FIRST INTERNET BANCORP ANNOUNCES SECOND QUARTER EARNINGS

INDIANAPOLIS, IN (July 29, 2009) - First Internet Bancorp (“Bancorp”), the parent company of First Internet Bank of Indiana (“Bank”), today announced net income of $263,747 and income from operations of $408,465 for the quarter ended June 30, 2009.
Income from operations represented a decrease of $40,575, or 9%, from the same quarter in the previous year but an increase of $974,755 over the results reported for the first quarter of 2009.

• Lower mortgage rates and a competitive pricing strategy fueled a second quarter increase in residential loan originations. As a result, non-interest income increased $357,829, or 47%, and net interest income increased by $247,113, or 8%, from the same quarter in the previous year.

• Provision expense related to consumer installment loans continued to challenge Bancorp profitability. Second quarter operating results included a nearly $1.5 million provision expense for credit losses. The provision exceeded net charge-offs by just over $400,000. While net charge-offs decreased significantly since the previous quarter, management remained cautious and increased the Bancorp’s allowance for loan and lease losses, from 1.61% to over 1.70% of outstanding loan balances. “We see some signs of economic recovery, but with a national unemployment rate hovering near 10%, we are not out of the woods yet,” said Chairman and Chief Executive Officer David B. Becker. “Nonperforming assets and net charge-offs from consumer installment loans remain higher than we would like.” Management stated the loan delinquencies are manageable, noting that additional resources applied to collection efforts had proven effective.

• Non-interest expense increased $276,111, or 12%, from the same quarter in the previous year. The increase was largely attributed to increases in Federal Deposit Insurance Corporation (FDIC) premiums. Ongoing, quarterly FDIC insurance premiums increased $188,865, or 212%, from the same quarter in the previous year.

The second quarter net income represented a decrease of $173,635, or 40%, from the same quarter in the previous year but an increase of $473,192 over the results reported for the first quarter in 2009. Primarily responsible for the decrease was a second quarter expense of $251,250 for a special assessment from the FDIC that will be paid on September 30, 2009. 

“Overall, we find a lot of good news in this quarter’s operating results,” said Becker. “Our non-interest income and net interest income are up, due in part to rates but also thanks to a savvy pricing strategy that makes our home loans extremely competitive for consumers.”

 “We recognize that consumer confidence in the banking industry and insured deposits is critical at this time, yet we cannot help but note that were it not for the increase in ongoing, quarterly FDIC insurance premiums and the special assessment expense, we would have been more profitable in the second quarter 2009 than we were a year ago,” Becker stated.

About First Internet Bancorp
First Internet Bancorp (OTC Bulletin Board: FIBP), the parent company of First Internet Bank of Indiana, is privately capitalized with over 250 private and corporate investors.  The Bancorp became effective March 21, 2006.

About First Internet Bank
With over $540 million in assets, First Internet Bank of Indiana (First IB) is the first state-chartered, FDIC-insured institution to operate solely via the Internet and has customers in all 50 states. Deposit services include checking accounts, regular and money market savings accounts with industry-leading interest rates, CDs and IRAs. First IB also offers consumer loans, conforming mortgages, jumbo mortgages, and home equity loans and lines of credit. First IB is a wholly owned subsidiary of First Internet Bancorp.

¹Financial results for the Bancorp are audited by external accountants on an annual basis; however, external auditors are not engaged to review quarterly information.