What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-12 compared with 2024-03-13 · 531 added, 530 removed, 1781 unchanged (37% of the section changed)

2 unchanged sentences

The Company maintains disclosure controls and procedures that are designed to ensure that information the Company is required to disclose in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time period specified in SEC rules and forms.

These controls and procedures are also designed to ensure that such information is accumulated and communicated to management, including our principal executive and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

These controls and procedures are also designed to ensure that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

In designing and evaluating disclosure controls and procedures, the Company has recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

8 unchanged sentences

The Company’s internal control over financial reporting

as of December 31, 2023 has been audited by FORVIS, LLP, an independent registered public accounting firm, as stated in its report appearing on page F-2.

as of December 31, 2024 has been audited by Forvis Mazars, LLP, an independent registered public accounting firm, as stated in its report appearing on page F-2.

Changes in Internal Control Over Financial Reporting

10 unchanged sentences

Name Age Position

Becker 70 Chairman, Chief Executive Officer and Director

Lorch 49 President, Chief Operating Officer and Secretary

Lovik 54 Executive Vice President and Chief Financial Officer

Chairman, Chief Executive Officer and Director

President, Chief Operating Officer and Secretary

Executive Vice President and Chief Financial Officer

Becker has served as our Chairman of the Board since 2006, as our Chief Executive Officer since 2007, and as our President from 2007 to June 2021.

10 unchanged sentences

Edwards & Sons, Inc.

Executive officers are elected annually by our Board of Directors and serve a one-year period or until their successors are elected.

Executive officers are elected annually by our Board of Directors and serve a one-year term or until their successors are elected.

None of the above-identified executive officers are related to each other or to any of our directors.

3 unchanged sentences

To the extent permissible under applicable law, the rules of the SEC or Nasdaq listing standards, we intend to post on our website any amendment to the code of business conduct and ethics, or any grant of a waiver from a provision of the code of business conduct and ethics, that requires disclosure under applicable law, the rules of the SEC or Nasdaq listing standards.

Insider Trading Policy

We have adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of the Company's securities by directors, officers and employees that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to the Company.

A copy of the Company's Trading Policy has been filed as Exhibit 19 to this Annual Report on Form 10-K.

The disclosures in the Proxy Statement under the headings “Proposal 1 - Election of Directors,” “Corporate Governance,” “Shareholder Proposals for 2025 Annual Meeting,” and, if applicable “Delinquent Section 16(a) Reports” are incorporated into this Item by reference.

Executive Compensation

Incorporated into this Item by reference is the information in the Proxy Statement regarding the compensation of our named executive officers appearing under the heading “Executive Compensation” (excluding information under the caption “Pay versus Performance”), the information regarding compensation committee interlocks and insider participation under the

heading “Corporate Governance” and the information regarding compensation of non-employee directors under the heading “Director Compensation.”

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

3 unchanged sentences

Principal Accountant Fees and Services

Incorporated into this Item by reference is the information in the Proxy Statement under the heading “Audit Matters.” The independent registered public accounting firm is FORVIS, LLP (Public Company Accounting Oversight Board Firm ID No.

Incorporated into this Item by reference is the information in the Proxy Statement under the heading “Audit Matters.” The independent registered public accounting firm is Forvis Mazars, LLP (Public Company Accounting Oversight Board Firm ID No.

686 ) located in Indianapolis, Indiana.

34 unchanged sentences

Form of Management Incentive Award Agreement - Restricted Stock Units under 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2023)*

Insider Trading Policy

List of Subsidiaries

4 unchanged sentences

Section 1350 Certifications

Compensation Recoupment Policy

Compensation Recoupment Policy (incorporated by reference to Exhibit 97 to Annual Report on Form 10-K for the year ended December 31, 202 3 )

101 Financial statements from the Annual Report on Form 10-K of First Internet Bancorp for the period ended December 31, 2024, filed with the SEC on March 12, 2025, formatted in inline extensible Business Reporting Language (XBRL):

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Keach, Jr., Director

Raines, Director

Becker, by signing his name hereto, does hereby sign this document on behalf of each of the above-named directors of the Registrant pursuant to powers of attorney duly executed by such persons.

5 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of First Internet Bancorp (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

We have audited the accompanying consolidated balance sheets of First Internet Bancorp (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 13, 2024, expressed an unqualified opinion thereon .

Emphasis of Matter

As discussed in Note 1, Note 4, and Note 22 to the consolidated financial statements, in 2023, the Company changed its method of accounting for credit losses on financial instruments due to the adoption of Accounting Standards Codification Topic 326:

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in I nternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 12, 2025, expressed an unqualified opinion thereon.

Change in Accounting Principle

As discussed in Note 1 and Note 4 to the consolidated financial statements, in 2023, the Company changed its method of accounting for credit losses on financial instruments due to the adoption of Accounting Standards Codification Topic 326:

Financial Instruments – Credit Losses .

Our opinion is not modified with respect to this matter.

Basis for Opinion

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Allowance for Credit Losses (ACL) – Loans – Qualitative Adjustments

As described in Note 1, Note 4, and Note 22 of the consolidated financial statements and referred to in the change in accounting principle explanatory paragraph above, on January 1, 2023, the Company adopted ASU 2016-13 :

Financial Instruments - Credit losses (“ASC 326”):

Measurement of Credit Losses on Financial Instruments , as amended, which replaces the incurred loss methodology with an expected credit loss (“CECL”) methodology.

As of December 31, 2023, the ACL on loans was $38,774,000.

Critical Audit Mater Description

As described in Note 4 to the consolidated financial statements, the Company’s consolidated allowance for credit losses (ACL) was $44,769,000 at December 31, 2024.

The Company also describes in Note 1 of the consolidated financial statements the “Allowance for Credit Losses” accounting policy around this estimate.

The ACL for loans represents management's estimate of all expected credit losses over the expected life of the Company’s existing loan portfolio.

Management estimates the ACL balance using relevant available information about the collectability of cash flows, from internal and external sources, including historical information relating to past events, current conditions, and reasonable and supportable forecasts of future economic conditions.

When the Company is unable to forecast future economic events, management may revert to historical information.

The Company utilized a discounted cash flow (“DCF”) method to estimate the quantitative portion of the allowance for credit losses for loans evaluated on a collective pooled basis.

Due to its minimal loss history, the Company elected to use peer data for a more reasonable calculation.

The Company also includes qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for.

Due to its minimal loss history, the Company elected to use peer data for a more accurate calculation.

The Company also includes qualitative adjustments to the ACL based on factors and considerations that have not otherwise been fully accounted for.

We have identified auditing the qualitative adjustments as a critical audit matter as management’s determination of the qualitative adjustments used in the ACL is subjective and involves significant management judgments;

and our audit procedures related to the qualitative adjustments involved a high degree of auditor judgment and required significant audit effort, including the need to involve more experienced audit personnel.

and our audit procedures related to the qualitative adjustments involved a high degree of auditor judgment and required significant audit effort.

The primary procedures we performed to address this critical audit matter included:

• Testing the design and operating effectiveness of controls over the qualitative adjustments used in the ACL calculation including controls addressing the:

◦ Significant assumptions and judgments applied in the development of the qualitative adjustments.

◦ Mathematical accuracy of the qualitative adjustments applied to the loan segments in the ACL calculation.

• Substantively testing management's determination of the qualitative adjustments used in the ACL estimate, including:

◦ Testing management’s process for developing the qualitative adjustments, which included assessing the relevance and reliability of data used to develop the qualitative adjustments, including evaluating their judgments and assumptions for reasonableness.

Among other procedures, our evaluation considered evidence from internal and external sources.

◦ Analytically evaluating the qualitative adjustments for directional consistency, testing for reasonableness, and obtaining evidence for significant changes.

◦ Testing the mathematical accuracy of the qualitative adjustments applied to the loan segments in the ACL calculation.

/s/ FORVIS, LLP

• We obtained an understanding of the Company’s process for establishing the ACL, including the key qualitative factor adjustments applied to the ACL.

• Evaluated the design and tested the operating effectiveness of key controls over significant assumptions and judgments applied in the application of the qualitative adjustments used in the ACL calculation

• Assessed management’s process for developing the qualitative adjustments and determining the reasonableness of the qualitative adjustments applied in the ACL estimate which included assessing the relevance and reliability of data used to develop the qualitative adjustments.

Our evaluation considered evidence from internal and external sources.

• Evaluated the reasonableness of the overall ACL and related qualitative adjustments to determine whether the ACL appropriately reflects expected credit losses by assessing trends in relevant factors and evaluating the relationship of those trends to the overall ACL and related qualitative adjustments applied to the ACL.

• Evaluated the mathematical accuracy of the qualitative adjustments applied to the loan segments in the ACL calculation.

