First Internet Bancorp Reports Third Quarter 2021 Results

10/20/2021

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Highlights for the third quarter include:

• Net income of $12.1 million, an increase of 43.7% over the third quarter of 2020
• Diluted earnings per share of $1.21, an increase of 40.7% over the third quarter of 2020
• Adjusted net income of $12.7 million, or $1.27 per diluted share, when excluding $0.8 million of pre-tax costs associated with the redemption of subordinated notes
• Total revenue of $28.7 million and adjusted total revenue of $29.5 million, an increase of 2.8% over the third quarter of 2020
• New board authorization to repurchase up to $30.0 million of common stock through the end of 2022

FISHERS, Ind.--(BUSINESS WIRE)-- First Internet Bancorp (the "Company") (Nasdaq: INBK), the parent company of First Internet Bank (the "Bank"), announced today financial and operational results for the third quarter of 2021. Net income for the third quarter of 2021 was $12.1 million, or $1.21 diluted earnings per share. This compares to net income of $13.1 million, or $1.31 diluted earnings per share, for the second quarter of 2021, and net income of $8.4 million, or $0.86 diluted earnings per share, for the third quarter of 2020.

"We produced strong operating results for the third quarter of 2021, driven by solid revenue generation and disciplined expense management," said David Becker, Chairman and Chief Executive Officer. "Our strategies designed to build sustainable fee revenue continued to pay off as we generated a return on average assets in excess of 1.0% for the fourth straight quarter. Looking forward, pipelines in our SBA, construction, single tenant lease financing and our newly formed franchise finance lines of business are strong, giving us confidence in our ability to continue growing revenue and earnings for the remainder of the year and into 2022.

"Our new franchise finance business line is the third installment in a $300 million commitment we have made to small business owners in 2021," Mr. Becker added. "We have teamed with ApplePie Capital, a company that sources and originates franchisee lending opportunities on a nationwide basis. Together, we are funding loans to proven businesses, fueling economic and job growth and building our loan portfolio. We expect to fund $100 million of franchise loans by year-end. Earlier this year, we originated $30 million in a second round of PPP, and we have secured an additional $172 million in SBA 7(a) approvals over the course of SBA's most recently ended fiscal year. Looking ahead to 2022, we expect to expand our small business pledge by 20%. We anticipate funding up to $150 million in franchise finance and $215 million in SBA 7(a) loans. Furthermore, to provide our small business owners the upgraded digital experience that will empower them to manage their cash flows effectively, we have announced a partnership with Finzly to provide an innovative payments hub and expect to announce additional relationships within the next few weeks."

Mr. Becker concluded, "Of course, the First Internet team's hard work and unwavering commitment to client service are the keys to our ongoing success and the reasons we are confident in the strength of our organization and our abilities to seize upon new opportunities ahead."

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2021 was $20.9 million, compared to $21.6 million for the second quarter of 2021, and $16.2 million for the third quarter of 2020. On a fully-taxable equivalent basis, net interest income for the third quarter of 2021 was $22.3 million, compared to $23.0 million for the second quarter of 2021, and $17.7 million for the third quarter of 2020.

On September 30, 2021, the Company redeemed all $25.0 million aggregate principal amount of 6.0% fixed-to-floating rate subordinated notes due in 2026. Excluding $0.8 million of costs related to this redemption, net interest income was $21.7 million and fully-taxable equivalent net interest income was $23.1 million.

Total interest income for the third quarter of 2021 was $33.0 million, a decrease of 1.0% compared to the second quarter of 2021, and an increase of 0.9% compared to the third quarter of 2020. On a fully-taxable equivalent basis, total interest income for the third quarter of 2021 was $34.4 million, a decrease of 1.1% compared to the second quarter of 2021, and an increase of 0.6% compared to the third quarter of 2020. The modest decrease in total interest income compared to the second quarter of 2021 was driven primarily by a 10 basis point ("bp") decrease in the yield on interest-earning assets, which was partially offset by a 1.2% increase in the average balance of these assets. The yield on interest-earning assets for the third quarter of 2021 decreased to 3.16% from 3.26% in the linked quarter due primarily to changes in the earning asset mix as well as lower loan fees. Average loan balances, including loans held for sale, decreased $60.0 million, or 2.0%, while the average balances of securities and other earning assets increased $108.0 million, or 10.0%, compared to the linked quarter.

Total interest expense for the third quarter of 2021 was $12.1 million, an increase of 2.9% compared to the second quarter of 2021, and a decrease of 26.7% compared to the third quarter of 2020. The increase in total interest expense compared to the linked quarter was due primarily to the costs related to the redemption of the subordinated notes discussed above. Average interest-bearing deposit balances increased $28.6 million, or 0.9%, while the cost of these deposits declined 9 bps to 0.90%.

The composition of deposits continued to improve as the average balance of money market accounts, savings accounts and interest-bearing demand deposits increased $94.1 million, or 5.6%, on a combined basis while the average balance of certificates and brokered deposits declined $65.5 million, or 4.5%, compared to the linked quarter. Furthermore, the cost of certificates and brokered deposits decreased by 14 bps compared to the linked quarter. During the third quarter of 2021, new certificates of deposit were originated at a weighted average cost of 43 bps while maturing certificates of deposit had a weighted average cost of 143 bps; a difference of 100 bps.

