First Internet Bancorp reports record-setting quarter

Fishers-based First Internet Bancorp says the launch of its new municipal lending department helped push its net interest income to a record level last quarter.

In its first-quarter earnings report, released Thursday afternoon, the parent company of First Internet Bank said it earned $11.5 million in quarterly net interest income, up 25 percent from the same period a year earlier.

Net interest income, a major income source, represents the difference between what a bank earns in interest from loans and investments and the amount it pays out in interest on accounts. 

Overall the bank reported quarterly profit of $2.8 million, or 43 cents per share, compared with profit of $2.4 million, or 53 cents per share, in the same quarter of 2016. The bank issued 1.9 million shares of common stock from May to December last year, which is why per-share profit declined even as overall profit went up.

The bank’s loan portfolio grew to $1.4 billion last quarter, up from $1.0 billion a year earlier. Part of that growth came from the bank’s new public finance lending team, which was launched during the first quarter. As of March 31 the bank’s loan portfolio included $78 million in public finance loans, which represented 5.4 percent of its total commercial loans.

Non-performing loans represented 0.24 percent of total loans as of March 31. A year earlier, non-performing loans made up 0.04 percent of total loans.

Non-interest income dropped to $2.1 million last quarter, down from $2.9 million the previous quarter and $2.5 million for the first quarter of 2016. A shift in mortgage activity was the reason for the quarter-over-quarter decline, the bank said.

Historically, most of the bank’s mortgage originations have been for 15-year and 30-year fixed-rate mortgages that the bank then sells on the secondary market. With a recent rise in mortgage interest rates, First Internet Bank said, more customers have been choosing adjustable rate mortgages, which the bank typically holds on its balance sheet. 

“We had an opportunity to grow our adjustable rate portfolio this quarter, which impacted fee revenue in the current period but will generate interest income in the current and future periods,” President and CEO David Becker said in the earnings report. 

Non-interest expenses totaled $8.7 million last quarter, up from $7.0 million a year earlier. The bank said this was mostly because of higher salaries and employee benefit costs.

First Internet Bank shares closed at $28.65 Thursday, up 40 cents.

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