First Internet Bancorp Announces Third Quarter Earnings

"This quarter's results are mixed," said David B. Becker, Chairman and CEO. "On the positive side, our non-interest income and net interest income have improved considerably. However, our provision for loan losses more than offset those gains. We have remained disciplined with our controllable expenses, but credit losses eroded earnings."

-- Net interest income and non-interest income increased over 2008 levels on a comparative basis for both the quarter as well as year-to-date. Net interest income and non-interest income year-to-date increased from the previous year by $1,003,599, or 11%, and $481,680, or 22%, respectively. Gains in non-interest income were fueled by increased mortgage loan activity and the sale of those loans into the secondary market.

-- Year-to-date non-interest expenses have increased $993,832 over 2008 levels, primarily due to increases in Federal Deposit Insurance Corporation (FDIC) premiums. Current year expenses include a $251,250 special assessment from the FDIC that was paid on September 30, 2009. In addition to the special assessment, the Bancorp's ongoing quarterly FDIC insurance premiums increased $366,429, or 141%, over the previous year. Third quarter results also include the recognition of a $200,000 pretax loss related to other-than-temporary-impairment on a $2 million par value trust preferred security within the Bancorp's investment portfolio. This is the only write-down the Bancorp has taken on its investment portfolio in 2009.

-- Provision expense remained elevated and therefore substantially reduced Bancorp profitability. Year-to-date provision expense of $6.1 million represents a $2.8 million, or 84%, increase over 2008 levels. Through the first three quarters of 2009, the provision has exceeded net charge-offs by $1.4 million. The formula used to determine the loan loss reserve is largely driven by a rolling average of net charge-offs but also includes qualitative considerations for the potential negative impact of economic factors, such as unemployment, which are outside of the Bancorp's control. As a result, the Bancorp has increased its loan loss reserve to 1.82% of outstanding loans, up from 1.27% a year ago.

"While there are indications that the nation's economy may be starting to recover, loan losses remain elevated at First Internet Bancorp," said Becker. "We have responded accordingly by increasing the reserve. We have tightened our requirements for loan approvals given this challenging economy but also recognize that economic recovery and improvement in the Bancorp's earnings will not occur unless we continue to make loans. Throughout this economic crisis, we have continued to add high quality loan assets."

Becker also noted the Bancorp has strengthened its capital position during 2009 by reducing the total assets and adding substantial amounts to the loan loss reserve. At September 30, 2009, the Bank's leverage ratio of 7.97% exceeded regulatory guidelines of 5% for well capitalized status. The Bancorp withdrew its application for, and therefore did not accept, TARP funds.

Selected Balance Sheet Information
                            September 30
                            2008             2009
                            (Unaudited(1))   (Unaudited(1))
Cash Equivalents            6,848,579        3,012,673
Investment Securities       168,207,017      153,955,491
Loans, net of Reserve       327,444,015      331,693,243
Bank owned life insurance   7,193,655        7,497,196
Goodwill                    4,687,349        4,687,349
Other Assets                9,127,075        6,573,802
Total Assets                523,507,690      507,419,754
Deposits                    422,332,707      411,030,235
FHLB Advances               57,000,000       46,700,000
Other Liabilities           1,283,846        1,633,100
Shareholder's Equity        42,891,137       48,056,419
Total Liabilities & Equity  523,507,690      507,419,754

Selected Income Statement Information
                                         Quarter Ended September 30
                                         2008            2009
                                         (Unaudited(1))  (Unaudited(1))
Net Interest Income                      3,214,515       3,669,408
Non-Interest Income                      715,821         773,742
Provision for Loan Losses                (1,286,348 )    (2,551,787 )
Non-Interest Expense                     (2,142,122 )    (2,468,362 )
Net Income/(Loss) Before Taxes           501,866         (576,999   )
Tax (Expense)/Benefit                    (39,999    )    368,193
Net Income/(Loss)                        461,867         (208,806   )
Income/(Loss) per share:
Basic                                    0.25            (0.11      )
Weighted average of shares outstanding:
Basic                                    1,877,531       1,891,460
                                         Nine Months Ended September 30
                                         2008            2009
                                         (Unaudited(1))  (Unaudited(1))
Net Interest Income                      9,009,603       10,013,202
Non-Interest Income                      2,173,784       2,655,464
Provision for Loan Losses                (3,295,420 )    (6,060,299 )
Non-Interest Expense                     (6,600,609 )    (7,594,441 )
Net Income/(Loss) Before Taxes           1,287,358       (986,074   )
Tax (Expense)/Benefit                    (18,170    )    831,570
Net Income/(Loss)                        1,269,188       (154,504   )
Income/(Loss) per share:
Basic                                    0.68            (0.08      )
Weighted average of shares outstanding:
Basic                                    1,877,531       1,891,460

About First Internet Bancorp

First Internet Bancorp (OTCBB: FIBP), the parent company of First Internet Bank of Indiana, is privately capitalized with over 250 private and corporate investors. The Bancorp became effective March 21, 2006.

About First Internet Bank

With over $500 million in assets, First Internet Bank of Indiana (First IB) 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 IB also offers consumer loans, conforming mortgages, jumbo mortgages, and home equity loans and lines of credit. First IB is a wholly owned subsidiary of First Internet Bancorp.

(1) Financial results for the Bancorp are audited by external accountants on an annual basis; however, external auditors are not engaged to review quarterly or year-to-date information.

SOURCE: First Internet Bancorp

First Internet Bancorp 
Nicole Lorch, 317-532-7906