Net interest margin ("NIM") was 2.00% for the third quarter of 2021, down from 2.11% for the second quarter of 2021 and up from 1.53% for the third quarter of 2020. Fully-taxable equivalent NIM ("FTE NIM") was 2.13% for the third quarter of 2021, down from 2.25% for the second quarter of 2021 and up from 1.67% for the third quarter of 2020. Excluding the $0.8 million of costs related to the redemption of the subordinated notes, adjusted NIM was 2.08% and adjusted FTE NIM was 2.21%. The decreases in adjusted NIM and adjusted FTE NIM compared to the linked quarter were driven primarily by the lower average loan balances and loan fees, partially offset by lower interest-bearing deposit costs and higher securities income.

Noninterest Income

Noninterest income for the third quarter of 2021 was $7.8 million, compared to $9.0 million for the second quarter of 2021 and $12.5 million for the third quarter of 2020. The decrease compared to the linked quarter was driven primarily by the positive impact of a $2.5 million gain on sale of premises and equipment that occurred in the second quarter. Excluding the impact of that gain, adjusted noninterest income increased by $1.4 million, or 21.3%, compared to the linked quarter, driven primarily by higher revenue from mortgage banking activities and other income, partially offset by modestly lower gain on sale of loans. Mortgage banking revenue totaled $3.9 million for the third quarter of 2021, an increase of $1.2 million, or 44.0%, from the linked quarter, due primarily to increases in interest rate locks, sold loan volume and margins. Other income increased $0.5 million due to a distribution from the Company's investment in a Small Business Investment Company fund. Gain on sale of loans totaled $2.7 million for the quarter, decreasing from $3.0 million in the second quarter of 2021, due mainly to a decline in secondary market premiums on U.S. Small Business Administration ("SBA") 7(a) guaranteed loan sales during the quarter.

Noninterest Expense

Noninterest expense for the third quarter of 2021 was $14.5 million, compared to $15.1 million for the second quarter of 2021 and $16.4 million for the third quarter of 2020. The decrease of $0.6 million, or 4.1%, compared to the linked quarter was driven primarily by lower consulting and professional fees, other expense and loan expenses. The decrease in consulting and professional fees and loan expenses was due mainly to third party loan review and stress testing performed in the linked quarter. The decrease in other expense was due to seasonal expenses incurred in the second quarter as well as a gain on the sale of a residential other real estate owned property. The decrease in loan expenses was due to reimbursement of expenses incurred in prior quarters related to nonperforming loans.

Income Taxes

The Company reported income tax expense of $2.2 million for the third quarter of 2021 and an effective tax rate of 15.5%, compared to income tax expense of $2.4 million and an effective tax rate of 15.4% for the second quarter of 2021 and $1.4 million and an effective tax rate of 14.2% for the third quarter of 2020.

Loans and Credit Quality

Total loans as of September 30, 2021 were $2.9 billion, a decrease of $21.5 million, or 0.7%, compared to June 30, 2021, and a decrease of $76.8 million, or 2.5%, compared to September 30, 2020. Total commercial loan balances were $2.4 billion as of September 30, 2021, a decrease of $29.1 million, or 1.2%, compared to June 30, 2021, and a decrease of $37.0 million, or 1.5%, compared to September 30, 2020. Compared to the linked quarter, the decline in commercial loan balances was driven largely by net payoffs in healthcare finance, public finance and SBA Paycheck Protection Program ("PPP") loans, which were partially offset by increases in franchise finance, commercial and industrial and single tenant lease financing balances.

Total consumer loan balances were $475.1 million as of September 30, 2021, an increase of $8.7 million, or 1.9%, compared to June 30, 2021, and a decrease of $32.6 million, or 6.4%, compared to September 30, 2020. The increase in consumer loan balances from June 30, 2021 was due primarily to higher balances in the residential mortgage portfolio.

Total delinquencies 30 days or more past due were 0.06% of total loans as of September 30, 2021, down from 0.07% as of June 30, 2021 and 0.22% as of September 30, 2020. Overall credit quality remained strong as nonperforming loans to total loans was 0.27% as of September 30, 2021, compared to 0.31% as of June 30, 2021 and 0.32% as of September 30, 2020. During the third quarter of 2021, nonperforming loans declined $1.2 million, or 13.1%, compared to the linked quarter due primarily to the payoff of a single tenant lease financing relationship which had previously been classified as nonaccrual.

The allowance for loan losses as a percentage of total loans was 0.95% as of September 30, 2021, or 0.96% when excluding PPP loans, consistent with 0.95% and 0.96%, respectively, as of June 30, 2021 and up from 0.89% and 0.91%, respectively, as of September 30, 2020.

Net charge-offs of less than $0.1 million were recognized during the third quarter of 2021, resulting in net charge-offs to average loans of 0.01%, compared to 0.35% for the second quarter of 2021 and 0.01% for the third quarter of 2020. Net charge-offs were elevated in the second quarter of 2021 due to the elimination of specific reserves related to a single tenant lease financing relationship. The provision for loan losses in the third quarter of 2021 was a benefit of $29,000, compared to a provision of $21,000 for the second quarter of 2021 and $2.5 million for the third quarter of 2020. The decrease in provision for loan losses for the third quarter of 2021 was due primarily to the $21.5 million decrease in loan balances mentioned above.

Capital

As of September 30, 2021, total shareholders' equity was $370.4 million, an increase of $11.8 million, or 3.3%, compared to June 30, 2021, and an increase of $52.3 million, or 16.5%, compared to September 30, 2020. The increase compared to the linked quarter was due primarily to net income earned during the quarter. Book value per common share increased to $37.59 as of September 30, 2021, up from $36.39 as of June 30, 2021 and $32.46 as of September 30, 2020. Tangible book value per share increased to $37.12, up from $35.92 and $31.98, each as of the same reference dates.