/s/ Forvis Mazars, LLP

We have served as the Company's auditor since 2004.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

/s/ FORVIS, LLP

/s/ Forvis Mazars, LLP

Indianapolis, Indiana

6 unchanged sentences

Total cash and cash equivalents 466,410 405,898

Securities available-for-sale - at fair value (amortized cost of $513,315 in 2023 and $436,183 in 2022) 474,855 390,384

Securities held-to-maturity - at amortized cost, net of allowance for credit losses of $0.3 million in 2023 (fair value of $207,572 in 2023 and $168,483 in 2022) 227,153 189,168

Loans held-for-sale (includes $9,110 at fair value in 2022) 22,052 21,511

Securities available-for-sale - at fair value (amortized cost of $ 626,854 and $ 513,315 in 2024 and 2023, respectively)

587,355 474,855

Securities held-to-maturity - at amortized cost, net of allowance for credit losses of $ 0.2 million and $ 0.3 million in 2024 and 2023, respectively, (fair value of $ 228,851 and $ 207,572 in 2024 and 2023, respectively)

249,796 227,153

Loans held-for-sale 54,695 22,052

4,170,646 3,840,220

Allowance for credit losses - loans ( 44,769 ) ( 38,774 )

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Advances from Federal Home Loan Bank 295,000 614,934

Subordinated debt, net of unamortized discounts and debt issuance costs of $2,162 in 2023 and $2,468 in 2022 104,838 104,532

Subordinated debt, net of unamortized discount and debt issuance costs of $ 1,850 and $ 2,162 in 2024 and 2023, respectively

105,150 104,838

Accrued interest payable 2,495 3,848

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8,667,894 and 8,644,451 shares issued and outstanding in 2024 and 2023, respectively

186,094 184,700

Nonvoting common stock, no par value;

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Benefit for credit losses - debt securities held-to-maturity ( 139 ) ( 42 ) —

Provision for credit losses - off-balance sheet commitments 1,241 — —

(Benefit) provision for credit losses - off-balance sheet commitments ( 1,606 ) 1,241 —

Net interest income after provision for credit losses 70,307 58,251 92,116

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Gain on sale of loans 33,329 20,526 11,372

Gain on sale of premises and equipment — — 2,523

Other 9,406 2,302 2,416

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Income before income taxes 27,542 4,940 40,100

Income tax (benefit) provision ( 3,477 ) 4,559 8,458

Income tax provision (benefit) 2,266 ( 3,477 ) 4,559

Net income $ 25,276 $ 8,417 $ 35,541

13 unchanged sentences

Net income $ 25,276 $ 8,417 $ 35,541

Other comprehensive income (loss)

Other comprehensive (loss) income

Securities available-for-sale

Net unrealized holding gains (losses) on securities available-for-sale recorded within other comprehensive income before income tax 7,339 ( 42,336 ) ( 4,087 )

Income tax provision (benefit) 1,682 ( 9,060 ) ( 1,064 )

Net effect on other comprehensive income (loss) 5,657 ( 33,276 ) ( 3,023 )

Net unrealized holding (losses) gains on securities available-for-sale recorded within other comprehensive income before income tax ( 1,039 ) 7,339 ( 42,336 )

Income tax (benefit) provision ( 800 ) 1,682 ( 9,060 )

Net effect on other comprehensive (loss) income ( 239 ) 5,657 ( 33,276 )

Securities held-to-maturity

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Cash flow hedges

Net unrealized holding (losses) gains on cash flow hedging derivatives recorded within other comprehensive income before income tax ( 2,566 ) 19,091 11,138

Net unrealized holding losses on cash flow hedging derivatives recorded within other comprehensive income before income tax ( 1,082 ) ( 2,566 ) 19,091

Reclassification of gain on termination of interest rate swaps ( 2,904 ) — —

Income tax (benefit) provision ( 248 ) ( 590 ) 4,893

Net effect on other comprehensive (loss) income ( 3,738 ) ( 1,976 ) 14,198

Total other comprehensive income (loss) 4,261 ( 22,597 ) 6,157

Total other comprehensive (loss) income ( 3,278 ) 4,261 ( 22,597 )

Comprehensive income $ 21,998 $ 12,678 $ 12,944

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Net income — 35,541 — 35,541

Other comprehensive income — — 6,157 6,157

Other comprehensive loss — — ( 22,597 ) ( 22,597 )

Dividends declared ($ 0.24 per share)

— ( 2,297 ) — ( 2,297 )

Repurchased shares of common stock ( 779,956 )

( 27,780 ) — — ( 27,780 )

Recognition of the fair value of share-based compensation 2,035 — — 2,035

2 unchanged sentences

Balance, December 31, 2022 $ 192,935 $ 205,675 $ ( 33,636 ) $ 364,974

Impact of adoption of new accounting standards (1)

— ( 4,491 ) — ( 4,491 )

Net income — 8,417 — 8,417

Other comprehensive loss — — ( 22,597 ) ( 22,597 )

Other comprehensive income — — 4,261 4,261

Dividends declared ($ 0.24 per share)

— ( 2,131 ) — ( 2,131 )

Repurchased shares of common stock ( 502,525 )

( 9,248 ) — — ( 9,248 )

Excise tax on repurchase of common stock ( 92 ) — — ( 92 )

Recognition of the fair value of share-based compensation 1,258 — — 1,258

2 unchanged sentences

Balance, December 31, 2023 $ 184,700 $ 207,470 $ ( 29,375 ) $ 362,795

Impact of adoption of new accounting standards (1)

— ( 4,491 ) — ( 4,491 )

Net income — 25,276 — 25,276

Other comprehensive income — — 4,261 4,261

Other comprehensive loss — — ( 3,278 ) ( 3,278 )

Dividends declared ($ 0.24 per share)

— ( 2,124 ) — ( 2,124 )

Repurchased shares of common stock ( 10,500 )

Excise tax on repurchase of common stock ( 92 ) ( 92 )

( 283 ) — — ( 283 )

Recognition of the fair value of share-based compensation 1,814 — — 1,814

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Gain on sale of loans ( 33,329 ) ( 20,997 ) ( 17,473 )

Gain on sale of other real estate owned ( 27 ) — —

Decrease in fair value of loans held-for-sale — 143 184

(Gain) loss on derivatives ( 384 ) ( 2,569 ) 1,513

Settlement of derivatives — — ( 1,859 )

Gain on sale of premises and equipment — — ( 2,523 )

Loss (gain) on derivatives 4,771 ( 384 ) ( 2,569 )

Gain on prepayment of FHLB advances ( 1,829 ) — —

Gain on termination of interest rate swaps ( 2,904 ) — —

Gain on bank-owned life insurance ( 149 ) — —

Net change in servicing asset 2,537 1,463 1,639

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Purchase of Federal Home Loan Bank of Indianapolis stock — — ( 3,131 )

Net proceeds from sale of premises and equipment — — 8,116

Proceeds from bank owned life insurance 737 — —

Purchase of premises and equipment ( 2,592 ) ( 5,367 ) ( 17,517 )

Loans purchased ( 142,001 ) ( 284,722 ) ( 412,109 )

Other investing activities ( 4,464 ) ( 3,510 ) 4,434

Net cash (used in) provided by investing activities ( 474,503 ) ( 601,033 ) 43,874

Purchase of equity investments ( 13,583 ) ( 4,464 ) ( 3,510 )

Net cash used in investing activities ( 496,170 ) ( 474,503 ) ( 601,033 )

Financing activities

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Cash dividends paid ( 2,078 ) ( 2,156 ) ( 2,317 )

Net proceeds from issuance of subordinated debt — — 58,658

Repayment of subordinated debt — — ( 35,000 )

Repurchase of common stock ( 283 ) ( 9,340 ) ( 27,780 )

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Other, net ( 182 ) ( 153 ) ( 287 )

Net cash provided by (used in) financing activities 612,169 331,902 ( 75,560 )

Net cash provided by financing activities 543,690 612,169 331,902

Net increase (decrease) in cash and cash equivalents 60,512 149,346 ( 186,408 )

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The Company was incorporated on September 15, 2005 , and consummated a plan of exchange on March 21, 2006, by which the Company became a bank holding company and 100 % owner of First Internet Bank of Indiana (the “Bank”).

The Company elected to and became a financial holding company, effective as of September 1, 2022.

The Bank offers a wide range of commercial, small business, consumer and municipal banking products and services.

10 unchanged sentences

The Company’s business activities are currently limited to one reporting unit and reportable segment, which is commercial banking.

The Company also evaluates its relationships with other entities to identify whether they represent a variable interest entity (“VIE”).

The Company is considered to hold a controlling financial interest in a VIE when it is the primary beneficiary.

A primary beneficiary has both:

1) the power to direct the activities that most significantly impact the entity’s economic performance;

and 2) and the obligation to absorb losses of, or the right to receive benefits from, an entity that could potentially be significant to the entity.

The Company considers all of its economic interests in the VIE when determining whether it has the obligation to absorb losses or the right to receive benefits from the VIE.

Certain equity investments held by the Company meet the criteria of a VIE.

See Note 3 for additional information on the Company’s equity investments and VIEs.

Segment Information

The Company operates as a single reportable segment.

While there are several lines of business within the operating segment, they are closely interrelated and cannot operate independently.

Accordingly, the Chief Operation Decision Maker (“CODM”) evaluates operations and financial performance on a Company-wide basis and all of the Company’s operations are aggregated in one reportable operating segment.

See Note 22 for additional segment information.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

The Company utilizes processes that involve the use of significant estimates and the judgment of management in determining the amount of the Company’s allowance for credit losses, income taxes, valuation and impairments of investment securities and goodwill, as well as fair value measurements of derivatives, loans held-for-sale and other real estate owned.

The Company utilizes processes that involve the use of significant estimates and the judgment of management in determining the amount of the Company’s allowance for credit losses (“ACL”).

Actual results could differ from those estimates.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The Company classifies its securities in one of three categories and accounts for the investments as follows:

2 unchanged sentences

The Company had no securities classified as “trading securities” at December 31, 2024 or 2023.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

• Securities not classified as either “held-to-maturity” or “trading securities” are classified as “available-for-sale” and reported at fair value, with unrealized gains and losses, after applicable taxes, excluded from earnings and reported in a separate component of shareholders’ equity.

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Loans Held-for-Sale

Loans originated and intended for sale in the secondary market under best-efforts pricing agreements are carried at the lower of cost or fair value in the aggregate.

Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value in the aggregate.

Net unrealized losses, if any, are recognized through a valuation allowance by charges to noninterest income.

Loans originated and intended for sale in the secondary market under mandatory pricing agreements are carried at fair value to facilitate hedging of the loans.

Gains and losses resulting from changes in fair value are recognized in noninterest income.

Gains and losses on loan sales are recorded in noninterest income, and direct loan origination costs and fees are deferred at origination of the loan and are recognized in noninterest income upon sale of the loan.

6 unchanged sentences

Loan fees, net of certain direct origination costs, primarily salaries and wages, are deferred and amortized to interest income as a yield adjustment over the life of the loan.

The Company also earns noninterest income through a variety of financial and transaction services provided to commercial and consumer clients such as deposit account, debit card, mortgage banking, portfolio loan sales and sales of the government-guaranteed portion of U.S.

Small Business Administration loans.

The Company also earns noninterest income through a variety of financial and transaction services provided to commercial and consumer clients such as sales of the government-guaranteed portion of U.S.

