About First Internet Bancorp

First Internet Bancorp operates as the bank holding company for First Internet Bank of Indiana that provides various banking products and services. The bank has three wholly-owned subsidiaries: First Internet Public Finance Corp., an Indiana corporation, which provides a range of public and municipal finance lending and leasing products to governmental entities throughout the United States and acquires securities issued by state and local governments and other municipalities; JKH Realty Services, LLC, a Delaware limited liability company, which manages other real estate owned properties as needed; and SPF15 Inc., an Indiana corporation that owns real estate used primarily for the bank’s principal office. The company offers a wide range of commercial, small business, consumer and municipal banking products and services. The company conducts its consumer and small business deposit operations primarily through digital channels on a nationwide basis and has no traditional branch offices. The company’s consumer lending products are primarily originated on a nationwide basis through relationships with dealerships and financing partners. The company’s commercial banking products and services are delivered through a relationship banking model and include commercial and industrial (‘C&I’) banking, construction and investor commercial real estate, single tenant lease financing, public finance, healthcare finance, small business lending, franchise finance and commercial deposits and treasury management. The company’s C&I team provides credit solutions, such as lines of credit, term loans, owner-occupied commercial real estate loans and corporate credit cards on a regional basis to commercial borrowers primarily in the Midwest and Southwest regions of the United States. The company primarily offers construction and investor commercial real estate loans within Central Indiana or on a regional basis and single tenant lease financing on a nationwide basis. The company’s public finance team provides a range of public and municipal lending and leasing products to government entities on a nationwide basis. The company’s healthcare finance team was established in conjunction with the company’s strategic partnership with Provide, Inc. (Provide), a San Francisco-based technology-enabled lender to healthcare practices, which provided lending on a nationwide basis for healthcare practice finance or acquisition, acquisition or refinancing of owner-occupied commercial real estate and equipment purchases. In the third quarter 2021, Provide was acquired by a super-regional financial institution. Subsequent to Provide being acquired, the acquiring institution has retained most, if not all, of Provide’s loan origination activity and the company’s healthcare finance loan balances have declined. The company’s franchise finance business was established in July 2021 in conjunction with the company’s business relationship with ApplePie Capital, a financial technology (‘fintech’) company that specializes in providing financing to franchisees in various industry segments. The company’s commercial deposits and treasury management team works with the other commercial teams to provide deposit products and treasury management services to the company’s commercial and municipal lending customers, as well as pursues commercial deposit opportunities in business segments where the company has no credit relationships. The company differentiates itself from larger financial institutions by providing a full suite of services to emerging small businesses and entrepreneurs on a nationwide basis. The company is one of the fastest-growing lenders in the Small Business Administration (‘SBA’) 7(a) program, closing more than $155.4 million in SBA 7(a) loans during 2022 and ranking in the top 30 SBA 7(a) lenders for the SBA’s 2022 fiscal year. The company also offers a top-ranked small business checking account product to the company’s country’s entrepreneurs. The company also offers payment, deposit, card and lending products and services through fintech partnerships, which the company intends to grow in future periods. With the rapid evolution of technology that enables consumers and small businesses to manage their finances digitally, fintechs are addressing a significantly growing marketplace. Fintechs have created robust digital offerings, unburdened by legacy technology architecture, to address growing customer expectations. Through partnerships with selected fintechs, the company’s ability to win and retain consumer and small business relationships will be significantly enhanced. Furthermore, partnering with select fintechs will allow the company to further diversify the company’s revenue sources, acquire lower-cost deposits and pursue additional asset generation capabilities. The company offers its consumer lending, as well as public finance, healthcare finance, franchise finance, small business lending and single tenant financing products and services throughout the United States. However, the company serves CRE and C&I borrowers primarily in Central Indiana and adjacent markets. Commercial and Industrial: Commercial and industrial loans’ sources of repayment are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Loans are made for working capital, equipment purchases, or other purposes. Most commercial and industrial loans are secured by the assets being financed and may incorporate a personal guarantee. This portfolio segment is generally concentrated in the Midwest and Southwest regions of the United States. Owner-Occupied Commercial Real Estate: The primary source of repayment is the cash flow from the ongoing operations and activities conducted by the borrower, or an affiliate of the borrower, who owns the property. This portfolio segment is generally concentrated in the Midwest and Southwest regions of the United States and its loans are often secured by manufacturing and service facilities, as well as office buildings. Investor Commercial Real Estate: These loans are underwritten primarily based on the cash flow expected to be generated from the property and are secondarily supported by the value of the real estate. These loans typically incorporate a personal guarantee from the primary sponsor or sponsors. This portfolio segment generally involves larger loan amounts with repayment primarily dependent on the successful leasing and operation of the property securing the loan or the business conducted on the property securing the loan. Investor commercial real estate loans may be more adversely affected by changing economic conditions in the real estate markets, industry dynamics or the overall health of the local economy where the property is located. The properties securing the company’s investor commercial real estate portfolio tend to be diverse in terms of property type and are generally located in the Midwest and Southwest regions of the United States. Construction: Construction loans are secured by land and related improvements and are made to assist in the construction of new structures, which may include commercial (retail, industrial, office, and multi-family) properties, land development for residential properties or single family residential properties offered for sale by the builder. This portfolio segment is generally concentrated in the Midwest and Southwest regions of the