During the third quarter of 2021, the Company completed a $60.0 million offering of 3.75% fixed-to-floating rate subordinated notes due in 2031. A portion of the proceeds were used to redeem the $25.0 million principal amount of 6.0% subordinated notes due in 2026 discussed above. The net increase in subordinated notes resulted in increases in the Company's Tier 2 regulatory capital and total risk-based capital ratio.

The following table presents the Company's and the Bank's regulatory and other capital ratios as of September 30, 2021.

As of September 30, 2021
Company	Bank
Total shareholders' equity to assets	8.71%	9.68%
Tangible common equity to tangible assets 1	8.61%	9.58%
Tier 1 leverage ratio 2	8.86%	9.83%
Common equity tier 1 capital ratio 2	12.61%	13.99%
Tier 1 capital ratio 2	12.61%	13.99%
Total risk-based capital ratio 2	17.03%	14.92%
1 This information represents a non-GAAP financial measure. For a discussion of non-GAAP financial measures, see the section below entitled "Non-GAAP Financial Measures."
2 Regulatory capital ratios are preliminary pending filing of the Company's and the Bank's regulatory reports.

Stock Repurchase Authorization

On October 18, 2021, the Company's Board of Directors authorized a new stock repurchase program (the "Program") with an aggregate purchase price of up to $30.0 million. The Program is scheduled to expire on December 31, 2022. The Program permits the Company to acquire shares of its common stock from time to time in the open market or in privately negotiated transactions at prices management considers to be attractive and in the best interest of the Company and its shareholders. The Program does not obligate the Company to repurchase shares of its common stock, and there is no assurance that it will do so.

Any repurchases are subject to compliance with applicable laws and regulations. Repurchases will be conducted in consideration of general market and economic conditions as well as the financial and regulatory condition of the Company and the Bank. The Program may be modified, suspended or discontinued at any time.

Conference Call and Webcast

The Company will host a conference call and webcast at 12:00 p.m. Eastern Time on Thursday, October 21, 2021 to discuss its quarterly financial results. The call can be accessed via telephone at (888) 348-3664. A recorded replay can be accessed through November 21, 2021 by dialing (877) 344-7529; passcode: 10160916.

Additionally, interested parties can listen to a live webcast of the call on Company's website at www.firstinternetbancorp.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

About First Internet Bancorp

First Internet Bancorp is a bank holding company with assets of $4.3 billion as of September 30, 2021. The Company's subsidiary, First Internet Bank, opened for business in 1999 as an industry pioneer in the branchless delivery of banking services. The Bank provides consumer and small business deposit, SBA financing, residential mortgage loans, consumer loans, and specialty finance services nationally as well as commercial real estate loans, construction loans, commercial and industrial loans, and treasury management services on a regional basis. First Internet Bancorp's common stock trades on the Nasdaq Global Select Market under the symbol "INBK" and is a component of the Russell 2000® Index. Additional information about the Company is available at www.firstinternetbancorp.com and additional information about the Bank, including its products and services, is available at www.firstib.com.

Forward-Looking Statements

This press release may contain forward-looking statements, including statements with respect to the Company's stock repurchase program and timing and methods of executing the same, 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 identifiable by the use of words such as "anticipate," "believe," "confidence in," "continue," "could," "designed," "effort," "estimate," "expect," "intend," "looking forward," "may," "optimistic," "pending," "plan," "position," "preliminary," "remain," "should," "will," "working on," "would" 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. Such statements are subject to certain risks and uncertainties including: the effects of the COVID-19 global pandemic and other adverse public health developments on the economy, our business and operations and the business and operations of our vendors and customers: 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. Other factors that may cause such differences include: failures or breaches of or interruptions in the communications and information systems on which we rely to conduct our business; failure of our plans to grow our commercial real estate, commercial and industrial, public finance, SBA, healthcare finance and franchise finance loan portfolios; competition with national, regional and community financial institutions; the loss of any key members of senior management; 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; fluctuations in interest rates; general economic conditions; risks relating to the regulation of financial institutions; and other factors identified in reports we file with the U.S. Securities and Exchange Commission. All statements in this press release, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles ("GAAP"). Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, total interest income - FTE, net interest income - FTE, adjusted net interest income, adjusted net interest income - FTE, net interest margin - FTE, adjusted net interest margin, adjusted net interest margin - FTE, allowance for loan losses to loans, excluding PPP loans, adjusted revenue, adjusted noninterest income, adjusted income before income taxes, adjusted income tax provision, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders' equity, adjusted return on average tangible common equity and adjusted effective income tax rate are used by the Company's management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the table at the end of this release under the caption "Reconciliation of Non-GAAP Financial Measures."