Small Business Administration loans, SBA servicing revenue, deposit account, debit card, mortgage banking and portfolio loan sales.

Revenue is recorded for noninterest income based on the contractual terms for the service or transaction performed.

In certain circumstances, noninterest income is reported net of associated expenses.

Loans that management intends to hold until maturity are reported at their outstanding principal balance adjusted for unearned income, charge-offs, the allowance for credit losses (“ACL”), any unamortized deferred fees or costs on originated loans, unamortized premiums or discounts on purchased loans and any carrying value adjustments related to terminated interest rate swaps associated with loans.

For loans recorded at cost, interest income is accrued based on the unpaid principal balance.

Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are recorded in accordance with our revenue recognition policy.

Loans that management intends to hold until maturity are reported at their outstanding principal balance adjusted for unearned income, charge-offs, the ACL, any unamortized deferred fees or costs on originated loans, unamortized premiums or discounts on purchased loans and any carrying value adjustments related to terminated interest rate swaps associated with loans.

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

Adoption of new accounting standards

For loans recorded at cost, interest income is accrued based on the unpaid principal balance.

Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are recorded in accordance with our revenue recognition policy.

ASU 2016 - 13

12 unchanged sentences

For AFS debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors, such as interest rates or market conditions.

In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and adverse conditions specifically related to the security, among other factors.

In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and any adverse conditions specifically related to the security, among other factors.

If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded.

Changes in the ACL are recorded as a provision for, or recovery of, credit loss expense.

Losses are charged against the allowance when management believes that uncollectibility of an AFS debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on AFS debt securities totaled $ 2.9 million at December 31, 2023 and is excluded from the estimate of credit losses.

The Company made the policy election to exclude accrued interest from the amortized cost basis of AFS debt securities and report accrued interest separately on the condensed consolidated balance sheet.

ACL - Held-To-Maturity (“HTM”) Debt Securities

Management measures expected credit losses on HTM debt securities on a collective basis by major security type.

Accrued interest receivable on HTM debt securities totaled $ 1.2 million at December 31, 2023 and is excluded from the estimate of credit losses.

Accrued interest receivable on HTM debt securities are excluded from the estimate of credit losses.

The Company made the accounting policy election to not measure an ACL for accrued interest.

4 unchanged sentences

The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.

At the time of adoption, the estimated reserve was $ 0.3 million.

The ACL for loans represents management's estimate of all expected credit losses over the expected life of the Company’s existing loan portfolio.

Management estimates the ACL balance using relevant available information about

Management estimates the ACL balance using relevant available information about the collectability of cash flows, from internal and external sources, including historical information relating to past

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

the collectability of cash flows, from internal and external sources, including historical information relating to past events, current conditions, and reasonable and supportable forecasts of future economic conditions.

events, current conditions, and reasonable and supportable forecasts of future economic conditions.

When the Company is unable to forecast future economic events, management may revert to historical information.

Accrued interest receivable on loans totaled $ 20.9 million and is excluded from the estimate of credit losses.

Accrued interest receivable on loans are excluded from the estimate of credit losses.

The Company made the accounting policy election to not measure an ACL for accrued interest receivable.

2 unchanged sentences

The ACL is measured on a collective pool basis when similar risk characteristics exist.

The Company utilized a discounted cash flow (“DCF”) method to estimate the quantitative portion of the allowance for credit losses for loans evaluated on a collective pooled basis.

For each segment, a loss driver analysis was performed in order to identify loss drivers and create a regression model for use in forecasting cash flows.

The Company utilizes a discounted cash flow (“DCF”) method to estimate the quantitative portion of the allowance for credit losses for loans evaluated on a collective pooled basis.

For each segment, a loss driver analysis is performed in order to identify loss drivers and create a regression model for use in forecasting cash flows.

In creating the DCF model, the Company has established a one-year reasonable and supportable forecast period with a one-year straight line reversion to the long-term historical average.

Due to its minimal loss history, the Company elected to use peer data for a more conservative calculation.

Due to its limited loss history, the Company elected to use peer data for a more accurate calculation.

Key inputs into the DCF model include loan-level detail, including the amortized cost basis of individual loans, payment structure, loss history, and forecasted loss drivers.

37 unchanged sentences

Modified Loans to Borrowers Experiencing Financial Difficulty

Concurrent with the adoption of ASU 2016-03, the Company adopted ASU 2022-02 “Financial Instruments-Credit Losses (ASC 326):

Troubled Debt Restructurings and Vintage Disclosures,” as amended.

The update eliminated the accounting guidance for troubled debt restructurings (“TDRs”) by creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

The Company may make modifications to certain loans in order to alleviate temporary difficulties in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company.

Modifications may include changes in the amortization terms of the loan, reductions in interest rates, acceptance of interest only payments, and/or reductions to the outstanding loan balance.

Such loans are typically placed on nonaccrual status when there is doubt concerning the full repayment of principal and interest or the loan has been delinquent for a period of 90 days or more.

These loans may be returned to accrual status when all contractual amounts past due have been brought current, and the borrower’s performance under the modified terms of the loan agreement and the ultimate collectability of all contractual amounts due under the modified terms is no longer in doubt.

Provision for Credit Losses

1 unchanged sentence

Such an evaluation, which includes a review of all loans for which full repayment may not be reasonably assured, considers, among other matters, the estimated net realizable value of the underlying collateral, as applicable, economic conditions, loan loss experience, and other factors that are particularly susceptible to changes that could result in a material adjustment in the near term.

While management attempts to use the best information available in making its evaluations, future allowance adjustments may be necessary if economic conditions change substantially from the assumptions used in making the evaluations.

While management attempts to use the best information available in making its evaluations, future ACL adjustments may be necessary if economic conditions change substantially from the assumptions used in making the evaluations.

Nonaccrual Loans

6 unchanged sentences

Payments with delays not exceeding 90 days outstanding generally are not individually evaluated.

Certain nonaccrual and substantially all delinquent loans more than 90 days past due may be individually evaluated.

Generally, loans are placed on nonaccrual status at 90 days past due and accrued interest is reversed against earnings, unless the loan is well secured and in the process of collection.

The accrual of interest on individually evaluated and nonaccrual loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due.

Certain nonaccrual

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

and substantially all delinquent loans more than 90 days past due may be individually evaluated.

Generally, loans are placed on nonaccrual status at 90 days past due and accrued interest is reversed against earnings, unless the loan is well secured and in the process of collection.

The accrual of interest on individually evaluated and nonaccrual loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due.

Individually evaluated loans include nonperforming loans and also include loans where concessions have been granted to borrowers experiencing financial difficulties.

21 unchanged sentences

Additionally, prior to the Company’s decision to exit its consumer mortgage business in the first quarter 2023, we entered into forward contracts related to our mortgage banking business to hedge the exposures we had from commitments to extend new residential mortgage loans to our customers and from our mortgage loans held-for-sale.

The forward contracts were entered into in order to economically hedge the effect of changed interest rates resulted from the Company’s commitment to fund the loans.

The forward contracts were entered into in order to economically hedge the effect of changed interest rates resulting from the Company’s commitment to fund the loans.

Designating an interest rate swap as an accounting hedge allows the Company to recognize gains and losses in the income statement within the same period that the hedged item affects earnings.

The Company includes the gain or loss on the hedged items in the same line item as the offsetting loss or gain on the related interest rate swaps.

For derivative instruments that are designated and qualify as cash flow hedges, any gains or losses related to changes in fair value are recorded in accumulated other comprehensive loss, net of tax.

The fair value of interest rate swaps with a positive fair value are reported in accrued income and other assets in the consolidated balance sheets while interest rate swaps with a negative fair value are reported in accrued expenses and other liabilities in the consolidated balance sheets.

For derivative

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

The IRLCs and forward contracts are not designated as accounting hedges and are recorded at fair value with changes in fair value reflected in noninterest income in the consolidated statements of income.

instruments that are designated and qualify as cash flow hedges, any gains or losses related to changes in fair value are recorded in accumulated other comprehensive loss, net of tax.

The interest rate lock commitments (“IRLCs”) and forward contracts are not designated as accounting hedges and are recorded at fair value with changes in fair value reflected in noninterest income in the consolidated statements of income.

The fair value of derivative instruments with a positive fair value are reported in accrued income and other assets in the consolidated balance sheets, while derivative instruments with a negative fair value are reported in accrued expenses and other liabilities in the consolidated balance sheets.

40 unchanged sentences

1 Potential dilutive common shares are excluded from the computation of diluted earnings per share in the periods where the effect would be antidilutive.

There were no antidilutive shares for the year ended December 31, 2024.

Excluded from the computation of diluted earnings per share were weighted average antidilutive shares totaling 20,797 and 2,646 for the years ended December 31, 2023 and 2022, respectively.

13 unchanged sentences

The Company recognizes tax-free income from the periodic increases in the cash surrender value of these policies and from death benefits.

Goodwill is tested at least annually for impairment.

If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value.

Subsequent increases in goodwill value are not recognized in the consolidated financial statements.

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

Goodwill is tested at least annually for impairment.

If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value.

Subsequent increases in goodwill value are not recognized in the consolidated financial statements.

Servicing Asset

5 unchanged sentences

At December 31, 2024, the Company’s interest-bearing and noninterest-bearing cash accounts at other institutions exceeded the limits for full FDIC insurance coverage by $ 1.1 million.

In addition, approximately $ 382.2 million and $ 7.0 million of cash was held by the Federal Reserve Bank of Chicago and the FHLB of Indianapolis, respectively, which are not federally insured.

In addition, approximately $ 440.8 million and $ 15.7 million of cash was held at the Federal Reserve Bank of Chicago and the FHLB of Indianapolis, respectively, which are not federally insured.

The Federal Reserve Act authorizes the Federal Reserve Board to establish reserve requirements within specified ranges for the purpose of implementing monetary policy on certain types of deposits and other liabilities of depository institutions.

