First Internet Bank Of Indiana Announces 2003 Year-End Financial Results

First Internet Bank of Indiana (First IB) today announced net income of $467,257 for the year ended December 31, 2003, representing its third consecutive year of profitability in the Bank’s five years of operation.

First IB management highlighted key factors relevant to Bank earnings for the year:

  • Non-interest income more than doubled over the prior year.
  • Non-interest expenses remained stable at prior year levels through a continued effort to manage the Bank efficiently. At the same time, the Bank’s assets grew by 16% ($46.3 million).
  • As announced earlier in the year, First IB devoted more resources to consumer loan originations due to the higher yields and shorter terms they offer when compared to other assets such as investment grade securities and mortgage loans. Over the course of the year, First IB’s loan portfolio grew 38% ($54.4 million). As a result of the larger loan portfolio and changes in loan mix, the expense for loan and lease losses remained at a level consistent with the prior year while maintaining an appropriate allowance for loan and lease loss.
  • Net interest income decreased by $1.3 million (19%) from the prior year. First IB management attributed the difference to the rapid rate of prepayments received on mortgage related assets as homeowners refinanced to take advantage of low interest rates. In some cases, these assets had to be replaced with lower-yielding assets.

“No question, First IB was strongly affected by the interest rate environment in 2003, and our net interest income took a beating,” said David B. Becker, Chairman and CEO of First IB. “However, we achieved meaningful growth in several key areas, and through a disciplined approach to expense management, we were able to maintain profitability. The ability to hold non-interest expense flat while growing the balance sheet of the bank demonstrates the scalability of our model, and we will further leverage that model in the year ahead.”

Selected Balance Sheet Information
December 31
Cash Equivalents 9,410,198 862,908
Investment Securities 135,115,650 134,021,538
Loans, net of Reserve 142,260,094 196,694,182
FHLB of Indianapolis Stock 1,014,700 1,535,000
Other Assets 3,817,799 4,847,384
Total Assets 291,618,441 337,961,012
Deposits 239,167,769 266,032,166
FHLB Advances 11,000,000 30,700,000
Other Liabilities 676,645 790,521
Shareholder’s Equity 40,774,027 40,438,325
Total Liabilities & Equity 291,618,441 337,961,012


Selected Income Statement Information
December 31
Net Interest Income 6,661,554 5,387,491
Non-Interest Income 475,875 1,188,295
Provision for Loan and Lease Losses (1,404,407) (1,418,531)
Non-Interest Expense (4,684,052) (4,565,379)
Net Income Before Taxes 1,048,970 591,876
Tax Expense / Benefit 1,397,227 (124,619)
Net Income 2,446,197 467,257
Income per share:
Basic 1.22 0.23
Diluted 1.21 0.23
Weighted average of shares outstanding:
Basic 2,006,661 2,010,654
Diluted 2,017,731 2,021,359

Net income for 2002 (approximately $2.4 million) included tax benefits of $1.4 million. These income tax benefits were derived from the Bank’s net operating loss carryforwards and were fully recognized in the Bank’s reported income for 2002. First IB was not subject to these recognition benefits in 2003 and incurred provision expense for income taxes of $125 thousand.

With $338 million in assets, First Internet Bank of Indiana is the first state-chartered, FDIC-insured institution to operate solely via the Internet and has customers in all 50 states. Services include interest-bearing checking accounts, regular and money market savings accounts with industry-leading interest rates, CDs, IRAs, credit cards, and check cards that can be used instead of cash or checks. First IB also offers personal lines of credit, installment loans, unique real-time transfers between accounts, and the ability to display checking, savings and loan information on a single screen. First IB is a privately capitalized institution with over 400 private and corporate investors.