First Internet Bancorp
Summary Financial Information (unaudited)
Dollar amounts in thousands, except per share data
Three Months Ended	Nine Months Ended
September 30,		June 30,		September 30,		September 30,		September 30,
2021		2021		2020		2021		2020
Net income	$	12,090		$	13,096		$	8,411		$	35,636		$	18,362
Per share and share information
Earnings per share - basic	$	1.22		$	1.32		$	0.86		$	3.59		$	1.87
Earnings per share - diluted		1.21			1.31			0.86			3.57			1.87
Dividends declared per share		0.06			0.06			0.06			0.18			0.18
Book value per common share		37.59			36.39			32.46			37.59			32.46
Tangible book value per common share 1		37.12			35.92			31.98			37.12			31.98
Common shares outstanding		9,854,153			9,854,153			9,800,569			9,854,153			9,800,569
Average common shares outstanding:
Basic		9,936,237			9,932,761			9,773,175			9,922,877			9,825,683
Diluted		9,988,102			9,981,422			9,773,224			9,974,071			9,827,182
Performance ratios
Return on average assets		1.12	%		1.25	%		0.78	%		1.13	%		0.58	%
Return on average shareholders' equity		13.10	%		14.88	%		10.67	%		13.54	%		7.90	%
Return on average tangible common equity 1		13.27	%		15.09	%		10.83	%		13.73	%		8.02	%
Net interest margin		2.00	%		2.11	%		1.53	%		2.05	%		1.47	%
Net interest margin - FTE 1,2		2.13	%		2.25	%		1.67	%		2.19	%		1.61	%
Capital ratios 3
Total shareholders' equity to assets		8.71	%		8.53	%		7.34	%		8.71	%		7.34	%
Tangible common equity to tangible assets 1		8.61	%		8.43	%		7.24	%		8.61	%		7.24	%
Tier 1 leverage ratio		8.86	%		8.70	%		7.72	%		8.86	%		7.72	%
Common equity tier 1 capital ratio		12.61	%		12.23	%		11.13	%		12.61	%		11.13	%
Tier 1 capital ratio		12.61	%		12.23	%		11.13	%		12.61	%		11.13	%
Total risk-based capital ratio		17.03	%		15.51	%		14.38	%		17.03	%		14.38	%
Asset quality
Nonperforming loans	$	7,851		$	9,038		$	9,774		$	7,851		$	9,774
Nonperforming assets		9,039			10,338			9,782			9,039			9,782
Nonperforming loans to loans		0.27	%		0.31	%		0.32	%		0.27	%		0.32	%
Nonperforming assets to total assets		0.21	%		0.25	%		0.23	%		0.21	%		0.23	%
Allowance for loan losses to:
Loans		0.95	%		0.95	%		0.89	%		0.95	%		0.89	%
Loans, excluding PPP loans 1		0.96	%		0.96	%		0.91	%		0.96	%		0.91	%
Nonperforming loans		356.6	%		310.5	%		275.4	%		356.6	%		275.4	%
Net charge-offs to average loans		0.01	%		0.35	%		0.01	%		0.12	%		0.06	%
Average balance sheet information
Loans	$	2,933,654		$	2,994,356		$	2,996,641		$	2,991,556		$	2,957,116
Total securities		713,342			574,684			633,552			612,755			640,659
Other earning assets		479,051			509,735			552,058			478,399			520,875
Total interest-earning assets		4,148,726			4,100,749			4,216,634			4,107,971			4,161,245
Total assets		4,265,189			4,206,966			4,307,819			4,215,479			4,246,201
Noninterest-bearing deposits		104,161			98,207			75,901			97,760			70,060
Interest-bearing deposits		3,137,728			3,109,165			3,279,621			3,121,039			3,213,372
Total deposits		3,241,889			3,207,372			3,355,522			3,218,799			3,283,432
Shareholders' equity		366,187			352,894			313,611			351,794			310,506
1 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below
2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate
3 Regulatory capital ratios are preliminary pending filing of the Company's regulatory reports

First Internet Bancorp
Condensed Consolidated Balance Sheets (unaudited)
Dollar amounts in thousands
September 30,	June 30,	September 30,
2021	2021	2020
Assets
Cash and due from banks	$	4,932		$	4,347		$	5,804
Interest-bearing deposits		402,583			324,450			482,649
Securities available-for-sale, at fair value		634,007			663,519			528,311
Securities held-to-maturity, at amortized cost		62,129			65,659			68,254
Loans held-for-sale		43,970			27,587			76,208
Loans		2,936,148			2,957,608			3,012,914
Allowance for loan losses		(28,000	)		(28,066	)		(26,917	)
Net loans		2,908,148			2,929,542			2,985,997
Accrued interest receivable		14,866			16,345			17,768
Federal Home Loan Bank of Indianapolis stock		25,650			25,650			25,650
Cash surrender value of bank-owned life insurance		38,660			38,421			37,714
Premises and equipment, net		52,700			44,249			31,262
Goodwill		4,687			4,687			4,687
Servicing asset		4,412			4,120			2,818
Other real estate owned		1,188			1,300			-
Accrued income and other assets		54,360			54,766			66,502
Total assets	$	4,252,292		$	4,204,642		$	4,333,624
Liabilities
Noninterest-bearing deposits	$	110,117		$	113,996		$	86,088
Interest-bearing deposits		3,114,478			3,092,151			3,286,303
Total deposits		3,224,595			3,206,147			3,372,391
Advances from Federal Home Loan Bank		514,920			514,919			514,914
Subordinated debt		104,156			69,871			69,758
Accrued interest payable		1,568			1,132			1,249
Accrued expenses and other liabilities		36,611			53,932			57,210
Total liabilities		3,881,850			3,846,001			4,015,522
Shareholders' equity
Voting common stock		223,059			222,486			220,951
Retained earnings		160,551			149,066			116,241
Accumulated other comprehensive loss		(13,168	)		(12,911	)		(19,090	)
Total shareholders' equity		370,442			358,641			318,102
Total liabilities and shareholders' equity	$	4,252,292		$	4,204,642		$	4,333,624

