First Internet Bancorp's Business Segments

First Internet Bancorp is a bank holding company that conducts its business activities through its wholly-owned subsidiary, First Internet Bank of Indiana, an Indiana chartered bank. First Internet Bank of Indiana was the first state-chartered, Federal Deposit Insurance Corporation (“FDIC”) insured Internet bank and commenced banking operations in 1999. First Internet Bancorp was incorporated under the laws of the State of Indiana on September 15, 2005. On March 21, 2006, we consummated a plan of exchange by which we acquired all of the outstanding shares of the Bank.

 

First Internet Bancorp is known for delivering a variety of banking products and services catering primarily to commercial and residential clients. Their offerings span multiple segments, focusing on lending solutions that meet the diverse needs of businesses and individuals. Below, I will provide a comprehensive overview of the primary segments, products, and services offered by First Internet Bancorp, detailing each category of loans.

Segments and Products:

1. Commercial and Industrial Loans
- Source of Repayment: The primary repayment source for commercial and industrial loans is the cash flows generated by the borrower. This is supplemented by the collateral associated with the loans, which may occasionally fluctuate in value.
- Purpose: These loans are typically utilized for working capital, equipment purchases, or other business needs.
- Collateral and Guarantees: Most loans in this category are secured by the assets being financed and often involve a personal guarantee from the borrower.

Owner-Occupied Commercial Real Estate Loans
- Source of Repayment: The cash flow from the operations conducted by the borrower or an affiliate is the primary repayment source for these loans.
- Market Focus: The portfolio is primarily located in the Central Indiana and greater Phoenix, Arizona regions, securing properties such as manufacturing facilities, service centers, and office buildings.
- Risk Monitoring: First Internet Bancorp evaluates these loans based on the operational performance of the properties and the creditworthiness of the borrower.

Investor Commercial Real Estate Loans
- Source of Repayment: Repayment relies heavily on cash flows generated from the property and secondarily on the real estates value.
- Loan Characteristics: These loans usually involve larger principal amounts and require personal guarantees.
- Market Considerations: Loans in this category may be influenced by real estate market dynamics and the overall economys health. The properties may vary widely in type and are typically located in Indiana or adjacent markets.
- Risk Assessment: Management keeps track of collateral values and the financial status of guarantors, adhering to robust risk evaluation criteria.

Construction Loans
- Nature of Loans: These loans are designed to assist with the development of new constructions.
- Collateral: They are secured by the real estate and its improvements.
- Use of Funds: They can fund land acquisition, site preparations, and various project costs related to commercial and residential properties.
- Risk Factors: The initial cash flows may be predictable but can fluctuate based on market conditions.

Single Tenant Lease Financing
- Characteristics: This loan type targets owners of real estate under long-term leases with single tenants, usually high-profile, well-established brands.
- Assessment: Loans are assessed based on the borrower’s financial strength, tenant cash flows, and lease arrangements overall financial health.
- Monitoring: Ongoing evaluations consider tenant performance and overall real estate trends.

Residential Mortgage Loans
- Description: These loans are predominantly for owner-occupied 1-4 family residences.
- Risk Mitigation: A maximum loan-to-value ratio is typically enforced, with private mortgage insurance required for higher ratios.
- Repayment Factors: Factors affecting repayment include borrower financial circumstances and overarching market conditions such as employment rates.

Home Equity Loans and Lines of Credit
- Nature of Products: These lending products are secured by a subordinate interest in residential properties and can be used for various financial needs.
- Nationwide Offering: Geographic diversity characterizes the properties secured in this portfolio, as these products are available nationwide.
- Repayment Influences: Economic conditions such as property value shifts and unemployment levels can significantly impact repayment.

8. Other Consumer Loans
- Types: This segment encompasses personal loans, credit cards, and secured consumer loans tied to recreational vehicles or other assets.
- Individual Loan Size: These loans usually have smaller, manageable amounts, distributed across a broad borrower base, reducing overall risk.
- Repayment Sources: Personal income primarily drives repayments, influenced by local economic conditions.

Conclusion
First Internet Bancorp’s extensive range of segments, products, and services addresses the diverse financial needs of both businesses and consumers. The bank focuses on a model that emphasizes cash flow as a primary repayment source, reinforced by collateral and guarantees, while actively managing risk through diligent monitoring and evaluation processes. The varying types of loans cater to a wide audience, positioning First Internet Bancorp as a versatile player within the banking sector.