15 unchanged sentences

Total available-for-sale $ 626,854 $ 1,542 $ ( 41,041 ) $ 587,355

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

December 31, 2024

7 unchanged sentences

1 Includes $ 0.3 million of additional premium related to terminated interest rate swaps associated with agency mortgage-backed securities - residential as of December 31, 2024.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Accrued interest receivable on AFS and HTM securities at December 31, 2023 was $ 2.9 million and $ 1.2 million, respectively, and is included in accrued interest receivable on the condensed consolidated balance sheet.

The Company elected to exclude all accrued interest receivable from securities when estimating credit losses.

Over 95% of mortgage-backed securities (including both AFS and HTM) held by the Company are issued by U.S.

government-sponsored entities and agencies.

These securities are either explicitly or implicitly guaranteed by the U.S.

government and have a long history of no credit losses;

therefore, the Company did not record an ACL on these securities.

Additionally, the Company evaluated credit impairment for individual AFS securities that are in an unrealized loss position and determined that the unrealized losses are unrelated to credit quality and are primarily attributable to changes in interest rates and volatility in the financial markets.

As the Company does not intend to sell the AFS securities that are in an unrealized loss position, and it is unlikely that it will be required to sell these securities before recovery of their amortized cost basis, the Company did not record an ACL on these securities.

In accordance with the adoption of ASC 326, the Company also evaluated its HTM securities that are in an unrealized loss position and considered issuer bond ratings, historical loss rates for bond ratings and economic forecasts.

As a result, the Company recorded in an initial ACL in retained earnings of $ 0.3 million on January 1, 2023.

The Company reevaluated these securities at December 31, 2023 and determined no additional ACL was necessary.

December 31, 2023

12 unchanged sentences

December 31, 2023

Amortized Cost Gross Unrealized Fair Value

Amortized Cost Gross Unrealized Fair Value Allowance for Credit Losses Net Carrying Value

Securities held-to-maturity

5 unchanged sentences

1 Includes $ 0.4 million of additional premium related to terminated interest rate swaps associated with agency mortgage-backed securities - residential as of December 31, 2023.

Accrued interest receivable on AFS and HTM securities at December 31, 2024 was $ 2.8 million and $ 1.1 million, respectively, compared to $ 2.9 million and $ 1.2 million, respectively, at December 31, 2023, and is included in accrued interest receivable on the consolidated balance sheet.

The Company elected to exclude all accrued interest receivable from securities when estimating credit losses.

At December 31, 2024 and 2023, over 92 % and 95 %, respectively, of mortgage-backed securities (including both AFS and HTM) held by the Company are issued by U.S.

government-sponsored entities and agencies.

These securities are either explicitly or implicitly guaranteed by the U.S.

government and have a long history of no credit losses;

therefore, the Company did not record an ACL on these securities.

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

changes in interest rates and volatility in the financial markets.

The Company also evaluated its HTM securities that are in an unrealized loss position and considered issuer bond ratings, historical loss rates for bond ratings and economic forecasts.

The ACL on HTM securities at December 31, 2024 and 2023 was $ 0.2 million and $ 0.3 million, respectively.

The carrying value of securities at December 31, 2024 is shown below by their contractual maturity date.

21 unchanged sentences

There were no gross realized gains or losses resulting from the sale of AFS securities recognized during the twelve months ended December 31, 2024, December 31, 2023 and December 31, 2022.

As of December 31, 2023, the fair value of AFS securities pledged as collateral was $ 662.1 million.

As of December 31, 2024, the fair value of securities pledged as collateral was $ 795.0 million.

The Company pledged these securities to both the FHLB and the Fed Discount Window to increase the Company’s borrowing capacity and provide collateral for existing FHLB advances.

1 unchanged sentence

The total fair value of these investments at December 31, 2024 and 2023 was $ 603.9 million and $ 578.9 million, which is approximately 72 % and 85 %, respectively, of the Company’s AFS and HTM securities portfolios.

As of December 31, 2023, the Company’s securities portfolio consisted of 512 securities, of which 434 were in an unrealized loss position.

As of December 31, 2022, the Company’s security portfolio consisted of 445 securities, of which 434 were in an unrealized loss position.

As of December 31, 2024, the Company’s securities portfolio consisted of 579 positions, of which 482 were in an unrealized loss position.

As of December 31, 2023, the Company’s security portfolio consisted of 512 positions, of which 434 were in an unrealized loss position.

The unrealized losses are related to the categories noted below.

Government-Sponsored Agencies, Municipal Securities and Corporate Securities

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The unrealized losses on the Company’s investments in securities issued by U.S.

2 unchanged sentences

The Company does not intend to sell the investments, and it is not likely that the Company will be required to sell the investments, before recovery of their amortized cost basis, which may be upon maturity.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Agency Mortgage-Backed and Private Label Mortgage-Backed Securities

The unrealized losses on the Company’s investments in agency mortgage-backed and private label mortgage-backed securities were caused primarily by interest rate changes.

Agency Mortgage-Backed, Private Label Mortgage-Backed Securities and Asset-Backed Securities

The unrealized losses on the Company’s investments in agency mortgage-backed, private label mortgage-backed securities and asset-backed securities were caused primarily by interest rate changes.

The Company expects to recover the amortized cost basis over the terms of the securities.

The Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be upon maturity.

The Company does not intend to sell the investments, and it is not more likely than not that the Company will be required to sell the investments, before recovery of their amortized cost basis, which may be upon maturity.

The following tables show the securities portfolio’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2024 and 2023:

32 unchanged sentences

(Tabular dollar amounts in thousands except per share data)

The following table summarizes ratings for the Company’s HTM portfolio issued by state and political subdivisions and other securities as of December 31, 2024 and 2023.

December 31, 2024

Less Than 12 Months 12 Months or Longer Total

Value Unrealized

Securities held-to-maturity

Municipals $ 8,160 $ ( 661 ) $ 4,258 $ ( 453 ) $ 12,418 $ ( 1,114 )

Agency mortgage-backed securities - residential 68,408 ( 8,848 ) 38,332 ( 6,264 ) 106,740 ( 15,112 )

Agency mortgage-backed securities - commercial 4,552 ( 1,266 ) — — 4,552 ( 1,266 )

Corporate securities 36,866 ( 2,685 ) 7,492 ( 508 ) 44,358 ( 3,193 )

Held-to-Maturity

Municipal Securities Mortgage-Backed Securities - Residential Mortgage-Backed Securities - Commercial Corporate Securities Total

AAA equivalent - agency $ — $ 201,840 $ 5,705 $ — $ 207,545

Aa1/AA+ 8,878 — — — 8,878

Aa2/AA 2,175 — — — 2,175

Aa3/AA- 1,793 — — — 1,793

A2/A — — — 5,000 5,000

A3/A- — — — — —

Baa1/BBB+ — — — 8,500 8,500

Baa2/BBB — — — 5,500 5,500

Baa3/BBB- — — — 8,559 8,559

Ba1/BB+ — — — 2,000 2,000

Total $ 12,846 $ 201,840 $ 5,705 $ 29,559 $ 249,950

The following table summarizes ratings for the Company’s HTM portfolio issued by state and political subdivisions and other securities as of December 31, 2023.

Securities Held-to-Maturity

(in thousands) State and Municipal Other Total

Aaa/AAA $ — $ — $ —

December 31, 2023

Held-to-Maturity

Municipal Securities Mortgage-Backed Securities - Residential Mortgage-Backed Securities - Commercial Corporate Securities Total

AAA equivalent - agency $ — $ 166,750 $ 5,767 $ — $ 172,517

Aa1/AA+ 9,917 — — — 9,917

7 unchanged sentences

Ba1/BB+ — — — 2,000 2,000

— 172,517 172,517

Total $ 13,892 $ 166,750 $ 5,767 $ 41,037 $ 227,446

1 HTM agency mortgage-backed securities - commercial and residential are listed under Other securities as not rated.

There were no amounts reclassified from accumulated other comprehensive loss to the condensed consolidated statements of income during the twelve months ended December 31, 2023, 2022 and 2021.

There were no amounts reclassified from accumulated other comprehensive loss to the consolidated statements of income during the twelve months ended December 31, 2024, 2023 and 2022.

Equity Investments

Equity investments, largely comprised of non-marketable equity investments, are generally accounted for under equity security accounting.

The following tables provide additional information related to investments accounted for under this method.

The carrying amount of each equity investment with a readily determinable fair value or net asset value at December 31, 2023 and 2022 is reflected in the following table:

(dollars in thousands) 2023 2022

GenOpp Financial Fund LP $ 2,102 $ 2,134

Total $ 2,102 $ 2,134

Equity investments, largely comprised of non-marketable equity investments, are generally accounted for under equity security accounting and is included within accrued income and other assets on the consolidated balance sheet.

The Company’s non-marketable equity investments consist of limited partner interests in venture capital and Small Business Investment Company (“SBIC”) funds.

After the initial commitment and over the course of the investment period, the Company will make capital contributions and receive profit and return of capital distributions as a result of fund performance until the funds wind down.

While the partnership agreements allow the Company to remove the general partner, this right is not considered to be substantive as the general partner can only be removed for cause.

All of these investments are generally non-redeemable and distributions are generally expected to be received through the

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

The carrying amount of the Company’s investments in non-marketable equity securities with no readily determinable fair value and amounts recognized in earnings on a cumulative basis as of December 31, 2023 and for the years ended December 31, 2023 and 2022 is reflected in the following table:

(dollars in thousands )

liquidation of the underlying investments throughout the life of the investment fund.

Investments may only be sold or transferred subject to the notice and approval provisions of the underlying investment agreements.

The above investments meet the criteria of a VIE.

However, the Company is not the primary beneficiary of the entities as it does not have the power to direct the activities that most significantly impact the economic performance of the entities.

The Company’s maximum exposure to loss from unconsolidated VIEs includes the value of the investment recorded on the Company’s consolidated balance sheets.

The following tables provide additional information related to equity investments accounted for under equity security accounting.