First Internet Bancorp
Condensed Consolidated Statements of Income (unaudited)
Dollar amounts in thousands, except per share data
Three Months Ended	Nine Months Ended
September 30,		June 30,		September 30,		September 30,		September 30,
2021		2021		2020		2021		2020
Interest income
Loans	$	30,126		$	30,835		$	29,560		$	91,846		$	89,698
Securities - taxable		2,297			1,921			2,240			5,997			9,135
Securities - non-taxable		241			259			381			781			1,410
Other earning assets		370			362			569			1,067			2,973
Total interest income		33,034			33,377			32,750			99,691			103,216
Interest expense
Deposits		7,090			7,705			12,428			23,423			45,399
Other borrowed funds		5,025			4,065			4,090			13,217			12,141
Total interest expense		12,115			11,770			16,518			36,640			57,540
Net interest income		20,919			21,607			16,232			63,051			45,676
(Benefit) provision for loan losses		(29	)		21			2,509			1,268			6,461
Net interest income after (benefit) provision
for loan losses		20,948			21,586			13,723			61,783			39,215
Noninterest income
Service charges and fees		276			280			224			822			618
Loan servicing revenue		511			457			274			1,390			780
Loan servicing asset revaluation		(274	)		(240	)		(103	)		(669	)		(372	)
Mortgage banking activities		3,850			2,674			9,630			12,274			16,706
Gain on sale of loans		2,719			3,019			2,033			7,461			4,596
Gain on sale of securities		-			-			98			-			139
Gain on sale of premises and equipment		-			2,523			-			2,523			-
Other		731			249			339			1,349			1,212
Total noninterest income		7,813			8,962			12,495			25,150			23,679
Noninterest expense
Salaries and employee benefits		9,316			9,232			9,533			28,040			25,096
Marketing, advertising and promotion		813			872			426			2,365			1,212
Consulting and professional fees		728			1,078			614			2,792			2,723
Data processing		380			382			388			1,224			1,102
Loan expenses		383			541			408			1,458			1,406
Premises and equipment		1,687			1,587			1,568			4,875			4,795
Deposit insurance premium		230			275			440			930			1,360
Write-down of other real estate owned		-			-			2,065			-			2,065
Other		914			1,108			970			3,159			3,383
Total noninterest expense		14,451			15,075			16,412			44,843			43,142
Income before income taxes		14,310			15,473			9,806			42,090			19,752
Income tax provision		2,220			2,377			1,395			6,454			1,390
Net income	$	12,090		$	13,096		$	8,411		$	35,636		$	18,362
Per common share data
Earnings per share - basic	$	1.22		$	1.32		$	0.86		$	3.59		$	1.87
Earnings per share - diluted	$	1.21		$	1.31		$	0.86		$	3.57		$	1.87
Dividends declared per share	$	0.06		$	0.06		$	0.06		$	0.18		$	0.18
All periods presented have been reclassified to conform to the current period classification.

First Internet Bancorp
Average Balances and Rates (unaudited)
Dollar amounts in thousands
Three Months Ended
September 30, 2021	June 30, 2021	September 30, 2020
Average	Interest /	Yield /	Average	Interest /	Yield /	Average	Interest /	Yield /
Balance	Dividends	Cost	Balance	Dividends	Cost	Balance	Dividends	Cost
Assets
Interest-earning assets
Loans, including loans held-for-sale 1	$	2,956,333		$	30,126	4.04	%	$	3,016,330		$	30,835	4.10	%	$	3,031,024		$	29,560	3.88	%
Securities - taxable		629,101			2,297	1.45	%		490,634			1,921	1.57	%		539,154		$	2,240	1.65	%
Securities - non-taxable		84,241			241	1.14	%		84,050			259	1.24	%		94,398		$	381	1.61	%
Other earning assets		479,051			370	0.31	%		509,735			362	0.28	%		552,058		$	569	0.41	%
Total interest-earning assets		4,148,726			33,034	3.16	%		4,100,749			33,377	3.26	%		4,216,634			32,750	3.09	%
Allowance for loan losses		(28,127	)		(30,348	)		(25,347	)
Noninterest-earning assets		144,590			136,565			116,532
Total assets	$	4,265,189		$	4,206,966		$	4,307,819
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits	$	198,637		$	150	0.30	%	$	192,777		$	143	0.30	%	$	154,275		$	228	0.59	%
Savings accounts		62,195			56	0.36	%		55,811			49	0.35	%		45,466			79	0.69	%
Money market accounts		1,498,218			1,532	0.41	%		1,416,406			1,462	0.41	%		1,295,249			2,442	0.75	%
Certificates and brokered deposits		1,378,678			5,352	1.54	%		1,444,171			6,051	1.68	%		1,784,631			9,679	2.16	%
Total interest-bearing deposits		3,137,728			7,090	0.90	%		3,109,165			7,705	0.99	%		3,279,621			12,428	1.51	%
Other borrowed funds		611,975			5,025	3.26	%		584,751			4,065	2.79	%		584,634			4,090	2.78	%
Total interest-bearing liabilities		3,749,703			12,115	1.28	%		3,693,916			11,770	1.28	%		3,864,255			16,518	1.70	%
Noninterest-bearing deposits		104,161			98,207			75,901
Other noninterest-bearing liabilities		45,138			61,949			54,052
Total liabilities		3,899,002			3,854,072			3,994,208
Shareholders' equity		366,187			352,894			313,611
Total liabilities and shareholders' equity	$	4,265,189		$	4,206,966		$	4,307,819
Net interest income	$	20,919	$	21,607	$	16,232
Interest rate spread	1.88	%	1.98	%	1.39	%
Net interest margin	2.00	%	2.11	%	1.53	%
Net interest margin - FTE 2,3	2.13	%	2.25	%	1.67	%
1 Includes nonaccrual loans
2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate
3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below

