tax (benefit) provision	(614)		171		(467)		153
Net effect on other comprehensive (loss) income	(2,056)		569		(1,563)		511

Total other comprehensive income (loss)	6,261		(8,011)		5,049		(7,561)
Comprehensive income (loss)	$	13,251	$	(4,602)	$	22,995	$	(3,287)

See Notes to Condensed Consolidated Financial Statements

First Internet Bancorp

Condensed Consolidated Statements of Changes in Shareholders’ Equity - Unaudited

Nine Months Ended September 30, 2024 and 2023

(Amounts in thousands except share and per share data)


	Voting and Nonvoting Common Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
Balance, January 1, 2024	$	184,700	$	207,470	$	(29,375)	$	362,795

Net income	—		17,946		—		17,946

Other comprehensive income	—		—		5,049		5,049
Dividends declared ($0.18 per share)	—		(1,592)		—		(1,592)

Recognition of the fair value of share-based compensation	1,356		—		—		1,356
Repurchased shares of common stock (10,500)	(283)		—		—		(283)
Excise tax on repurchase of common stock	(3)		—		—		(3)
Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units	3		—		—		3
Common stock redeemed for the net settlement of share-based awards	(142)		—		—		(142)

Balance, September 30, 2024	$	185,631	$	223,824	$	(24,326)	$	385,129

Balance, January 1, 2023	$	192,935	$	205,675	$	(33,636)	$	364,974
Impact of adoption of new accounting standards 1	—		(4,491)		—		(4,491)
Net income	—		4,274		—		4,274

Other comprehensive loss	—		—		(7,561)		(7,561)
Dividends declared ($0.18 per share)	—		(1,602)		—		(1,602)

Recognition of the fair value of share-based compensation	873		—		—		873
Repurchased shares of common stock (462,525)	(8,535)		—		—		(8,535)
Excise tax on repurchase of common stock	(85)		—		—		(85)
Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units	3		—		—		3
Common stock redeemed for the net settlement of share-based awards	(106)		—		—		(106)

Balance, September 30, 2023	$	185,085	$	203,856	$	(41,197)	$	347,744

1 Reflects the impact of adopting Accounting Standards Update (“ASU”) 2016-13.

See Notes to Condensed Consolidated Financial Statements

First Internet Bancorp

Condensed Consolidated Statements of Changes in Shareholders’ Equity - Unaudited

Three Months Ended September 30, 2024 and 2023

(Amounts in thousands except share and per share data)


	Voting and Nonvoting Common Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
Balance, July 1, 2024	185,175		$	217,365	$	(30,587)	$	371,953

Net income	—		6,990		—		6,990

Other comprehensive income	—		—		6,261		6,261
Dividends declared ($0.06 per share)	—		(531)		—		(531)

Recognition of the fair value of share-based compensation	454		—		—		454


Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units	2		—		—		2


Balance, September 30, 2024	$	185,631	$	223,824	$	(24,326)	$	385,129

Balance, July 1, 2023	$	186,545	$	200,973	$	(33,186)	$	354,332

Net income	—		3,409		—		3,409

Other comprehensive loss	—		—		(8,011)		(8,011)
Dividends declared ($0.06 per share)	—		(526)		—		(526)

Recognition of the fair value of share-based compensation	386		—		—		386
Repurchased shares of common stock (97,834)	(1,828)						(1,828)
Excise tax on repurchase of common stock	(18)		—		—		(18)


Balance, September 30, 2023	$	185,085	$	203,856	$	(41,197)	$	347,744

See Notes to Condensed Consolidated Financial Statements

First Internet Bancorp

Condensed Consolidated Statements of Cash Flows – Unaudited

(Amounts in thousands)


	Nine Months Ended September 30,
	2024		2023
Operating Activities
Net income	$	17,946	$	4,274
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	6,030		3,019
Increase in cash surrender value of bank-owned life insurance	(817)		(760)
Provision for credit losses	9,869		13,059
Share-based compensation expense	1,356		873


Loans originated for sale	(366,948)		(248,622)
Proceeds from sale of loans	374,561		249,296
Gain on loans sold	(24,761)		(14,969)
Gain on sale of other real estate owned	(31)		—
Decrease in fair value of loans held-for-sale	—		143
Loss on derivatives	768		362
Gain on bank-owned life insurance	(149)		—

Loan servicing asset revaluation	2,109		670

Net change in accrued income and other assets	(3,525)		(4,385)
Net change in accrued expenses and other liabilities	2,739		(3,584)
Net cash provided by (used in) operating activities	19,147		(624)
Investing Activities
Net loan activity, excluding purchases	(117,719)		(51,677)
Proceeds from sale of other real estate owned	406		—

Maturities and calls of securities available-for-sale	54,418		39,749

Purchase of securities available-for-sale	(148,019)		(110,749)
Maturities and calls of securities held-to-maturity	18,426		14,236
Purchase of securities held-to-maturity	(53,977)		(53,573)