The carrying amount of each equity investment with a readily determinable fair value or net asset value at December 31, 2024 and 2023 is reflected in the following table:

GenOpp Financial Fund LP $ 2,724 $ 2,102

Total $ 2,724 $ 2,102

The carrying amount of the Company’s investments in non-marketable equity securities with no readily determinable fair value and amounts recognized in earnings on a cumulative basis for the years ended December 31, 2024 and 2023 is reflected in the following table:

Carrying value 1

5 unchanged sentences

Net change $ 20,017 $ 12,374

1 Exclusive of $ 11.5 million and $ 13.0 million in unfunded commitments as of December 31, 2023, and 2022, respectively.

1 Excludes $ 9.1 million and $ 11.5 million in unfunded commitments as of December 31, 2024 and 2023, respectively.

First Internet Bancorp

11 unchanged sentences

Small business lending 1

331,914 218,506

Franchise finance 536,909 525,783

11 unchanged sentences

Net loans $ 4,125,877 $ 3,801,446

1 Balances include $ 34.0 million and $ 33.5 million that is guaranteed by the U.S.

government as of December 31, 2024 and December 31, 2023, respectively.

2 Includes carrying value adjustment of $ 22.9 million and $ 27.8 million related to terminated interest rate swaps associated with public finance loans as of December 31, 2024 and December 31, 2023, respectively.

9 unchanged sentences

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.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Investor Commercial Real Estate:

3 unchanged sentences

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.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

properties securing the Company’s investor commercial real estate portfolio tend to be diverse in terms of property type.

Management monitors and evaluates commercial real estate loans based on property financial performance, collateral value, guarantor strength, economic and industry conditions together with other risk grade criteria.

30 unchanged sentences

The sources of repayment are primarily based on the identified cash flows from operations of the borrower and related entities and secondarily on the underlying collateral provided by the borrower.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Small Business Lending:

11 unchanged sentences

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.

With respect to residential loans that are secured by 1-to-4 family residences and are generally owner occupied, the Company typically established a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded.

Repayment of these loans is primarily dependent on the financial circumstances of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels.

Repayment can also be impacted by changes in residential property values.

Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers in geographically diverse locations throughout the country.

Risk is mitigated

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers in geographically diverse locations throughout the country.

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.

The properties securing the home equity portfolio segment are generally geographically diverse as the Company offered these products on a nationwide basis.

Repayment of these loans and lines of credit is primarily dependent on the financial circumstances of the borrowers and may be impacted by changes in unemployment levels and property values on residential properties, among other economic conditions in the market.

9 unchanged sentences

When the Company is unable to forecast future economic events, management may revert to historical information.

The Company's methodologies incorporate a one-year reasonable and supportable forecast period with a one-year straight line reversion to the long-term historical average.

The Company's methodologies incorporate a one-year reasonable and supportable forecast period with a one-year straight line reversion to the long-term historical average for most segments.

The ACL methodology may also consider other adjustments to address changes in conditions, trends, and circumstances such as local industry changes that could have a significant impact on the risk profile of the loan portfolio and provide for adjustments that may not be reflected and/or captured in the historical loss data.

1 unchanged sentence

lending policies, imprecision in forecasting future economic conditions, loan profile, lending staff, problem loan trends, loan review, collateral, credit concentration, or other internal and external factors.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The Company also includes qualitative adjustments to the ACL based on factors and considerations that have not otherwise been fully accounted for.

13 unchanged sentences

Additional sub-segmentation may be utilized to identify groups of loans with unique risk characteristics relative to the rest of the portfolio.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Loans that do not share similar risk characteristics are evaluated on an individual basis.

These evaluations are typically performed on loans with a deteriorated internal risk rating.

The allowance for credit loss is determined based on several methods, including estimating the fair value of the underlying collateral or the present value of expected cash flows.

The ACL is determined based on several methods, including estimating the fair value of the underlying collateral or the present value of expected cash flows.

The Company relies on a third-party platform that offers multiple methodologies to measure historical life-of-loan losses.

10 unchanged sentences

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Policy for Charging Off Loans

3 unchanged sentences

A home improvement loan generally is charged off no later than when it is 90 days past due as to principal or interest.

The following tables present changes in the balance of the ACL during the twelve months ended December 31, 2023.

The following tables present changes in the balance of the ACL during the twelve months ended December 31, 2024 and December 31, 2023, respectively.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Twelve Months Ended December 31, 2024

Balance, Beginning of Period Adoption of CECL (Credit) Provision Charged to Expense Losses Charged Off Recoveries Balance, End of Period

Balance, Beginning of Period (Credit) Provision Charged to Expense Losses Charged Off Recoveries Balance, End of Period

Allowance for credit losses:

12 unchanged sentences

Total $ 38,774 $ 18,815 $ ( 13,270 ) $ 450 $ 44,769

Prior to the adoption of ASU 2016-13 on January 1, 2023, the Company calculated the allowance for loan losses using the incurred loss methodology.

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2022 and December 31, 2021.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Twelve Months Ended December 31, 2023

Balance, Beginning of Period Provision (Credit) Charged to Expense Losses Charged Off Recoveries Balance, End of Period

Allowance for loan losses:

Balance, Beginning of Period Adoption of CECL Provision (Credit) Charged to Expense Losses Charged Off Recoveries Balance, End of Period

Allowance for credit losses:

Commercial and industrial $ 1,711 $ ( 120 ) $ 7,400 $ ( 7,049 ) $ 243 $ 2,185

11 unchanged sentences

Total $ 31,737 $ 2,962 $ 15,454 $ ( 11,884 ) $ 505 $ 38,774

Prior to the adoption of ASU 2016-13 on January 1, 2023, the Company calculated the allowance for loan losses using the incurred loss methodology.

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2022.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Twelve Months Ended December 31, 2022

Balance, Beginning of Period Provision (Credit) Charged to Expense Losses Charged Off Recoveries Balance, End of Period

Balance, Beginning of Period (Credit) Provision Charged to Expense Losses Charged Off Recoveries Balance, End of Period

Allowance for loan losses:

14 unchanged sentences

This reserve is maintained at a level management believes to be sufficient to absorb losses arising from unfunded loan commitments.

The day one entry for off-balance sheet commitments resulted in a reserve of $ 2.5 million.

The adequacy of the reserve for unfunded commitments is determined quarterly based on methodology similar to the methodology for determining the ACL.

The following table details activity in the provision for credit losses on off-balance sheet commitments for the twelve months ended December 31, 2023.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

(dollars in thousands) Pre-ASC 326 Adoption Impact of ASC 326 Adoption Provision for credit losses Balance

The following tables details activity in the provision for credit losses on off-balance sheet commitments for the twelve months ended December 31, 2024 and December 31, 2023.

December 31, 2023 Provision for credit losses Balance

December 31, 2024

5 unchanged sentences

Construction 2,889 ( 1,321 ) 1,568

Healthcare finance — 2 ( 2 ) —

Single tenant lease financing — 19 19

Small business lending 541 ( 278 ) 263

6 unchanged sentences

Total allowance for off-balance sheet commitments $ 3,745 $ ( 1,606 ) $ 2,139

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2022.

Loans Allowance for Loan Losses

December 31, 2022 Ending Balance:

Collectively Evaluated for Impairment Ending Balance:

Individually Evaluated for Impairment Ending Balance Ending Balance:

Collectively Evaluated for Impairment Ending Balance:

Individually Evaluated for Impairment Ending Balance

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Pre-ASC 326 Adoption Impact of ASC 326 Adoption Provision for credit losses Balance

December 31, 2023

Off-balance sheet commitments

Commercial loans

Commercial and industrial $ — $ 110 $ 123 $ 233

2 unchanged sentences

Construction — 2,193 696 2,889

Single tenant lease financing 939,240 — 939,240 10,519 — 10,519

Public finance 621,032 — 621,032 1,753 — 1,753

Healthcare finance — 2 ( 2 ) —

Small business lending — — 541 541

113,699 10,051 123,750 1,465 703 2,168

Franchise finance 299,835 — 299,835 3,988 — 3,988

Total commercial loans — 2,314 1,364 3,678

Consumer loans

Residential mortgage — 127 ( 116 ) 11

1 unchanged sentence

Other consumer — 11 — 11

Total $ 3,427,463 $ 25,144 $ 3,452,607 $ 30,983 $ 754 $ 31,737

1 Balance is partially guaranteed by the U.S.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The Company utilizes a risk grading matrix to assign a risk grade to each of its commercial loans.

Total consumer loans — 190 ( 123 ) 67

Total allowance for off-balance sheet commitments $ — $ 2,504 $ 1,241 $ 3,745

The Company utilizes a risk grading matrix to assign a risk grade to each of its commercial loans, which are evaluated annually.

A description of the general characteristics of the risk grades is as follows:

16 unchanged sentences

(Tabular dollar amounts in thousands except per share data)

The following table presents the credit risk profile of the Company’s commercial and consumer loan portfolios by loan class and by year of origination for the years indicated based on rating category and payment activity as of December 31, 2023.

