First Internet Bancorp Reports Strong Earnings Growth in Second Quarter, Record First Half Results

  First Internet Bancorp Reports Strong Earnings Growth in Second Quarter,
  Record First Half Results

Business Wire

INDIANAPOLIS -- July 24, 2013

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 three months and six months ended June 30, 2013.

“We are reporting strong second quarter results,” said David Becker, Chairman
and CEO. “Year over year, second quarter net income rose 34%, our commercial
loan portfolio grew 66%, and non-interest income increased 76%.”

Highlights for the quarter ended June 30, 2013:

  *Net income was a record $1.71 million or $0.59 per diluted share in the
    second quarter 2013 compared with $1.28 million or $0.45 per diluted share
    in the second quarter 2012.
  *Return on average assets in second quarter 2013 increased to 1.07% from
    0.83% in the prior year’s second quarter, and return on average equity
    rose to 10.86% compared with 8.92% in second quarter 2012.
  *Total assets were $656.77 million at June 30, 2013, the highest in the
    company’s history, compared with $623.95 million at June 30, 2012.
  *Mortgage originations grew 25% to $232.54 million in second quarter 2013
    compared to $186.06 in the second quarter 2012.
  *The company’s second quarter dividend of $0.06, following the company’s
    3-for-2 stock split in second quarter 2013, was the equivalent of a 50%
    increase of its quarterly cash dividend paid in first quarter 2013.
  *First Internet Bancorp common stock was added to the Russell Microcap
    Index, the MSCI USA Micro Cap Index and the ABA NASDAQ Community Bank
    Index.

Highlights for the six months ended June 30, 2013:

  *For the six months ended June 30, 2013, net income was $3.20 million or
    $1.11 per diluted share, a company record for first half earnings.
  *Commercial real estate and commercial & industrial loan activity was
    strong, with $45.54 million in commercial loans closed in first half 2013
    compared with $26.21 million in first half 2012.
  *Total non-interest income, driven by gain on loans sold, rose to $6.89
    million in first half 2013 compared with $4.14 million in first half 2012.

“First Internet’s second quarter and first half results reflect the continuing
expansion of the bank and progress toward our goal of being a strong national
presence in retail and commercial banking,” said David Becker, Chairman and
CEO. “We have added experienced talent to our retail and commercial lending
teams and have also strengthened our finance and support teams to enhance
efficiency, risk management and regulatory compliance.”

Second Quarter Income Statement Reflects Year-Over-Year Growth in Interest and
Non-Interest Income

For the quarter ended June 30, 2013, net income was $1.71 million or $0.59 per
diluted share. Net interest income after provision for loan losses was $4.21
million in second quarter 2013, up 27% over second quarter 2012.

Total interest expense in second quarter 2013 declined to $1.92 million
compared with $2.16 million in second quarter 2012. The company held interest
rates on deposits steady as core deposits climbed, allowing the company to
reduce its use of higher-cost Federal Home Loan Bank borrowings. The company’s
average cost of funds was 1.35% in second quarter 2013, compared with 1.58% in
second quarter 2012.

Net interest margin increased to 2.78% at June 30, 2013 compared with 2.63% at
June 30, 2012. Loan growth, lower interest expense and management of the
company’s investment portfolio contributed to the increase.

Total non-interest income in second quarter 2013 increased 76% to $3.82
million over second quarter 2012. Gains on loans sold and secondary market
hedges contributed to the increase.

Total non-interest expense in second quarter 2013 was $5.62 million compared
with $3.80 million in second quarter 2012. Increased salaries and benefits
expense reflected continued investment in experienced talent, primarily in
mortgage lending and commercial banking. To support mortgage lending growth,
the company established a residential mortgage loan processing center in
Tempe, Arizona, and expanded facilities in the Indianapolis area.

Becker stated: “While we remain committed to our efficient and highly scalable
operating model with minimal reliance on brick and mortar facilities,
supporting current and future growth requires investments in quality people
and critical facilities.”

Balance Sheet, Deposit Growth, Loan Activity and Asset Quality Highlights

The company’s total assets of $656.77 million at June 30, 2013 demonstrated
steady year-over-year growth, up from $623.95 million at June 30, 2012. Total
deposits at June 30, 2013 were up 7.5%, to $561.16 million over the same
quarter in the prior year.

Net loans after allowance for loan losses were $360.80 million at June 30,
2013 compared with $341.57 million at June 30, 2012, with the portfolio
showing strong growth in commercial loans. Commercial loans comprised 35% of
the company’s total loan portfolio at June 30, 2013 compared with 22% at June
30, 2012. Commercial real estate loans increased 64% to $112.68 million at
June 30, 2013, compared with $68.90 million at June 30, 2012. Commercial &
industrial lending grew to $15.13 million at June 30, 2013, compared with
$8.12 million at June 30, 2012. The company’s commercial banking business,
which in the first half was augmented with cash management services and a
business credit card, continued to demonstrate gains.

Residential mortgage originations demonstrated positive year-over-year and
consecutive quarter trends. The total value of mortgages originated grew to
$232.54 million in second quarter 2013 compared with $186.06 million in the
second quarter 2012. Purchase mortgages accounted for 24% of the company’s
residential loan originations.

The company’s loan and asset quality remained strong, with non-performing
loans at June 30, 2013 declining to $2.89 million from $8.37 million at June
30, 2012. The ratio of non-performing loans to total assets was 0.71% in
second quarter 2013 compared with 2.19% in second quarter 2012.

Capital Position

The bank and holding company continue to exceed all regulatory capital
requirements, with a Tier 1 leverage ratio of 9.00% at the bank and 9.13% at
the holding company.

