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 | |||
| 2002 (Audited) |
2003 (Audited) |
||
| 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 | |||
| 2002 (Audited) |
2003 (Audited) |
||
| 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.