December 31, 2024

Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term

(in thousands) 2023 2022 2021 2020 2019 Prior Total

2024 2023 2022 2021 2020 Prior Total

Commercial and industrial

5 unchanged sentences

industrial 23,586 8,665 18,315 5,418 2,362 17,829 44,000 — 120,175

Gross charge-offs — — 6,914 5 130 — — — 7,049

Year-to-date gross charge-offs — — — — — — — — —

Owner-occupied commercial real estate

5 unchanged sentences

commercial real estate 7,410 1,458 5,936 7,326 13,860 17,601 — — 53,591

Year-to-date gross charge-offs — — — — — — — — —

Investor commercial real estate

5 unchanged sentences

estate 71,430 3,849 88,290 65,050 9,607 31,205 — — 269,431

Gross charge-offs — — — — — 591 — — 591

Year-to-date gross charge-offs — — — — — — — — —

Pass 35,177 186,979 140,299 47,598 1,622 — 1,848 — 413,523

3 unchanged sentences

Total construction 35,177 186,979 140,299 47,598 1,622 — 1,848 — 413,523

Year-to-date gross charge-offs — — — — — — — — —

Single tenant lease financing

5 unchanged sentences

financing 80,516 46,674 220,701 91,652 63,506 446,699 — — 949,748

Year-to-date gross charge-offs — — — — — 195 — — 195

Public finance

4 unchanged sentences

Total public finance 55,306 1,290 7,790 12,050 463 408,968 — — 485,867

Year-to-date gross charge-offs — — — — — — — — —

First Internet Bancorp

3 unchanged sentences

Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term

(in thousands) 2023 2022 2021 2020 2019 Prior Total

2024 2023 2022 2021 2020 Prior Total

Healthcare finance

4 unchanged sentences

Total healthcare finance — — — 8,969 104,427 68,031 — — 181,427

Gross charge-offs — — — — 605 — — — 605

Year-to-date gross charge-offs — — — — — — — — —

Small business lending

4 unchanged sentences

Total small business lending 142,006 103,156 32,870 11,973 11,011 12,110 18,788 — 331,914

Gross charge-offs 67 739 416 1,364 — — — — 2,586

Year-to-date gross charge-offs 1,093 4,600 3,038 567 619 524 — — 10,441

Franchise finance

4 unchanged sentences

Total franchise finance 67,065 235,946 184,281 49,617 — — — — 536,909

Gross charge-offs — 331 — — — — — — 331

Year-to-date gross charge-offs — 1,171 — 295 — — — — 1,466

Consumer loans

3 unchanged sentences

Total residential mortgage 3,577 13,533 185,155 86,822 28,724 57,349 — — 375,160

Gross charge-offs — 53 70 — 17 — — — 140

Year-to-date gross charge-offs — — 101 58 — — — — 159

Performing — 992 1,450 356 414 530 13,621 911 18,274

1 unchanged sentence

Total home equity — 992 1,450 356 414 530 13,621 911 18,274

Year-to-date gross charge-offs — — — — — — — — —

Other consumer

2 unchanged sentences

Total other consumer 101,965 97,832 88,910 33,188 20,919 64,263 870 — 407,947

Gross charge-offs 97 115 20 51 56 243 — — 582

Year-to-date gross charge-offs 157 242 300 127 1 182 — — 1,009

Total Loans $ 588,038 $ 700,374 $ 973,997 $ 420,019 $ 256,915 $ 1,124,585 $ 79,127 $ 911 $ 4,143,966

Total gross charge-offs $ 164 $ 1,238 $ 7,420 $ 1,420 $ 808 $ 834 $ — $ — $ 11,884

1 Balance is partially guaranteed by the U.S.

Total year-to-date gross charge-offs $ 1,250 $ 6,013 $ 3,439 $ 1,047 $ 620 $ 901 $ — $ — $ 13,270

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

The following tables present the credit risk profile of the Company’s commercial and consumer loan portfolios based on rating category and payment activity as of December 31, 2022.

December 31, 2023

(in thousands) Pass Special Mention Substandard Total

Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term

2023 2022 2021 2020 2019 Prior Total

Commercial and industrial

Pass $ 24,329 $ 19,382 $ 15,464 $ 2,502 $ 12,365 $ 8,703 $ 41,967 $ — $ 124,712

Special Mention — 4,637 — — — — — — 4,637

Substandard — — — — — — — — —

Doubtful — — — — — — — — —

Total Commercial and

industrial 24,329 24,019 15,464 2,502 12,365 8,703 41,967 — 129,349

Year-to-date gross charge-offs — — 6,914 5 130 — — — 7,049

Owner-occupied commercial real estate

Pass 1,492 10,731 7,990 6,591 5,255 12,485 — — 44,544

Special Mention — 584 922 8,392 — 1,189 — — 11,087

Substandard — — — — — 1,655 — — 1,655

Doubtful — — — — — — — — —

Total owner-occupied

commercial real estate 1,492 11,315 8,912 14,983 5,255 15,329 — — 57,286

Year-to-date gross charge-offs — — — — — — — — —

Investor commercial real estate

Construction 180,768 1,198 — 181,966

Pass 6,571 35,209 26,841 9,864 47,827 5,765 — — 132,077

Special Mention — — — — — — — — —

Substandard — — — — — — — — —

Doubtful — — — — — — — — —

Total investor commercial real

estate 6,571 35,209 26,841 9,864 47,827 5,765 — — 132,077

Year-to-date gross charge-offs — — — — — 591 — — 591

Pass 26,539 153,066 70,175 6,121 — — 5,849 — 261,750

Special Mention — — — — — — — — —

Substandard — — — — — — — — —

Doubtful — — — — — — — — —

Total construction 26,539 153,066 70,175 6,121 — — 5,849 — 261,750

Year-to-date gross charge-offs — — — — — — — — —

Single tenant lease financing

Pass 52,360 221,964 89,075 65,863 142,023 346,695 — — 917,980

Special Mention — 4,362 6,698 3,032 — 4,544 — — 18,636

Substandard — — — — — — — — —

Doubtful — — — — — — — — —

Total single tenant lease

financing 52,360 226,326 95,773 68,895 142,023 351,239 — — 936,616

Year-to-date gross charge-offs — — — — — — — — —

Public finance

Pass 3,805 30,583 29,750 719 43,611 411,176 — — 519,644

Special Mention — — — — — 2,120 — — 2,120

Substandard — — — — — — — — —

Doubtful — — — — — — — — —

Total public finance 3,805 30,583 29,750 719 43,611 413,296 — — 521,764

Year-to-date gross charge-offs — — — — — — — — —

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

December 31, 2023

Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term

2023 2022 2021 2020 2019 Prior Total

Healthcare finance

Pass — — 9,955 124,654 63,486 23,484 — — 221,579

Special Mention — — — — 1,214 — — — 1,214

Substandard — — — — — — — — —

Doubtful — — — — — — — — —

Total healthcare finance — — 9,955 124,654 64,700 23,484 — — 222,793

Year-to-date gross charge-offs — — — — 605 — — — 605

Small business lending

107,885 5,814 10,051 123,750

Pass 119,149 42,077 15,180 13,948 4,582 9,215 5,388 — 209,539

Special Mention 343 496 — 341 265 698 — — 2,143

Substandard 1,095 1,854 52 1,777 1,155 417 474 — 6,824

Doubtful — — — — — — — — —

Total small business lending 120,587 44,427 15,232 16,066 6,002 10,330 5,862 — 218,506

Year-to-date gross charge-offs 67 739 416 1,364 — — — — 2,586

Franchise finance

Total commercial loans $ 2,672,714 $ 25,214 $ 21,421 $ 2,719,349

1 Balance in “Substandard” is partially guaranteed by the U.S.

December 31, 2022

(in thousands) Performing Nonperforming Total

Pass 256,944 210,617 57,919 — — — — — 525,480

Special Mention — — — — — — — — —

Substandard — — 303 — — — — — 303

Doubtful — — — — — — — — —

Total franchise finance 256,944 210,617 58,222 — — — — — 525,783

Year-to-date gross charge-offs — 331 — — — — — — 331

Consumer loans

Residential mortgage

Home equity 24,712 — 24,712

Performing 14,942 195,453 91,010 30,092 13,072 48,330 — — 392,899

Nonperforming — 738 456 73 — 1,482 — — 2,749

Total residential mortgage 14,942 196,191 91,466 30,165 13,072 49,812 — — 395,648

Year-to-date gross charge-offs — 53 70 — 17 — — — 140

Performing 1,369 1,997 436 467 141 585 16,896 1,778 23,669

Nonperforming — — — — — — — — —

Total home equity 1,369 1,997 436 467 141 585 16,896 1,778 23,669

Year-to-date gross charge-offs — — — — — — — — —

Other consumer

Total $ 732,193 $ 1,065 $ 733,258

Performing 115,736 106,883 41,598 26,527 27,087 58,902 795 — 377,528

Nonperforming — 53 — 5 15 13 — — 86

Total other consumer 115,736 106,936 41,598 26,532 27,102 58,915 795 — 377,614

Year-to-date gross charge-offs 97 115 20 51 56 243 — — 582

Total Loans $ 624,674 $ 1,040,686 $ 463,824 $ 300,968 $ 362,098 $ 937,458 $ 71,369 $ 1,778 $ 3,802,855

Total year-to-date gross charge-offs $ 164 $ 1,238 $ 7,420 $ 1,420 $ 808 $ 834 $ — $ — $ 11,884

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

The following tables present the Company’s loan portfolio delinquency analysis as of December 31, 2023 and 2022.

The following tables present the Company’s loan portfolio delinquency analysis as of December 31, 2024 and December 31, 2023.

December 31, 2024

(in thousands) 30-59

Past Due 60-89

10 unchanged sentences

Small business lending 11,817 1,310 5,587 18,714 313,200 331,914

2,680 57 2,794 5,531 212,975 218,506

Franchise Finance 9,431 3,279 9,849 22,559 514,350 536,909

3 unchanged sentences

Total $ 22,090 $ 6,496 $ 19,278 $ 47,864 $ 4,096,102 $ 4,143,966

1 Balance is partially guaranteed by the U.S.

December 31, 2023

(in thousands) 30-59

Past Due 60-89

10 unchanged sentences

Small business lending 2,680 57 2,794 5,531 212,975 218,506

57 — 3,485 3,542 120,208 123,750

Franchise Finance — 2,923 303 3,226 522,557 525,783

3 unchanged sentences

Total $ 3,013 $ 3,778 $ 4,813 $ 11,604 $ 3,791,251 $ 3,802,855

1 Balance is partially guaranteed by the U.S.

Loans are reclassified to non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest.

At the time the accrual is discontinued, all unpaid accrued interest is reversed against earnings.

Interest income accrued in prior years, if any, is charged to the allowance for credit losses.

Interest income accrued in prior years, if any, is charged to the ACL.

Payments subsequently received on nonaccrual loans are applied to principal.

5 unchanged sentences

December 31, 2024 December 31, 2023

(in thousands) Nonaccrual Loans Nonaccrual Loans with no Allowance for Credit Losses Total Loans

Accruing Nonaccrual Loans Nonaccrual Loans with no Allowance for Loan Losses Total Loans

Total Nonaccrual Loans Nonaccrual Loans with no Allowance for Credit Losses Total Loans

Accruing Total Nonaccrual Loans Nonaccrual Loans with no Allowance for Credit Losses Total Loans

Commercial and industrial $ — $ — $ — $ — $ — $ —

6 unchanged sentences

Total loans $ 25,955 $ 8,922 $ 2,466 $ 9,124 $ 2,901 $ 838

1 Balance is partially guaranteed by the U.S.

There was $ 0.7 million and $ 0.3 million in interest income recognized on nonaccrual loans for the twelve months ended December 31, 2024 and December 31, 2023, respectively.

