First Internet Bancorp Reports Third Quarter, Nine Month 2013 Results: Significant Growth in Loans, Deposits and Total Assets

  First Internet Bancorp Reports Third Quarter, Nine Month 2013 Results:
  Significant Growth in Loans, Deposits and Total Assets

Business Wire

INDIANAPOLIS -- October 25, 2013

First Internet Bancorp (NASDAQ: INBK), parent company of First Internet Bank
(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 nine months ended September 30, 2013.

“We are pleased with the significant progress we have made on loan, deposit
and asset growth, particularly on the commercial side of our business,” said
David Becker, Chairman and CEO. “Our goal is to continue to grow commercial
loans and deposits while also growing our national retail business. As
expected, our mortgage banking unit was not immune to the increase in interest
rates which caused a reduction in our mortgage originations and spreads over
the last three months. We have made significant progress in shifting our focus
to purchase loans versus refinancings.”

Highlights for the quarter ended September 30, 2013:

  *Total assets were a record $738.52 million at September 30, 2013 compared
    with $627.68 million at September 30, 2012, up 18%.
  *Total loans excluding those held for sale were $434.17 million at
    September 30, 2013 compared with $348.84 million at September 30, 2012, an
    increase of 24%. Commercial loans totaled $168.40 million at September 30,
    2013 compared with $89.08 million at September 30, 2012, an 89% increase.
    Commercial Real Estate loans increased 55% and Commercial and Industrial
    loans increased 338%.
  *Total deposits were $636.65 million at September 30, 2013 compared with
    $522.66 million at September 30, 2012, up 22%.
  *Net interest income increased 13% in the quarter ending September 30, 2013
    to $4.36 million compared with $3.86 million for the quarter ending
    September 30, 2012.
  *Net income was $727,000 or $0.25 per diluted share in third quarter 2013
    compared with $1.63 million or $0.57 per diluted share in third quarter
    2012. The decrease in net income for the quarter was primarily attributed
    to the decline in revenue from the company’s mortgage banking operations.

Highlights for the nine months ended September 30, 2013:

  *Net interest income was $12.48 million compared with $11.75 million for
    the prior year period, an increase of 6%.
  *Total non-interest income rose to $8.35 million compared with $7.61
    million for the prior year period, an increase of 10%.
  *For the first nine months of 2013, net income was $3.93 million or $1.36
    per diluted share compared with $4.05million or $1.41 per diluted share
    for the first nine months of 2012.

“Interest rate fluctuations affected all national mortgage lenders this
quarter, and we too experienced the slowdown in mortgage refinancing activity
that was triggered by increased interest rates,” Becker said. “To reduce our
sensitivity to rate adjustments, our mortgage banking unit has made
significant progress during the quarter on transitioning from a
refinance-based national mortgage origination platform to becoming a preferred
home purchase lender. During this quarter, 51% of the mortgages we closed were
for home purchases, compared to 12% in third quarter 2012.”

Becker also noted, “Our commercial lending teams continue to have great
success in growing their loan portfolios by increasing the number and types of
borrowers while achieving a balanced and diversified mix of loans. Our
expanding loan portfolio fuels growth in interest income and non-interest
income. Additionally, our teams are focused on building non-interest bearing
deposit account relationships, which not only offers the company an attractive
low-cost source of funding but also demonstrates our ability to build more
robust banking relationships.”

Third Quarter Income Statement Highlights

For the quarter ended September 30, 2013, net interest income was $4.36
million, up 13% from $3.86 million in third quarter 2012. The increase in net
interest income is a result of both an increase in interest income from loan
growth and a decrease in interest expense.

“We have taken measured steps to grow the balance sheet in ways that will
yield a positive outcome in net interest income in future periods,” Becker
said. “Our significant loan growth in the third quarter will lead to expanded
interest income, while continued deposit repricing will have a favorable
impact on interest expense.”

Total noninterest expense in third quarter 2013 was $5.14 million compared
with $4.11 million in third quarter 2012. Increased salaries and benefits
expense reflected continued investment in experienced talent in commercial
banking, compliance, finance and mortgage lending.

Net income was $727,000 or $0.25 per diluted share compared with $1.63 million
or $0.57 per diluted share for the quarter September 30, 2012. The decrease in
net income was attributed to the decrease in revenue from mortgage banking
activities. Revenue from mortgage banking activities decreased from $3.21
million for the quarter ended September 30, 2012 to $1.30 million for the
quarter ended September 30, 2013.

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

The company’s total assets were $738.52 million at September 30, 2013, up 18%
from $627.68 million at September 30, 2012. Total deposits were a record
$636.65 million at September 30, 2013 compared with $522.66 million at
September 30, 2012. Loans receivable after allowance for loan losses were
$434.17 million at September 30, 2013 compared with $348.84 million at
September 30, 2012, with the portfolio reflecting the strong growth in
commercial lending.

Commercial real estate loans receivable were $121.03 million at September 30,
2013 compared with $78.27 million a year ago, and commercial and industrial
loans receivable totals grew to $47.37 million compared with $10.81 million a
year ago. Commercial loans comprised 39% of the loan portfolio excluding
mortgages held for sale at September 30, 2013 compared with 25% at September
30, 2012.

Loan and asset quality remained strong, with non-performing loans at September
30, 2013 declining to $2.66 million from $8.97 million at September 30, 2012.
Non-performing loans to total loans was 0.61% in third quarter 2013 compared
with 2.55% in third quarter 2012. The loan loss allowance to total loans
receivable was 1.26% at September 30, 2013.

