FIRST INTERNET BANCORP ANNOUNCES STRONG MORTGAGE
LENDING AND ORIGINATION GROWTH IN THIRD QUARTER 2011

INDIANAPOLIS, IN (November 2, 2011) - First Internet Bancorp (OTCBB:FIBP), parent company of First Internet Bank of Indiana (www.firstib.com), a premier provider of online retail and business banking services nationwide, today announced unaudited results for the quarter and nine months ended September 30, 2011.

Highlights:

• The company grew assets to $561.29 million at September 30, 2011, up from $487.08 million at September 30, 2010.

• Originated mortgage loans awaiting sale increased to $44.43 million at September 30, 2011 compared with $19.53 million at September 30, 2010.

• Total deposits grew 14.9% to $464.11 million in third quarter 2011 compared with $404.06 million in the prior year’s third quarter.

• Net loans rose 18.4% to $331.04 million compared with the prior year’s total.

• Tangible book value increased to $25.84 per share at September 30, 2011 versus $24.23 per share at September 30, 2010.

• Recent investments in technology, marketing and personnel supported revenue growth.

• Strong capital ratios and no TARP or SBLF funds accepted.

First Internet reported third quarter 2011 net income of $765,000 or $0.40 per diluted share, compared with $1.01 million or $0.53 per diluted share in third quarter 2010. Net income for the nine months of 2011 was $2.13 million or $1.12 per diluted share compared with $4.25 million or $2.24 per diluted share in the nine months of 2010.

The primary reason for the decrease in nine month net income in 2011 is that 2010 included $2.4 million of pre-tax income from a one-time reversal of a loan loss provision when a commercial credit was re-collateralized. The company noted the primary reason for the decline in third quarter net income between 2010 and 2011 periods was due to the timing of recognizing gains from closed but not-yet sold mortgage loan originations in third quarter 2011.

Loans held for sale were $44.43 million at September 30, 2011 compared with $19.53 million at September 30, 2010. The company expects positive impact on fourth quarter net income as a result of recognizing gains from the increased pipeline of loans held for sale and continued significant increase in mortgage loan origination.

"We enjoyed a tremendously active third quarter in our mortgage lending and mortgage origination business," said David Becker, chairman and CEO. "Our ability to tap into a nationwide audience of borrowers has enabled First Internet to seek out the best lending opportunities from coast to coast without being tied to a particular geography."

The company has accelerated web-based marketing, including an expanded presence in mortgage lender referral sites, which has directly contributed to increases in the mortgage business in recent months. The marketing spend increased to $242,000 in third quarter 2011 from $58,000 in the prior year’s third quarter.

"With an efficient Internet-based business model and an experienced mortgage lending team, we provide competitive rates and superior customer service," said Becker. "We endeavor to be very straightforward with borrowers, and many find this a refreshing experience.

"We were pleased our assets reached an all-time high at the end of third quarter – a reflection of our ability to grow the institution – while other banks muddle through significant problem credits," said Becker. "While we trimmed assets during a difficult economic climate in the past several years, we are now tapping opportunities for growth in numerous markets."

Revenue Growth and Margin Management

Net interest income after provision for loan losses in third quarter 2011 was $3.07 million compared with $3.08 million in third quarter 2010. For the nine months of 2011, net interest income after provision for loan losses was $9.13 million compared with $11.47 million during the first nine months of 2010. As previously noted, the nine months of 2010 included $2.4 million pre-tax income from a reversal of a loan loss provision.

In third quarter 2011, net interest income before provision for loan losses was flat, year over year, at $3.71 million. For the nine months of 2011, the company recorded net interest income before provision for loan losses of $10.62 million compared with $11.10 million for the nine months of 2010.

Total third quarter interest income was $6.11 million at September 30, 2011 compared with $6.31 million at September 30, 2010. For the nine months of 2011, total interest income was $18.01 million at September 30, 2011, compared with $19.34 million at September 30, 2010. Both 2011 totals reflect a slight decline of loan interest income due primarily to a lower interest rate environment year-over-year. The bank’s net interest margin at September 30, 2011 was 2.89% compared with 2.80% in second quarter 2011 and 3.28% at September 30, 2010.

Becker explained that by re-pricing selected deposits, the company was able to lower total interest expense year-over-year while at the same time growing deposits by 14.9%. Total interest expense in third quarter 2011 was $2.41 million compared with $2.60 million in the prior year’s third quarter. For the nine months of 2011, total interest expense was $7.39 million compared with $8.24 million in the nine months of 2010.

First Internet’s total noninterest income in third quarter 2011 was $816,000 compared with $843,000 in third quarter 2010, reflecting lower gains on loans sold because of the previously discussed delay in recognizing income from mortgage loans pending sale to the secondary market. In the nine months of 2011, total noninterest income was $1.74 million compared with $1.86 million in the nine months of 2010.

Balance Sheet Growth and Capital Position

To support its lending, at September 30, 2011, total deposits increased to $464.11 million compared with $443.64 million in second quarter 2011 and $404.06 million at September 30, 2010. Net loans increased 18.4% to $331.04 million at September 30, 2011 compared with $279.66 million at September 30, 2010.

Becker commented: "We have dramatically reduced our use of brokered deposits since 2010 and have grown core deposits to support lending. We anticipate our efficient Internet-based cost structure, supported by experienced lenders and account representatives, will contribute to cost-effectively drive revenue to the bottom line. We have also expanded our lending capabilities in commercial real estate which we anticipate will contribute to the diversity of our loan portfolio and placed an increased emphasis on our consumer segment’s specialty vehicle lending."

With a strong deposit base and little prior exposure to commercial real estate (CRE) loans, the company is pursuing high quality commercial lending opportunities at a time when many banks have pulled back from CRE lending, explained Becker. Lending on specialty vehicles such as horse trailers and recreational vehicles enables the company to target customers in a sector with relatively few competitors.

First Internet’s asset quality is better than most of its community bank peers. Non-performing loans as a percentage of total loans was 1.61% at September 30, 2011 compared with 2.78% at December 31, 2010, and 2.06% at September 30, 2010. The loan loss reserve as a percentage of non-accrual loans was 90.58% at September 30, 2011. Total assets increased to a record $561.29 million at September 30, 2011 compared with $487.08 million at September 30, 2010.

First Internet Bancorp is well-capitalized under regulatory capital guidelines, with a Tier 1 Leverage ratio of 8.68% at the bank and 8.95% at the holding company at September 30, 2011, and a Total Risk Based Capital ratio of 12.20% at the bank and 12.52% at the holding company.

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 240 private and corporate investors. First Internet Bank opened for business in 1999. The Bancorp became effective March 21, 2006.

About First Internet Bank
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, home equity loans and lines of credit, and commercial loans. First IB is a wholly owned subsidiary of First Internet Bancorp.

Safe Harbor Statement
Statements in this press release which express "belief," "intention," "expectation," and similar expressions, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company’s management, as well as assumptions made by, and information currently available to, such management. Such statements are inherently uncertain and there can be no assurance that the underlying assumptions will prove to be accurate. Actual results could differ materially from those contemplated by the forward-looking statements. Any forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

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