5 unchanged sentences

Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses as of December 31, 2023.

The following tables present the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses as of December 31, 2024 and December 31, 2023.

December 31, 2024

(in thousands) Commercial Real Estate Residential Real Estate Other Total Allowance on Collateral Dependent Loans

Commercial and industrial $ — $ — $ — $ — $ —

Commercial Real Estate Residential Real Estate Other (Includes Equipment, Machinery and Other Assets) Total Allowance on Collateral Dependent Loans

Owner-occupied commercial real estate $ 1,654 $ — $ — $ 1,654 $ —

1 unchanged sentence

723 — 8,571 9,294 4,167

Franchise finance — — 3,468 3,468 679

Residential mortgage — 4,083 — 4,083 —

1 unchanged sentence

Total loans $ 2,377 $ 4,083 $ 12,061 $ 18,521 $ 4,846

1 Balance is partially guaranteed by the U.S.

1 Balance includes $ 3.5 million of loans guaranteed by the U.S.

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

The following tables present the Company’s impaired loans as of December 31,2022.

December 31, 2023

Balance Unpaid

Balance Specific

Loans without a specific valuation allowance

Commercial and industrial $ 9,750 $ 9,750 $ —

Owner-occupied commercial real estate 1,570 1,779 —

Small business lending 1

8,184 8,705 —

Residential mortgage 3,676 3,835 —

Home equity 29 29 —

Other consumer 17 36 —

Total 23,226 24,134 —

Loans with a specific valuation allowance

Commercial and industrial $ 51 $ 51 $ 51

Single tenant lease financing — — —

Healthcare finance — — —

Small business lending 1

1,867 1,867 703

Total 1,918 1,918 754

Total impaired loans $ 25,144 $ 26,052 $ 754

1 Balance is partially guaranteed by the U.S.

The following table presents average balances and interest income recognized for impaired loans during the twelve months ended December 31, 2022, and 2021.

December 31, 2022 December 31, 2021

Balance Interest

Income Average

Balance Interest

Loans without a specific valuation allowance

Commercial and industrial $ 3,676 $ 872 $ 194 $ 9

Commercial Real Estate Residential Real Estate Other (Includes Equipment, Machinery and Other Assets) Total Allowance on Collateral Dependent Loans

Owner-occupied commercial real estate $ — $ — $ 1,654 $ 1,654 $ —

Single tenant lease financing — — 75 5

Healthcare finance — — 252 —

Small business lending 1

1 unchanged sentence

Residential mortgage — 1,911 — 1,911 —

Home equity 16 — 13 —

Other consumer 8 — 29 —

Total 12,160 897 7,366 81

Loans with a specific valuation allowance

Commercial and industrial $ 411 $ — $ 675 $ —

Owner-occupied commercial real estate — — 355 —

Single tenant lease financing 410 — 3,931 —

Healthcare finance 620 45 841 131

Small business lending 1

1,662 — 644 —

Other consumer 50 — — —

Total 3,153 45 6,446 131

Total impaired loans $ 15,313 $ 942 $ 13,812 $ 212

1 Balance is partially guaranteed by the U.S.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Other consumer loans — — 86 86 —

Total loans $ 2,875 $ 3,121 $ 3,966 $ 9,962 $ 2,391

1 Balance includes $ 1.4 million of loans guaranteed by the U.S.

Loan Modifications to Borrowers Experiencing Financial Difficulty

4 unchanged sentences

Instead, these modifications are included in their respective loan pool and a historical loss rate is applied to the current loan balance to arrive at the quantitative baseline portion of the ACL.

Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearances, term extensions and other actions intended to minimize loss and to avoid foreclosure or repossession of collateral.

The Company did not have any loan modifications made to borrowers experiencing financial difficulty during the twelve months ended December 31, 2023.

There were two portfolio residential mortgage loans classified as new TDRs during the twelve months ended December 31, 2022 with a pre-modification and post-modification outstanding recorded investment of $ 1 million.

The Company did not allocate a specific allowance for loan losses (“ALLL”) for these loans as of December 31, 2022 and the modifications consisted of interest only payments for a period of time.

There was one SBA loan classified as a new TDR during the twelve months ended December 31, 2022 with a pre-modification and post-modification outstanding recorded investment of $ 0.6 million and the modification consisted of a forbearance agreement.

The company allocated a specific ALLL of $ 0.3 million for this loan.

There were two portfolio residential mortgage loans classified as new TDRs during the twelve months ended December 31, 2021 with a pre-modification and post-modification outstanding recorded investment of $ 1.6 million.

The Company did not allocate a specific ALLL for these loans as of December 31, 2021.

The modifications consisted of interest-only payments for a period of time.

There were no performing TDRs which had payment defaults within the twelve months following modification during the years ended December 31, 2022 and 2021.

Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, other-than-insignificant payment delays, term extensions and other actions intended to minimize loss and to avoid foreclosure or repossession of collateral.

The Company had five loan modifications made to borrowers experiencing financial difficulty during the twelve months ended December 31, 2024.

The Company did no t have any loan modifications made to borrowers experiencing financial difficulty during the twelve months ended December 31, 2023.

The following table present loans that were both experiencing financial difficulty and modified during the twelve months ended December 31, 2024.

Twelve Months Ended December 31, 2024 Payment Delay Total Modification by Loan Class % of Class of Loans

Investor commercial real estate $ 3,731 $ 3,731 1.4 %

Franchise finance 5,566 5,566 1.0 %

Total loans $ 9,297 $ 9,297

The following table describe the financial effect of the modifications made to borrowers experiencing financial difficulty.

As of December 31, 2024, the Company had no commitments to lend additional funds to these borrowers included in the table below.

Twelve Months Ended December 31, 2024 - Payment Delay

Loan Type Financial Effect

Investor commercial real estate Forbearance average of 9 months.

Franchise finance Forbearance average of 7 months.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table presents the performance of such loans that have been modified in the last twelve months as of December 31, 2024.

Current 30 - 89 Days

Past Due 90+ Days

Investor commercial real estate $ 3,731 $ — $ —

Franchise finance 5,566 — —

Total loans $ 9,297 $ — $ —

There were four Franchise Finance loans and one Investor CRE loan classified as modifications to borrowers experiencing financial difficulty during the twelve months ended December 31, 2024 with total book balance of $ 9.3 million.

There were no loans classified as modifications to borrowers experiencing financial difficulty during the twelve months ended December 31, 2023.

Other Real Estate Owned

The Company had $ 0.4 million in OREO as of December 31, 2023, which consisted of two residential mortgage properties.

The Company did not have any OREO as of December 31, 2022.

There was one loan totaling $ 0.8 million and one loan totaling $ 0.1 million, in the process of foreclosure at December 31, 2023 and December 31, 2022, respectively.

The Company had $ 0.3 million in other real estate owned (“OREO”) as of December 31, 2024, which consisted of one residential mortgage property.

The Company had $ 0.4 million in other real estate owned (“OREO”) as of December 31, 2023, which consisted of two residential mortgage properties.

There were nine loans totaling $ 2.1 million and one loan totaling $ 0.8 million, in the process of foreclosure at December 31, 2024 and December 31, 2023, respectively.

Accrued Interest Receivable

Accrued interest receivable on loans totaled $ 23.8 million and $ 22.0 million at December 31, 2024 and December 31, 2023, respectively, and is excluded from the estimate of credit losses.

The Company made the accounting policy election to not measure an ACL for accrued interest receivable.

Accrued interest deemed uncollectible will be written off through interest income.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Premises and Equipment

7 unchanged sentences

$ 71,453 $ 73,463

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

As of December 31, 2024 and 2023, the carrying amount of goodwill was $ 4.7 million.

1 unchanged sentence

Goodwill is tested for impairment on an annual basis as of August 31, or whenever events or changes in circumstances indicate the carrying amount of goodwill exceeds its implied fair value.

The annual test indicated no impairment existed as of August 31, 2023 and no events or changes in circumstances have occurred since the August 31, 2023 annual impairment test that would suggest it was more likely than not goodwill impairment existed.

The annual test indicated no impairment existed as of August 31, 2024.

No events or changes in circumstances have occurred since the August 31, 2024 annual impairment test that would suggest it was more likely than not goodwill impairment existed.

Servicing Asset

17 unchanged sentences

Loan servicing revenue totaled $ 6.2 million, $ 3.8 million and $ 2.6 million during the twelve months ended December 31, 2024, 2023 and 2022, respectively.

Loan servicing asset revaluation, which represents paydowns and the change in fair value of the servicing asset, resulted in a $ 1.5 million, $ 1.6 million and $ 1.1 million downward valuation for twelve months ended December 31, 2023, 2022 and 2021, respectively.

Loan servicing asset revaluation, which represents paydowns and the

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

change in fair value of the servicing asset, resulted in a $ 2.5 million, $ 1.5 million and $ 1.6 million downward valuation for twelve months ended December 31, 2024, 2023 and 2022, respectively.

The fair value of servicing rights is highly sensitive to changes in underlying assumptions.

3 unchanged sentences

Refer to Note 16 - Fair Value of Financial Instruments for further details.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The following table presents the composition of the Company’s deposit base as of December 31, 2024 and 2023.

Noninterest-bearing demand deposit accounts $ 123,464 $ 175,315

Interest-bearing demand deposit accounts 402,976 335,611

Noninterest-bearing deposits $ 136,451 $ 123,464

Interest-bearing demand deposits 1

896,661 402,976

Savings accounts 19,823 21,364

Money market accounts 1,183,789 1,248,319

Banking-as-a-Service (“BaaS”) - brokered deposits 74,401 13,607

Fintech - brokered deposits 1

Certificates of deposits 2,133,455 1,605,156

2 unchanged sentences

Time deposits greater than $250 $ 776,788 $ 703,835

1 Fintech - brokered deposits that had been previously classified as brokered deposits were reclassified to interest-bearing demand deposits as of December 31, 2024.

