First Internet Bancorp on Thursday reported a 60-percent drop in first-quarter profit, blaming a big decrease in mortgage banking income.
The Indianapolis-based parent of First Internet Bank earned $600,000, or 13 cents a share, versus a profit of $1.49 million, or 52 cents a share, in the first quarter of last year.
At midday Thursday, First Internet shares had slid 0.6 percent, to $22.20.
Total assets rose 30 percent, to $848 million, compared with $651 million a year earlier. Total deposits increased 33 percent to $727.6 million, from $546.7 million in the first quarter last year.
The bank attributed its drop in profit to a 70-percent decrease in mortgage banking income. That reflected the national slowdown in residential refinancing that began in the second half of 2013, according to First Internet. Rising interest rates put a damper on mortgage refinancing.
Income from mortgage banking fell from $3 million in the first quarter of 2013 to $900,000 in the first quarter this year.
In addition, tthe bank's decrease in net income per share reflected a 1.6 million increase in the number of outstanding common shares, following a December public offering.
Chairman and CEO David Becker said First Internet saw strong gains in commercial loans, which soared 111 percent to $230.2 million, compared with $109.1 million in the first quarter of last year.
The bank best known for its focus on consumers has in recent years stepped up its commercial business. Commercial real estate loans rose 87 percent in the quarter, while commercial and industrial loans jumped by 221 percent.
“Continued growth and diversification of our loan and deposit portfolios will be the fundamental drivers of our long-term success," Becker said in a prepared statement. “Our loan portfolio is diversified by both lending category and by geography. We have expanded our commercial lending capabilities in the Midwest and Southwest."
Becker founded the bank 15 years ago as one of the first in a new genre of Internet-based banks that don’t use traditional brick-and-mortar branches.