United States. Single Tenant Lease Financing: These loans are made on a nationwide basis to property owners of real estate subject to long-term lease arrangements with single tenant operators. The real estate is typically operated by regionally, nationally or globally branded businesses. Public Finance: These loans are made on a nationwide basis to governmental and not-for-profit entities to provide both tax-exempt and taxable loans for a variety of purposes, including short-term cash-flow needs; debt refinancing; economic development; quality of life projects; infrastructure improvements; renewable energy projects; and equipment financing. Certain loans may also include an additional collateral pledge of mortgaged property or a security interest in financed equipment. Healthcare Finance: These loans are made on a nationwide basis to healthcare providers, primarily dentists, for practice acquisition financing or refinancing that occasionally includes owner-occupied commercial real estate and equipment purchases. Small Business Lending: These loans are made on a nationwide basis to small businesses and generally carry a partial guaranty from the U.S. Small Business Administration (‘SBA’) under its 7(a) loan program. The company generally sells the government guaranteed portion of SBA loans into the secondary market while retaining the non-guaranteed portion of the loan and the servicing rights. Loans in the small business lending portfolio have sources of repayment that are primarily based on the identified cash flows of the borrower and secondarily on any underlying collateral provided by the borrower. Loans may, but do not always, have a collateral shortfall. For SBA loans where the guaranteed portion is retained, the SBA guaranty provides a tertiary source of repayment to the bank in event of borrower default. Loans are made for a broad array of purposes, including but not limited to, providing operating cash flow, funding ownership changes, and facilitating equipment purchases. Franchise Finance: These loans are made on a nationwide basis through the company’s partnership with ApplePie Capital, which through their deep relationships with franchise brands provides franchisees with financing options for new franchise units, recapitalization, expansion, equipment and working capital. Residential Mortgage: With respect to residential loans that are secured by 1-to-4 family residences and are generally owner occupied, the company typically establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home Equity: Home equity loans and lines of credit are typically secured by a subordinate interest in 1-to-4 family residences. The properties securing the home equity portfolio segment are generally geographically diverse as the company offers these products on a nationwide basis. Other Consumer: These loans primarily consist of consumer loans and credit cards. Consumer loans may be secured by consumer assets, such as horse trailers or recreational vehicles. Some consumer loans are unsecured, such as small installment loans, home improvement loans and certain lines of credit. Deposits As of December 31, 2022, the company’s deposits included noninterest-bearing demand deposit accounts; interest-bearing demand deposit accounts; savings accounts; money market accounts; certificates of deposits; banking-as-a-service (BaaS) - brokered deposits; and brokered deposits. Investment Securities Portfolio As of December 31, 2022, the company’s investment securities portfolio included U.S. Government-sponsored agencies; municipal securities; agency mortgage-backed securities - residential; agency mortgage-backed securities - commercial; private-label mortgage-backed securities - residential; asset-backed securities; and corporate securities. Regulation and Supervision The company is registered as a bank holding company under the Bank Holding Company Act of 1956 (the ‘BHCA’) and has elected to be a financial holding company. It is subject to regulation, supervision, examination and enforcement by the Federal Reserve. The company and Bank are each subject to the Basel III Rule. Under the Dodd-Frank Act, the company is required to serve as a source of financial and managerial strength for the bank and to commit resources to support it in circumstances where the company might not otherwise do so, in the event of the financial distress of the bank. This provision codified the longstanding policy of the Federal Reserve. The bank is an Indiana-chartered bank formed pursuant to the Indiana Financial Institutions Act (the ‘IFIA’). As such, the bank is regularly examined by and subject to regulations promulgated by the DFI and the FDIC as its primary federal bank regulator. The bank derives its lending and investment powers from the IFIA, the Federal Deposit Insurance Act (the ‘FDIA’) and related regulations. Under the CRA, as implemented by FDIC regulations, the bank has a continuing and affirmative obligation, consistent with safe and sound banking practices, to help meet the credit needs of its entire community, including low and moderate-income neighborhoods. The authority of the bank, like other FDIC-insured institutions, to engage in transactions with its ‘affiliates’ is limited by Sections 23A and 23B of the Federal Reserve Act and the Federal Reserve’s Regulation W. The company is an ‘affiliate’ of the bank for purposes of Regulation W and Sections 23A and 23B of the Federal Reserve Act. The bank’s authority to extend credit to its directors, executive officers and principal shareholders, as well as to entities controlled by such persons (‘Related Interests’), is governed by Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve. The DFI and the FDIC share primary regulatory enforcement responsibility over the bank and its institution-affiliated parties, including directors, officers and employees. The bank is a member of the Deposit Insurance Fund (‘DIF’), which is administered by the FDIC. The bank is a member of the FHLB. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, in conjunction with the implementation of various federal regulatory agency regulations, has caused financial institutions, such as the bank, to adopt and implement additional policies or amend existing policies and procedures with respect to, among other things, anti-money laundering compliance, suspicious activity, currency transaction reporting, customer identity verification and customer risk analysis. The bank is subject to a number of federal and state laws designed to protect consumers and prohibit unfair or deceptive business practices. These laws include the Equal Credit Opportunity Act, Fair Housing Act, Homeowners Protection Act, Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003 (the ‘FACT Act’), the Gramm-Leach-Bliley Act (the ‘GLBA’), the Truth in Lending Act, the CRA, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act, the Service Members Civil Relief Act, the Expedited Funds Availability Act, the Electronic Fund Transfer Act, the Truth in Savings Act, the Right to Financial Privacy Act, laws relating to unfair, deceptive and abusive acts and practices, and various state laws, such as usury laws, or laws which are counterparts and/or extensions of the foregoing federal laws. History First Internet Bancorp was founded in 1999. The company was incorporated under the laws of the state of Indiana in 2005.