Shares of First Internet Bancorp tumbled in trading Friday after the company posted a lower third-quarter profit, citing rising interest rates that pinched mortgage spreads.
The parent of Indianapolis-based First Internet Bank posted a profit of $727,000, or 25 cents a share, compared with $1.63 million, or 57 cents a share, in the same quarter last year.
At midday, First Internet shares had slid 17 percent, or $5.42, to $25.92.
Chairman and CEO David Becker said that as a result of rising interest rates, the bank shifted focus to home-purchase loans instead of refinancing loans.
During the quarter, 51 percent of mortgages closed were for home purchases versus 12 percent during the same time last year.
“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,” Becker said in a statement.
First Internet Bank has been expanding its mortgage operations in recent years. Earlier this year, it invested $4.3 million to outfit nearly 50,000 square feet of office space at 11201 USA Parkway.
The bank boasted assets of $739 million in the third quarter, up from $628 million in the same quarter last year.
The bank also has put a focus on commercial lending. Commercial real estate loans receivable at Sept. 30 increased from $78.3 million in the third quarter of 2012 to $121 million in the third quarter this year.