Outlook

Becker commented: “We have a robust pipeline for commercial loans. Somewhat
improved economic conditions seem to be having a positive impact on commercial
real estate lending opportunities, with higher levels of activity in
construction and income properties. First Internet’s C&I business is
performing well, and while we face considerable competition, we are committed
to making quality loans.”

About First Internet Bancorp

First Internet Bancorp (NASDAQ: 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.


First Internet Bancorp
Consolidated Balance Sheets (unaudited)
(in thousands)
                                                         
                                             June 30, 2013       June 30, 2012
                                                                 
Cash and due from banks                      1,355               1,344
Interest-bearing demand deposits             14,093              34,658
Total cash and cash equivalents              15,448              36,002
                                                                 
Interest bearing time deposits               2,500               -
Securities - AFS                             193,934             182,671
Loans held for sale                          42,271              34,960
                                                                 
Gross loans                                  362,983             343,340
Net deferred expenses                        3,344               3,954
Allowance for loan losses                    (5,527)             (5,727)
Net loans                                    360,800             341,567
                                                                 
Accrued interest receivable                  2,271               2,264
FHLB stock                                   2,943               2,943
Bank owned life insurance                    11,735              11,346
Goodwill                                     4,687               4,687
Other real estate owned                      5,156               750
Premises and equipment                       6,740               894
Other assets                                 8,280               5,861
                                                                 
Total assets                                 656,765             623,945
                                                                 
                                                                 
Non-interest bearing demand deposits         16,915              13,588
Interest bearing demand deposits             73,321              64,458
Savings and money market deposits            230,977             200,287
Time deposits                                239,949             243,692
Total deposits                               561,162             522,025
                                                                 
FHLB advances                                23,740              40,629
Subordinated debt                            2,745               -
Accrued interest payable                     100                 115
Accrued payroll and related expenses         1,469               1,140
Other liabilities                            6,371               1,786
Total liabilities                            595,587             565,695
                                                                 
                                                                 
Common stock                                 41,826              41,346
Retained earnings                            20,938              15,323
Accumulated other comprehensive              (1,586)             1,581
income / (loss)                                                 
Shareholders’ equity                         61,178              58,250
                                                                 
Total liabilities & equity                   656,765             623,945
                                                                 


First Internet Bancorp
Consolidated Statements of Income (unaudited)
(in thousands, except share data)
                                                         
                                             Quarter Ended
                                             June 30, 2013       June 30, 2012
                                                                 
Securities income                            1,277               1,320
Loan income                                  4,861               4,716
Other interest income                        21               19
Total interest income                        6,159               6,055
                                                                 
Deposit interest expense                     1,656               1,826
Other interest expense                       267              338
Total interest expense                       1,923               2,164
                                                                 
Net interest income                          4,236               3,891
                                                                 
Provision for loan losses                    24                  564
                                                                 
Net interest income after provision          4,212               3,327
                                                                 
Service charges and fees                     179                 166
Gain on loans sold                           2,249               2,034
Gain on secondary marketing hedge            1,208               -
Other-than-temporary impairment loss         -                   (92)
Loss on asset disposals                      (4)                 (31)
Other non-interest income                    186              98
Total non-interest income                    3,818               2,175
                                                                 
Salaries and employee benefits               2,846               1,929
Marketing, advertising and promotion         455                 341
Consulting and professional fees             561                 272
Data processing                              232                 238
Loan expenses                                285                 303
Premises and equipment                       715                 350
Deposit insurance premiums                   115                 121
Other non-interest expense                   415              241
Total non-interest expense                   5,624               3,795
                                                                 
Income before taxes                          2,406               1,707
                                                                 
Tax provision                                694              428
                                                                 
Net Income                                   1,712            1,279
                                                                 
Diluted weighted average shares              2,888,260           2,867,763
                                                                 
Diluted EPS                                  0.59                0.45
                                                                 


First Internet Bancorp
Consolidated Statements of Income (unaudited)
(in thousands, except share data)
                                                         
                                             Six Months Ended
                                             June 30, 2013       June 30, 2012
                                                                 
Securities income                            2,046               2,666
Loan income                                  9,903               9,513
Other interest income                        39               37
Total interest income                        11,988              12,216
                                                                 
Deposit interest expense                     3,284               3,646
Other interest expense                       575              677
Total interest expense                       3,859               4,323
                                                                 
Net interest income                          8,129               7,893
                                                                 
Provision for loan losses                    158                 1,134
                                                                 
Net interest income after provision          7,971               6,759
                                                                 
Service charges and fees                     338                 361
Gain on loans sold                           5,260               3,785
Gain on secondary marketing hedge            1,208               -
Other-than-temporary impairment loss         (34)                (92)
Loss on asset disposals                      (268)               (101)
Other non-interest income                    384              190
Total non-interest income                    6,888               4,143
                                                                 
Salaries and employee benefits               5,225               3,920
Marketing, advertising and promotion         827                 732
Consulting and professional fees             1,214               599
Data processing                              446                 468
Loan expenses                                365                 488
Premises and equipment                       1,116               762
Deposit insurance premiums                   227                 219
Other non-interest expense                   850              489
Total non-interest expense                   10,270              7,677
                                                                 
Income before taxes                          4,589            3,225
                                                                 
Tax provision                                1,389               800
                                                                 
Net Income                                   3,200            2,425
                                                                 
Diluted weighted average shares              2,887,207           2,866,174
                                                                 
Diluted EPS                                  1.11                0.85

Contact:

First Internet Bancorp
Nicole Lorch, 317-532-7906
investors@firstib.com