First Internet Bank of Indiana (First IB) today announced net income of $80,358 for the quarter ended June 30, 2003.
Narrow net interest margins resulting from declining interest rates continued to affect earnings. Over the past several quarters, interest rates paid on deposits and the Bank’s overall cost of funds has decreased, but not as significantly as loan rates, resulting in the reduction in net interest margin.
First IB’s continued loan growth and the corresponding increase in the Provision for Loan and Lease Losses increased expenses by $152,742. These loan loss reserves help to position the Bank with a strong balance sheet moving into future periods.
“First IB has been successful in steadily expanding its lending efforts, primarily to consumers, and our loan portfolio is up more than 45% compared to the same quarter last year. However, this internal loan growth was not enough to counter the substantial security and loan prepayments we have received during this extended low rate environment,” said David B. Becker, Chairman and CEO of First IB. “We consider the Bank’s overall credit quality to be very good and plan to continue with a disciplined approach to asset quality and interest rate risk. In the short term, we will likely see modest earnings, but we believe this approach is in the long term best interest of the Bank and its stakeholders.”
Net income before taxes for the quarter was $169,127 higher than the same quarter in the previous year. However, the Bank had sustained a substantial investment security loss in the second quarter 2002 that contributed to the positive variance to the current year.
As of June 30, 2003, First IB held $260.2 million in deposits, a 25% increase over deposits as of June 30, 2002. Despite the increase in deposits, overhead expenses remained consistent with prior quarters.
| Selected Balance Sheet Information | |||
| June 30 | |||
| 2002 (Unaudited) |
2003 (Unaudited) |
||
| Cash Equivalents | 14,937,510 | 12,132,566 | |
| Investment Securities | 119,396,848 | 137,115,878 | |
| Loans, net of Reserve | 122,565,161 | 180,160,740 | |
| Other Assets | 3,363,604 | 4,267,704 | |
| Total Assets | 260,263,123 | 333,676,888 | |
| Deposits | 213,623,912 | 267,162,215 | |
| FHLB Advances | 4,500,000 | 25,000,000 | |
| Other Liabilities | 2,529,304 | 866,083 | |
| Shareholder’s Equity | 39,609,906 | 40,648,590 | |
| Total Liabilities & Equity | 260,263,123 | 333,676,888 | |
| Selected Income Statement Information | |||
| June 30 | |||
| 2002 (Unaudited) |
2003 (Unaudited) |
||
| Net Interest Income | 1,782,306 | 1,270,437 | |
| Non-Interest Income | 218,794 | 223,925 | |
| Provision for Loan and Lease Losses | (99,534) | (252,276) | |
| Non-Interest Expense | (1,178,567) | (1,141,357) | |
| Gain on Sale of Investments | (798,061) | (6,664) | |
| Net Income Before Taxes | (75,062) | 94,065 | |
| Tax Benefit (Expense) | 545,591 | (13,707) | |
| Net Income | 470,529 | 80,358 | |
| Income per share: | |||
| Basic | 0.23 | 0.04 | |
| Weighted average of shares outstanding: | |||
| Basic | 2,005,608 | 2,009,658 | |
With $333 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.