First Internet Bank of Indiana today announced its fourth consecutive profitable quarter and the first full year of profitability in its three-year history. First IB attributed the earnings improvement to factors including disciplined expense management, more efficient asset allocation, and the success of efforts to attract core deposits capable of producing transactional revenues.
First IB’s net income for the quarter ended December 31, 2001, was $782,760. Net interest income for the quarter was $1,825,793, a 20% increase over the previous quarter.
Net income for the full year was $2.1 million, compared to a net loss of $4.6 million recorded in 2000. Net interest income for the year (before provision for loan losses) rose by 53% percent to $6.0 million, up from $3.9 million in 2000.
Deposits increased approximately 10% as a result of a concerted effort to attract transactional accounts. Total assets as of December 31, 2001, were $246.8 million, up nearly 14% over the previous year.
“Our 2001 earnings and transition to profitability prove that Internet-only banking is a valid model if it is implemented correctly,” said David B. Becker, Chairman and CEO of First IB. “Costs must be carefully controlled, and focus must be placed on the quality of the customers rather than the quantity. We have 23 employees running a $245 million bank, and we concentrate on building customer relationships rather than growing our account numbers. We believe we have found the right formula.”
The upturn in First IB’s earnings stemmed primarily from a $5.8 million improvement in operating income (net income before income tax benefit) over the previous year. The major contributor to the improvement was a $3.3 million reduction in non-interest expense – from $7.8 million in 2000 to $4.5 million in 2001 – that was achieved despite a growing customer base that nearly doubled data processing costs. Expenses were reduced by lowering advertising and consulting expenditures while keeping personnel and occupancy costs essentially unchanged from the prior year.
| Selected Balance Sheet Information | |||
| Dec 31, 2000 (Audited) |
Dec 31, 2001 (Audited) |
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| Cash Equivalents | 35,425,739 | 14,399,533 | |
| Investment Securities | 117,169,265 | 123,602,107 | |
| Loans, net of Reserve | 62,307,183 | 105,353,221 | |
| Other Assets | 2,186,116 | 3,460,720 | |
| Total Assets | 217,088,303 | 246,815,581 | |
| Deposits | 181,310,758 | 203,797,257 | |
| FHLB Advances | – | 3,500,000 | |
| Other Liabilities | 1,068,744 | 1,313,614 | |
| Shareholder’s Equity | 34,708,801 | 38,204,710 | |
| Total Liabilities & Equity | 217,088,303 | 246,815,581 | |
| Selected Income Statement Information | |||
| Year Ended December 31 2000 (Audited) |
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| 2001 (Audited) |
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| Net Interest Income | 3,921,128 | 5,995,083 | |
| Non-Interest Incomes | 329,443 | 881,697 | |
| Provision for Loan and Lease Losses | (713,275) | (941,089) | |
| Non-Interest Expense | (8,163,927) | (4,716,041) | |
| Net Income/(Loss) Before Taxes | (4,626,631) | 1,219,650 | |
| Tax Benefit | – | 853,696 | |
| Net Income/(Loss) | (4,626,631) | 2,073,346 | |
First Internet Bank of Indiana is the first state-chartered, FDIC-insured institution to operate solely via the Internet and has customers around the country. 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.