First Internet Bancorp
Average Balances and Rates (unaudited)
Dollar amounts in thousands
Nine Months Ended
September 30, 2021	September 30, 2020
Average	Interest /	Yield /	Average	Interest /	Yield /
Balance	Dividends	Cost	Balance	Dividends	Cost
Assets
Interest-earning assets
Loans, including loans held-for-sale 1	$	3,016,817		$	91,846	4.07	%	$	2,999,711		$	89,698	3.99	%
Securities - taxable		527,625			5,997	1.52	%		543,699			9,135	2.24	%
Securities - non-taxable		85,130			781	1.23	%		96,960			1,410	1.94	%
Other earning assets		478,399			1,067	0.30	%		520,875			2,973	0.76	%
Total interest-earning assets		4,107,971			99,691	3.24	%		4,161,245			103,216	3.31	%
Allowance for loan losses		(29,446	)		(23,605	)
Noninterest-earning assets		136,954			108,561
Total assets	$	4,215,479		$	4,246,201
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits	$	190,785		$	425	0.30	%	$	138,288		$	684	0.66	%
Savings accounts		54,740			145	0.35	%		37,700			249	0.88	%
Money market accounts		1,428,554			4,385	0.41	%		1,084,411			9,726	1.20	%
Certificates and brokered deposits		1,446,960			18,468	1.71	%		1,952,973			34,740	2.38	%
Total interest-bearing deposits		3,121,039			23,423	1.00	%		3,213,372			45,399	1.89	%
Other borrowed funds		593,605			13,217	2.98	%		584,547			12,141	2.77	%
Total interest-bearing liabilities		3,714,644			36,640	1.32	%		3,797,919			57,540	2.02	%
Noninterest-bearing deposits		97,760			70,060
Other noninterest-bearing liabilities		51,281			67,716
Total liabilities		3,863,685			3,935,695
Shareholders' equity		351,794			310,506
Total liabilities and shareholders' equity	$	4,215,479		$	4,246,201
Net interest income	$	63,051	$	45,676
Interest rate spread	1.92	%	1.29	%
Net interest margin	2.05	%	1.47	%
Net interest margin - FTE 2,3	2.19	%	1.61	%
1 Includes nonaccrual loans
2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate
3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below