Purchase of premises and equipment	(2,097)		(4,970)
Proceeds from bank-owned life insurance	737		—

Loans purchased	(81,605)		(194,318)

Other investing activities	(11,857)		(3,442)
Net cash used in investing activities	(341,287)		(364,744)
Financing Activities
Net increase in deposits	730,737		640,370

Cash dividends paid	(1,580)		(1,623)


Repurchase of common stock	(283)		(8,620)
Proceeds from advances from Federal Home Loan Bank	430,000		415,000
Repayment of advances from Federal Home Loan Bank	(530,000)		(415,000)

Other, net	(153)		(106)
Net cash provided by financing activities	628,721		630,021
Net Increase in Cash and Cash Equivalents	306,581		264,653
Cash and Cash Equivalents, Beginning of Period	405,898		256,552
Cash and Cash Equivalents, End of Period	$	712,479	$	521,205
Supplemental Disclosures


Cash paid during the period for interest	151,330		118,019
Cash paid during the period for taxes	492		864
Loans transferred to other real estate owned	251		106

Cash dividends declared, paid in subsequent period	520		520
Securities purchased during the period, settled in subsequent period	—		2,632

See Notes to Condensed Consolidated Financial Statements

First Internet Bancorp

Notes to Condensed Consolidated Financial Statements – Unaudited

(Table amounts in thousands except share and per share data)

Note 1: Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information or footnotes necessary for a complete presentation of financial condition, results of operations, changes in shareholders’ equity, or cash flows in accordance with GAAP. In our opinion, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results expected for the year ending December 31, 2024 or any other period. The September 30, 2024 condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the First Internet Bancorp Annual Report on Form 10-K for the year ended December 31, 2023.

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, or assumptions that could have a material effect on the carrying value of certain assets and liabilities. These estimates, judgments, and assumptions affect the amounts reported in the condensed consolidated financial statements and the disclosures provided. The determination of the allowance for credit losses, income taxes, valuations and impairments of investment securities and goodwill, as well as fair value measurements of derivatives and loans held-for-sale are highly dependent upon management’s estimates, judgments, and assumptions, and changes in any of these could have a significant impact on the condensed consolidated financial statements.

The condensed consolidated financial statements include the accounts of First Internet Bancorp (the “Company”), its wholly owned subsidiary, First Internet Bank of Indiana (the “Bank”), and the Bank’s three wholly owned subsidiaries, First Internet Public Finance Corp., JKH Realty Services, LLC and SPF15, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations, and cash flows of the Company.

Note 2: Earnings Per Share

Earnings per share of common stock are based on the weighted-average number of basic shares and dilutive shares outstanding during the period.

The following is a reconciliation of the weighted-average common shares for the basic and diluted earnings per share computations for the three and nine months ended September 30, 2024 and 2023.


(dollars in thousands, except share and per share data)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Basic earnings per share
Net income	$	6,990	$	3,409	$	17,946	$	4,274
Weighted-average common shares	8,696,634		8,744,385		8,688,304		8,889,532
Basic earnings per common share	$	0.80	$	0.39	$	2.07	$	0.48
Diluted earnings per share

First Internet Bancorp [INBK] Filings
First Internet Bancorp [INBKZ] Filings
10-Q	[2024-11]
10-Q	[2024-08]
10-Q	[2024-05-08]
10-K	[2024-03-13]
10-Q	[2023-11-08]
10-Q	[2023-08-08]
10-Q	[2023-05-10]
10-K	[2023-03-14]
10-Q	[2022-11-09]
10-Q	[2022-08-09]
10-Q	[2022-05-09]
10-K	[2022-03-15]
10-Q	[2021-11-09]
10-Q	[2021-08-09]
10-Q	[2021-05-10]
10-K	[2021-03-15]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-08]
10-K	[2020-03-12]
10-Q	[2019-11-08]
10-Q	[2019-08-07]
10-Q	[2019-05-08]
10-K	[2019-03-14]
10-Q	[2018-11-09]
10-Q	[2018-08-08]
10-Q	[2018-05-08]
10-K	[2018-03-08]
10-Q	[2017-11-07]
10-Q	[2017-08-03]
10-Q	[2017-05-03]
10-K	[2017-03-14]
10-Q	[2016-11-07]
10-Q	[2016-08-02]
10-Q	[2016-05-04]
10-K	[2016-03-10]
10-Q	[2015-11-03]
10-Q	[2015-08-05]
10-Q	[2015-05-07]
10-K	[2015-03-13]
10-Q	[2014-11-12]
10-Q	[2014-08-12]
10-Q	[2014-05-14]
10-K	[2014-03-31]
10-Q	[2013-11-04]
S-1	[2013-09-30]
10-Q	[2013-08-14]
10-Q	[2013-05-15]
10-K	[2013-03-28]

First Internet Bancorp [INBK] Filings

First Internet Bancorp [INBKZ] Filings