First Internet Bank Reaches Milestone
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndianapolis-based First Internet Bancorp (Nasdaq: INBK) is reporting first quarter net income of $2.1 million, compared to $1.5 million during the same quarter in the previous year. The bank also says it has topped $1 billion in assets for the first time. April 23, 2015
News Release
INDIANAPOLIS, Ind. – First Internet Bancorp (NASDAQ: INBK), the parent company of First Internet Bank (www.firstib.com), a premier nationwide provider of online retail banking services and commercial banking services, announced today financial and operational results for the first quarter 2015.
“Thanks to the hard work and dedication of our talented teams, we produced earnings growth for the fourth consecutive quarter. With focus and shared vision, we reached two significant milestones during the quarter.”
First quarter net income was a record $2.1 million and diluted earnings per share were $0.46. This compares with fourth quarter 2014 net income of $1.5 million and diluted earnings per share of $0.32 and first quarter 2014 net income of $0.6 million and diluted earnings per share of $0.13.
David Becker, Chairman, President and Chief Executive Officer, commented, “Thanks to the hard work and dedication of our talented teams, we produced earnings growth for the fourth consecutive quarter. With focus and shared vision, we reached two significant milestones during the quarter.
“First, we surpassed $1.0 billion in total assets. As our organization grows, we expect to realize economies of scale that should allow us to generate higher returns. We continued our trend of strong loan growth as our commercial lending teams had another excellent quarter of production. Our investment in commercial lending is paying strong dividends, as commercial balances have increased $152.1 million, or 62.6%, over the past year and now represent more than 50% of our total loans. The commercial pipeline at the end of the first quarter is higher than it was at the end of the fourth quarter and looks extremely strong, leaving us optimistic about our ability to continue generating high quality assets. Furthermore, we generated strong deposit growth as balances increased $62.6 million, or 8.2%, and drove balance sheet expansion during the quarter.
“Second, we achieved a record level of quarterly net income, with quarterly earnings per share growth of 43.8% and significantly improved profitability compared to the fourth quarter 2014. Loan growth drove net interest income higher while operating expenses, excluding seasonal and equity-related compensation costs, were essentially flat quarter-over-quarter.”
Highlights for the first quarter 2015 included:
Diluted earnings per share increased $0.14, or 43.8%, compared to the linked quarter and $0.33, or 253.8%, compared to the first quarter 2014
Improved quarterly performance
Return on average assets of 0.84% compared to 0.62% in the linked quarter and 0.30% in the first quarter 2014
Return on average shareholders' equity of 8.55% compared to 6.07% in the linked quarter and 2.64% in the first quarter 2014
Return on average tangible common equity of 8.98% compared to 6.38% in the linked quarter and 2.79% in the first quarter 2014
Continued strong revenue growth
Net interest income increased $0.4 million, or 6.3%, compared to the linked quarter and $1.9 million, or 39.2%, compared to the first quarter 2014
Mortgage banking revenue increased $1.0 million, or 56.7%, compared to the linked quarter and $2.0 million, or 220.7%, compared to the first quarter 2014
Total loan growth of $35.3 million, or 4.8%, compared to December 31, 2014 and $235.4 million, or 44.2%, compared to March 31, 2014
Continued strong performance in single tenant lease financing with balances increasing $34.6 million, or 18.0%, compared to the linked quarter and $121.4 million, or 114.7%, compared to March 31, 2014
C&I and owner-occupied CRE balances increased $10.9 million on a combined basis, or 9.7%, compared to the linked quarter and $34.0 million, or 38.5%, compared to March 31, 2014
Net interest margin (“NIM”) increased to 2.84%, or 6 bps compared to the linked quarter and 33 bps compared to the first quarter 2014
NIM benefited from the recapture of $0.1 million of interest related to a loan recovery during the quarter
NIM was negatively impacted by the conversion of $40.0 million of variable rate short term borrowings to long term fixed rate funding
Capital levels remain solid and continue to support loan growth
Tangible common equity to tangible assets of 9.18%
Common equity tier 1 capital ratio of 11.99%
Tier 1 capital ratio of 11.99%
Total risk-based capital ratio of 13.18%
Asset quality remains strong
Nonperforming loans to total loans receivable declined to 0.03% from 0.04% and nonperforming assets to total assets declined to 0.47% from 0.50% compared to the linked quarter.
The allowance for loan losses (“ALLL”) increased $0.6 million, or 10%, compared to the linked quarter with the ratio of ALLL to total loans increasing to 0.83% compared to 0.79% as of December 31, 2014.
Net Interest Income and Net Interest Margin
Net interest income for the first quarter was $6.8 million compared to $6.4 million for the fourth quarter 2014 and $4.9 million for the first quarter 2014. Compared to the linked quarter, total interest income increased $0.6 million, or 6.5%, and total interest expense increased $0.2 million, or 7.3%. The increase in total interest income was driven by a $37.4 million, or 5.3%, increase in average loans receivable and an increase in the yield earned on the loan portfolio as well as a $15.5 million, or 12.0%, increase in the average balance of securities available for sale and an increase in the yield earned on the securities portfolio. Total interest income also benefited from the recapture of $0.1 million of interest related to a loan recovery during the quarter.
The increase in interest expense during the quarter was due primarily to an increase in the cost of funds related to advances from the Federal Home Loan Bank. Early in the first quarter, $40.0 million of variable rate short term advances were converted to longer term funding with a six year maturity and a cost of funds of 1.67%. Additionally, interest expense related to deposits increased modestly due to a $36.2 million, or 5.0%, increase in the average balance of interest-bearing deposits.
Net interest margin was 2.84% for the first quarter compared to 2.78% for the fourth quarter 2014 and 2.51% for the first quarter 2014. Compared to the prior quarter, the yield on interest-earning assets increased 9 bps to 3.85%. Excluding the impact of the interest income associated with the loan recovery, the yield on interest-earning assets increased 3 bps to 3.79% compared to the prior quarter, driven by higher yields earned on commercial loans and investment securities, partially offset by lower yields on consumer loans and mortgage loans held for sale. The cost of interest-bearing liabilities during the quarter increased 3 bps to 1.12% driven primarily by the increase in the cost of funds related to Federal Home Loan Bank advances, offset by a slight decline in deposit funding costs.
Noninterest Income
Noninterest income for the first quarter was $3.1 million compared to $2.1 million for the fourth quarter 2014 and $1.5 million for the first quarter 2014. The increase of $1.0 million, or 50.0%, compared to the linked quarter was driven by an increase of $1.0 million, or 56.7%, in mortgage banking revenue resulting from an improvement in gain on sale margin and higher origination volumes.
Noninterest Expense
Noninterest expense for the first quarter was $6.3 million compared to $5.9 million for the fourth quarter 2014 and $5.4 million for the first quarter 2014. The increase of $0.4 million, or 6.4%, compared to the linked quarter was due to higher salaries and employee benefits and marketing expenses. The increase in salari