First Internet Bancorp
Loans and Deposits (unaudited)
Dollar amounts in thousands
September 30, 2021	June 30, 2021	September 30, 2020
Amount	Percent	Amount	Percent	Amount	Percent
Commercial loans
Commercial and industrial	$	107,142	3.6	%	$	96,203	3.3	%	$	77,116	2.6	%
Owner-occupied commercial real estate		84,819	2.9	%		87,136	2.9	%		89,095	3.0	%
Investor commercial real estate		28,505	1.0	%		28,871	1.0	%		13,084	0.4	%
Construction		115,414	3.9	%		117,970	4.0	%		92,154	3.1	%
Single tenant lease financing		921,998	31.5	%		913,115	30.9	%		960,505	31.9	%
Public finance		601,738	20.5	%		612,138	20.7	%		625,638	20.8	%
Healthcare finance		417,388	14.2	%		455,890	15.3	%		461,740	15.3	%
Small business lending		102,889	3.5	%		123,293	4.2	%		123,168	4.1	%
Franchise finance		25,598	0.9	%		-	-		-	-
Total commercial loans		2,405,491	82.0	%		2,434,616	82.3	%		2,442,500	81.2	%
Consumer loans
Residential mortgage		188,750	6.4	%		177,148	6.0	%		203,041	6.7	%
Home equity		17,960	0.6	%		17,510	0.6	%		22,169	0.7	%
Trailers		147,806	5.0	%		148,795	5.0	%		145,775	4.8	%
Recreational vehicles		90,192	3.1	%		91,030	3.1	%		96,910	3.2	%
Other consumer loans		30,398	1.0	%		31,971	1.1	%		39,765	1.3	%
Total consumer loans		475,106	16.1	%		466,454	15.8	%		507,660	16.7	%
Net deferred loan fees, premiums, discounts and other 1		55,551	1.9	%		56,538	1.9	%		62,754	2.1	%
Total loans	$	2,936,148	100.0	%	$	2,957,608	100.0	%	$	3,012,914	100.0	%
September 30, 2021	June 30, 2021	September 30, 2020
Amount	Percent	Amount	Percent	Amount	Percent
Deposits
Noninterest-bearing deposits	$	110,117	3.4	%	$	113,996	3.6	%	$	86,088	2.6	%
Interest-bearing demand deposits		201,557	6.3	%		196,841	6.1	%		155,054	4.6	%
Savings accounts		66,762	2.1	%		56,298	1.8	%		49,890	1.5	%
Money market accounts		1,479,358	45.8	%		1,432,355	44.6	%		1,359,178	40.3	%
Certificates of deposits		1,043,898	32.4	%		1,087,350	33.9	%		1,360,575	40.3	%
Brokered deposits		322,903	10.0	%		319,307	10.0	%		361,606	10.7	%
Total deposits	$	3,224,595	100.0	%	$	3,206,147	100.0	%	$	3,372,391	100.0	%
1 Includes carrying value adjustments of $38.9 million, $40.4 million and $44.3 million related to terminated interest rate swaps associated with public finance loans as of September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Dollar amounts in thousands, except per share data
Three Months Ended	Nine Months Ended
September 30,	June 30,	September 30,	September 30,	September 30,
2021	2021	2020	2021	2020
Total equity - GAAP	$	370,442		$	358,641		$	318,102		$	370,442		$	318,102
Adjustments:
Goodwill		(4,687	)		(4,687	)		(4,687	)		(4,687	)		(4,687	)
Tangible common equity	$	365,755		$	353,954		$	313,415		$	365,755		$	313,415
Total assets - GAAP	$	4,252,292		$	4,204,642		$	4,333,624		$	4,252,292		$	4,333,624
Adjustments:
Goodwill		(4,687	)		(4,687	)		(4,687	)		(4,687	)		(4,687	)
Tangible assets	$	4,247,605		$	4,199,955		$	4,328,937		$	4,247,605		$	4,328,937
Common shares outstanding		9,854,153			9,854,153			9,800,569			9,854,153			9,800,569
Book value per common share	$	37.59		$	36.39		$	32.46		$	37.59		$	32.46
Effect of goodwill		(0.47	)		(0.47	)		(0.48	)		(0.47	)		(0.48	)
Tangible book value per common share	$	37.12		$	35.92		$	31.98		$	37.12		$	31.98
Total shareholders' equity to assets		8.71	%		8.53	%		7.34	%		8.71	%		7.34	%
Effect of goodwill		(0.10	%)		(0.10	%)		(0.10	%)		(0.10	%)		(0.10	%)
Tangible common equity to tangible assets		8.61	%		8.43	%		7.24	%		8.61	%		7.24	%
Total average equity - GAAP	$	366,187		$	352,894		$	313,611		$	351,794		$	310,506
Adjustments:
Average goodwill		(4,687	)		(4,687	)		(4,687	)		(4,687	)		(4,687	)
Average tangible common equity	$	361,500		$	348,207		$	308,924		$	347,107		$	305,819
Return on average shareholders' equity		13.10	%		14.88	%		10.67	%		13.54	%		7.90	%
Effect of goodwill		0.17	%		0.21	%		0.16	%		0.19	%		0.12	%
Return on average tangible common equity		13.27	%		15.09	%		10.83	%		13.73	%		8.02	%
Total interest income	$	33,034		$	33,377		$	32,750		$	99,691		$	103,216
Adjustments:
Fully-taxable equivalent adjustments 1		1,356			1,394			1,424			4,105			4,396
Total interest income - FTE	$	34,390		$	34,771		$	34,174		$	103,796		$	107,612
Net interest income	$	20,919		$	21,607		$	16,232		$	63,051		$	45,676
Adjustments:
Fully-taxable equivalent adjustments 1		1,356			1,394			1,424			4,105			4,396
Net interest income - FTE	$	22,275		$	23,001		$	17,656		$	67,156		$	50,072
Net interest income	$	20,919		$	21,607		$	16,232		$	63,051		$	45,676
Adjustments:
Subordinated debt redemption cost		810			-			-			810			-
Adjusted net interest income	$	21,729		$	21,607		$	16,232		$	63,861		$	45,676
Net interest income - FTE	$	20,919		$	21,607		$	16,232		$	63,051		$	45,676
Adjustments:
Fully-taxable equivalent adjustments 1	1,356				1,394				1,424				4,105				4,396
Subordinated debt redemption cost		810			-			-			810			-
Adjusted Net interest income - FTE	$	23,085		$	23,001		$	17,656		$	67,966		$	50,072
Net interest margin		2.00	%		2.11	%		1.53	%		2.05	%		1.47	%
Effect of fully-taxable equivalent adjustments 1		0.13	%		0.14	%		0.14	%		0.14	%		0.14	%
Net interest margin - FTE		2.13	%		2.25	%		1.67	%		2.19	%		1.61	%
Net interest margin	2.00	%	2.11	%	1.53	%	2.05	%	1.47	%
Effect of subordinated debt redemption cost	0.08	%	0.00	%	0.00	%	0.02	%	0.00	%
Adjusted net interest margin	2.08	%	2.11	%	1.53	%	2.07	%	1.47	%
Net interest margin		2.00	%		2.11	%		1.53	%		2.05	%		1.47	%
Effect of fully-taxable equivalent adjustments 1	0.13	%			0.14	%			0.14	%			0.14	%			0.14	%
Effect of subordinated debt redemption cost		0.08	%		0.00	%		0.00	%		0.02	%		0.00	%
Adjusted Net interest margin - FTE		2.21	%		2.25	%		1.67	%		2.21	%		1.61	%
Allowance for loan losses	$	28,000		$	28,066		$	26,917		$	28,000		$	26,917
Loans	$	2,936,148		$	2,957,608		$	3,012,914		$	2,936,148		$	3,012,914
Adjustments:
PPP loans		(14,981	)		(39,682	)		(58,337	)		(14,981	)		(58,337	)
Loans, excluding PPP loans	$	2,921,167		$	2,917,926		$	2,954,577		$	2,921,167		$	2,954,577
Allowance for loan losses to loans		0.95	%		0.95	%		0.89	%		0.95	%		0.89	%
Effect of PPP loans		0.01	%		0.01	%		0.02	%		0.01	%		0.02	%
Allowance for loan losses to loans, excluding PPP loans		0.96	%		0.96	%		0.91	%		0.96	%		0.91	%
1 Assuming a 21% tax rate