Capital Position

The bank and holding company continue to exceed all regulatory capital
requirements, with a Tier 1 leverage ratio of 8.36% at the bank and 8.42% at
the holding company.

Outlook

Becker concluded, “We are committed to growing the First Internet Bank brand,
which continues to be well received by a growing base of satisfied consumer
and commercial customers. Our focus on asset quality has been enhanced by our
investment in expanding our credit, compliance and risk management
capabilities. We are solidly dedicated to building the company’s value to our
customers and our shareholders.”

About First Internet Bancorp

First Internet Bancorp (NASDAQ: INBK) became the parent company of First
Internet Bank of Indiana in 2006.

About First Internet Bank

First Internet Bank of Indiana opened for business in 1999 as 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.

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: failures or interruptions in our
information systems; growth in our commercial lending activities; declines in
market values of our investments; technological obsolescence; our possible
need for additional capital resources in the future; competition; loss of key
members of management; fluctuations in interest rates; inadequate allowance
for loan losses; risks relating to consumer lending; our dependence on capital
distributions from the bank; our ability to maintain growth in our mortgage
lending business; a decline in the mortgage loan markets or real estate
markets; risks associated with the regulation of financial institutions;
changes in regulatory capital requirements 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


First Internet Bancorp
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
                                                             
                                               September 30,     September 30,
                                               2013              2012
                                                                 
Assets
Cash and due from banks                        $  2,048          $   1,910
Interest-bearing demand deposits                 24,281           22,264
Total cash and cash equivalents                   26,329             24,174
Interest-bearing time deposits                    2,500              -
Securities available for sale - at fair           216,662            171,323
value
Loans held for sale                               18,309             55,490
Loans receivable - net of allowance for loan      434,167            348,839
losses
Accrued interest receivable                       2,810              2,263
Federal Home Loan Bank of Indianapolis stock      2,943              2,943
Cash surrender value of life insurance            11,835             11,442
Premises and equipment, net                       6,742              853
Goodwill                                          4,687              4,687
Other real estate owned                           5,381              553
Other assets                                     6,153            5,111
Total assets                                   $  738,518       $   627,678
Liabilities and Shareholders’ Equity
Liabilities
Non-interest bearing deposits                  $  14,541         $   12,072
Interest-bearing deposits                        622,112          510,587
Total deposits                                    636,653            522,659
Advances from Federal Home Loan Bank              31,767             40,658
Subordinated debt                                 2,767              -
Accrued interest payable                          81                 98
Accrued expenses and other liabilities           5,376            3,568
Total liabilities                                676,644          566,983
Shareholders' Equity
Voting common stock                               42,037             41,366
Retained earnings                                 21,500             16,949
Accumulated other comprehensive income /         (1,663   )        2,380
(loss)
Total shareholders’ equity                       61,874           60,695
Total liabilities and shareholders’ equity     $  738,518       $   627,678
                                                                     


First Internet Bancorp
Condensed Consolidated Statements of Income (Unaudited)
(in thousands)
                                                              
                         Three Months Ended          Nine Months Ended
                         September 30,               September 30,
                         2013          2012          2013          2012
Interest Income
Loans                    $  5,170      $  4,951      $  15,073     $  14,464
Securities – taxable        825           656           2,211         2,514
Securities –               447         424         1,146       1,269  
non-taxable
Total interest income      6,442       6,031       18,430      18,247 
Interest Expense
Deposits                    1,758         1,828         5,042         5,475
Other borrowed funds       329         342         904         1,019  
Total interest expense     2,087       2,170       5,946       6,494  
Net Interest Income         4,355         3,861         12,484        11,753
Provision/(Credit) for     (57    )     974         101         2,108  
Loan Losses
Net Interest Income
After                      4,412       2,887       12,383      9,645  
Provision/(Credit) for
Loan Losses
Noninterest Income
Service charges and         177           162           515           523
fees
Mortgage banking            1,299         3,206         7,767         6,991
activities
Other-than-temporary        -             (112   )      (49    )      (204   )
impairment loss
Gain (loss) on sale of      97            -             (69    )      49
securities
Gain (loss) on asset        (34    )      113           (121   )      (37    )
disposals
Other                      102         100         304         290    
Total noninterest          1,641       3,469       8,347       7,612  
income
Noninterest Expense
Salaries and employee       2,512         2,161         7,737         6,066
benefits
Marketing, advertising      562           278           1,389         1,010
and promotion
Professional services       577           438           1,791         1,037
Data processing             247           214           693           682
Loan expenses               209           381           574           869
Net occupancy expenses      534           315           1,468         1,092
Deposit insurance           85            122           313           341
premium
Other                      414         200         1,263       687    
Total noninterest          5,140       4,109       15,228      11,784 
expense
Income Before Income        913           2,247         5,502         5,473
Taxes
Income Tax Provision       186         621         1,575       1,421  
Net Income               $  727       $  1,626     $  3,927     $  4,052  
Income Per Share of
Common Stock
Basic                    $  0.25       $  0.57       $  1.36       $  1.41
Diluted                  $  0.25       $  0.57       $  1.36       $  1.41
Weighted-Average
Number of Common
Shares Outstanding
Basic                    2,890,369     2,870,680     2,888,274     2,867,769
Diluted                  2,903,816     2,870,680     2,889,039     2,867,769
Dividends Declared Per      0.06          -             0.16          -
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Contact:

First Internet Bancorp
Paula Deemer, 317-428-4628
investors@firstib.com