First Internet Bancorp
Reconciliation of Non-GAAP Financial Measures
Dollar amounts in thousands, except per share data
Three Months Ended		Nine Months Ended
September 30,		June 30,		September 30,		September 30,		September 30,
2021		2021		2020		2021		2020
Total revenue - GAAP	$	28,732		$	30,569		$	28,727		$	88,201		$	69,355
Adjustments:
Gain on sale of premises and equipment		-			(2,523	)		-			(2,523	)		-
Subordinated debt redemption cost		810			-			-			810			-
Adjusted total revenue	$	29,542		$	28,046		$	28,727		$	86,488		$	69,355
Noninterest income - GAAP	$	7,813	$	8,962	$	12,495	$	25,150	$	23,679
Adjustments:
Gain on sale of premises and equipment	-	(2,523	)	-	(2,523	)	-
Adjusted noninterest income	$	7,813	$	6,439	$	12,495	$	22,627	$	23,679
Income before income taxes - GAAP	$	14,310		$	15,473		$	9,806		$	42,090		$	19,752
Adjustments:
Write-down of other real estate owned		-			-			2,065			-			2,065
Gain on sale of premises and equipment		-			(2,523	)		-			(2,523	)		-
Subordinated debt redemption cost		810			-			-			810			-
Adjusted income before income taxes	$	15,120		$	12,950		$	11,871		$	40,377		$	21,817
Income tax provision - GAAP	$	2,220		$	2,377		$	1,395		$	6,454		$	1,390
Adjustments:
Write-down of other real estate owned		-			-			434			-			434
Gain on sale of premises and equipment		-			(530	)		-			(530	)		-
Subordinated debt redemption cost		170			-			-			170			-
Adjusted income tax provision	$	2,390		$	1,847		$	1,829		$	6,094		$	1,824
Net income - GAAP	$	12,090		$	13,096		$	8,411		$	35,636		$	18,362
Adjustments:
Write-down of other real estate owned		-			-			1,631			-			1,631
Gain on sale of premises and equipment		-			(1,993	)		-			(1,993	)		-
Subordinated debt redemption cost		640			-			-			640			-
Adjusted net income	$	12,730		$	11,103		$	10,042		$	34,283		$	19,993
Diluted average common shares outstanding		9,988,102			9,981,422			9,773,224			9,974,071			9,827,182
Diluted earnings per share - GAAP	$	1.21		$	1.31		$	0.86		$	3.57		$	1.87
Adjustments:
Effect of write-down of other real estate owned		-			-			0.17			-			0.16
Effect of gain on sale of premises and equipment		-			(0.20	)		-			(0.19	)		-
Effect of subordinated debt redemption cost		0.06			-			-			0.06			-
Adjusted diluted earnings per share	$	1.27		$	1.11		$	1.03		$	3.44		$	2.03
Return on average assets		1.12	%		1.25	%		0.78	%		1.13	%		0.58	%
Effect of write-down of other real estate owned		0.00	%		0.00	%		0.15	%		0.00	%		0.05	%
Effect of gain on sale of premises and equipment		0.00	%		(0.19	%)		0.00	%		(0.06	%)		0.00	%
Effect of subordinated debt redemption cost		0.06	%		0.00	%		0.00	%		0.02	%		0.00	%
Adjusted return on average assets		1.18	%		1.06	%		0.93	%		1.09	%		0.63	%
Return on average shareholders' equity		13.10	%		14.88	%		10.67	%		13.54	%		7.90	%
Effect of write-down of other real estate owned		0.00	%		0.00	%		2.07	%		0.00	%		0.70	%
Effect of gain on sale of premises and equipment		0.00	%		(2.26	%)		0.00	%		(0.75	%)		0.00	%
Effect of subordinated debt redemption cost		0.69	%		0.00	%		0.00	%		0.24	%		0.00	%
Adjusted return on average shareholders' equity		13.79	%		12.62	%		12.74	%		13.03	%		8.60	%
Return on average tangible common equity		13.27	%		15.09	%		10.83	%		13.73	%		8.02	%
Effect of write-down of other real estate owned		0.00	%		0.00	%		2.10	%		0.00	%		0.71	%
Effect of gain on sale of premises and equipment		0.00	%		(2.30	%)		0.00	%		(0.77	%)		0.00	%
Effect of subordinated debt redemption cost		0.70	%		0.00	%		0.00	%		0.25	%		0.00	%
Adjusted return on average tangible common equity		13.97	%		12.79	%		12.93	%		13.21	%		8.73	%
Effective income tax rate		15.5	%		15.4	%		14.2	%		15.3	%		7.0	%
Effect of write-down of other real estate owned		0.0	%		0.0	%		1.2	%		0.0	%		1.4	%
Effect of gain on sale of premises and equipment		0.0	%		(1.1	%)		0.0	%		(0.6	%)		0.0	%
Effect of subordinated debt redemption cost		0.3	%		0.0	%		0.0	%		0.4	%		0.0	%
Adjusted effective income tax rate		15.8	%		14.3	%		15.4	%		15.1	%		8.4	%

View source version on businesswire.com: https://www.businesswire.com/news/home/20211020006085/en/

Investors/Analysts
Paula Deemer
Director of Corporate Administration
(317) 428-4628
[email protected]

Media
Nicole Lorch
President & Chief Operating Officer
(317) 532-7906
[email protected]

Source: First Internet Bancorp