The following table presents time deposit maturities by year as of December 31, 2024.

7 unchanged sentences

$ 2,133,455 $ 245,229

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

FHLB Advances

The Company had outstanding FHLB advances of $ 614.9 million as of December 31, 2023 and 2022.

The Company had outstanding FHLB advances of $ 295.0 million and $ 614.9 million as of December 31, 2024 and 2023, respectively.

As of December 31, 2024, the stated interest rates on the Company’s outstanding FHLB advances ranged from 1.06 % to 4.16 %, with a weighted average interest rate of 3.39 %.

2 unchanged sentences

The fair value of investment securities pledged to the FHLB was approximately $ 795.0 million and $ 662.1 million as of December 31, 2024 and 2023, respectively.

Based on this collateral and the Company’s holding of FHLB stock, the Company is eligible to borrow up to an additional $ 663.2 million at year-end 2023.

As of December 31, 2023, the Company had $ 125.0 million of putable advances with the FHLB.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Based on this collateral and the Company’s holding of FHLB stock, the Company is eligible to borrow up to an additional $ 1.1 billion at year-end 2024.

As of December 31, 2024, the Company had $ 210.0 million of putable advance structures with the FHLB in which the FHLB holds a one-time option to put certain advances on a stated exercise date prior to maturity.

Among the Company’s putable advance structures, $ 60.0 million have passed their one-time exercise date, with the next exercise date occurring in 2027.

The Company’s FHLB advances are scheduled to mature according to the following schedule:

3 unchanged sentences

In June 2019, the Company issued $ 37.0 million aggregate principal amount of 6.0 % Fixed-to-Floating Rate Subordinated Notes due 2029 (the “2029 Notes”) in a public offering.

The 2029 Notes initially bear a fixed interest rate of 6.0 % per year to, but excluding, June 30, 2024, and thereafter a floating rate equal to the then-current benchmark rate (initially three-month LIBOR rate) plus 4.11 %.

The 2029 Notes bear interest at a floating rate equal to three-month Term SOFR plus 4.376 %.

All interest on the 2029 Notes is payable quarterly.

The 2029 Notes are scheduled to mature on June 30, 2029.

The 2029 Notes are unsecured subordinated obligations of the Company and may be repaid, without penalty, on any interest payment date on or after June 30, 2024.

The 2029 Notes are unsecured subordinated obligations of the Company and may be repaid at any time, without penalty.

The 2029 Notes are intended to qualify as Tier 2 capital under regulatory guidelines.

5 unchanged sentences

The Company used the net proceeds from the issuance of the 2030 Note to redeem a subordinated term note that had been entered into in October 2015.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

In August 2021, the Company issued $ 60.0 million aggregate principal amount of 3.75 % Fixed-to-Floating Rate Subordinated Notes due 2031 (the “2031 Notes”) in a private placement.

The 2031 Notes initially bear a fixed interest rate of 3.75 % per year to, but excluding, September 1, 2026, and thereafter a floating rate equal to the then-current benchmark rate (initially three-month Term SOFR plus 3.11 %).

The 2031 Notes initially bear a fixed interest rate of 3.75 % per year to, but excluding, September 1, 2026, and thereafter at a floating rate equal to the then-current benchmark rate (initially three-month Term SOFR plus 3.11 %).

The 2031 Notes are scheduled to mature on September 1, 2031.

5 unchanged sentences

Holders of $ 0.7 million of unregistered 2031 Notes did not participate in the exchange.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The following table presents the principal balance and unamortized discount and debt issuance costs for the 2029 Notes, the 2030 Note and the 2031 Notes as of December 31, 2024 and 2023.

8 unchanged sentences

Employee contributions are limited to the maximum established by the Internal Revenue Service on an annual basis.

The Company has elected to match contributions equal to 100 % up to the first 1 % of employee deferrals and then 50 % on deferrals of 2 % to 6 % equating to a maximum match of 3.5 % of an individual’s total eligible salary, as defined in the plan.

The Company has elected to match contributions equal to 100 % up to the first 1 % of employee deferrals and 50 % for employee deferrals above 1 % up to a maximum of 6 % equating to a maximum match of 3.5 % of an individual’s eligible earnings, as defined in the plan.

The company match vests immediately.

Discretionary employer-matching contributions begin vesting immediately at a rate of 50 % per year of employment and are fully vested after the completion of two years of employment.

Contributions totaled approximately $ 0.9 million in the twelve months ended December 31, 2023, 2022 and 2021, respectively.

Contributions totaled approximately $ 1.1 million, $ 0.9 million and $ 0.9 million for the twelve months ended December 31, 2024, 2023 and 2022, respectively.

Employment Agreements

4 unchanged sentences

The agreements also provide for the continuation of salary and certain other benefits for a specified period of time upon termination of employment under certain circumstances, including resignation for “good reason,” termination by the Company without “cause” at any time or any termination of employment within twelve months following a “change in control,” along with other specific conditions.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

2022 Equity Incentive Plan

4 unchanged sentences

Award Activity Under 2022 Plan

The Company recorded $ 0.8 million and $ 0.1 million of share-based compensation expense for the years ended December 31, 2023, and 2022, respectively, related to stock-based awards under the 2022 Plan.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The Company recorded $ 1.5 million, $ 0.8 million, and $ 0.1 million of share-based compensation expense for the years ended December 31, 2024, 2023 and 2022, respectively, related to stock-based awards under the 2022 Plan.

The following table summarizes the stock-based award activity under the 2022 Plan for the year ended December 31, 2024.

14 unchanged sentences

Unvested at January 1, 2024 53,985 $ 39.86 — $ — — $ —

Granted — — — — — —

Forfeited ( 22,899 ) 30.58 — — — —

1 unchanged sentence

Unvested at December 31, 2024 22,997 $ 46.71 — $ — — $ —

As of December 31, 2023, the total unrecognized compensation cost related to unvested awards was $ 0.6 million with a weighted-average expense recognition period of 1.1 years.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

As of December 31, 2024, the total unrecognized compensation cost related to unvested awards was less than $ 0.1 million with a weighted-average expense recognition period of 0.1 years.

Directors Deferred Stock Plan

3 unchanged sentences

Deferred stock rights were to be settled in common stock following the end of the deferral period payable on the basis of one share of common stock for each deferred stock right.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The following table summarizes the status of deferred stock rights related to the Directors Deferred Stock Plan for the year ended December 31, 2024.

1 unchanged sentence

Outstanding, beginning of year 28,538

Released ( 12,278 )

Outstanding, end of year 28,821

20 unchanged sentences

Deferred tax assets (liabilities)

Allowance for loan losses $ 9,847 $ 8,569

Allowance for credits losses $ 10,824 $ 9,847

Net unrealized losses on available-for-sale securities and hedged items 9,753 8,776

8 unchanged sentences

Total deferred tax assets, net $ 13,053 $ 15,614

As of December 31, 2023 and 2022 the Company had federal net operating loss (“NOL”) carryforwards of approximately $ 57.2 million and $ 40.5 million, respectively, and state NOL carryforwards of $ 8.5 million and $ 9.1 million, respectively.

As of December 31, 2024 and 2023 the Company had federal net operating loss (“NOL”) carryforwards of approximately $ 54.0 million and $ 57.2 million, respectively, and no state NOL carryforwards for December 31, 2024 and $ 8.5 million for December 31, 2023.

For federal income tax purposes, the NOL has no expiration period;

1 unchanged sentence

The Company expects to generate sufficient taxable income in the future to utilize the loss generated.

As of December 31, 2024 the Company had general business credits of $ 0.3 million that will begin expiring in 2044 and qualified zone academy bonds credits of $ 0.4 million that will begin expiring in 2025.

The Company has state tax credits of $ 0.3 million that will begin expiring in 2029.

Related Party Transactions

36 unchanged sentences

As permitted by the federal banking regulatory agencies, the Company has elected the option to delay the impact of the day one adoption of ASC 326.

The transition adjustments of $ 4.5 million will be phased into the regulatory capital calculations over a three-year period, with 25% of the adjustment recognized in 2023, 50% of the adjustment recognized in 2024, 75% of the adjustment recognized in 2025 and 100% of the adjustment recognized in 2026.

The transition adjustments of $ 4.5 million are phased into the regulatory capital calculations over a three-year period, with 25% of the adjustment recognized in 2023, 50% of the adjustment recognized in 2024, 75% of the adjustment recognized in 2025 and 100% of the adjustment recognized in 2026.

Actual Minimum Capital Required - Basel III Minimum Required to be Considered Well Capitalized

34 unchanged sentences

At December 31, 2024 and 2023, the Company had outstanding loan commitments totaling approximately $ 667.7 million and $ 755.4 million, respectively.

Capital Commitments

Capital expenditures were made in connection with the construction of the building where our corporate headquarters is located, along with an attached parking garage.

The Company entered into construction-related contracts.

As of December 31, 2023, the project was completed at a total cost of $ 67.2 million.

There are no remaining capital commitments left at December 31, 2023.

Fair Value of Financial Instruments

19 unchanged sentences

Rating agency and industry research reports as well as default and deferral activity are reviewed and incorporated into the calculation.

The Company did not own any securities classified within Level 3 of the hierarchy as of December 31, 2023 or 2022.

Loans Held-for-Sale (mandatory pricing agreements)

The fair value of loans held-for-sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan (Level 2).

The Company did not own any securities classified within Level 3 of the hierarchy as of December 31, 2024 or December 31, 2023.

First Internet Bancorp

5 unchanged sentences

The present value of the future cash flows is then calculated utilizing market-based discount rate assumptions (Level 3).

Interest Rate Swap Agreements

Interest Rate Swaps

The fair values of interest rate swap agreements are estimated using current market interest rates as of the balance sheet date and calculated using discounted cash flows that are observable or that can be corroborated by observable market data (Level 2).

Back-to-Back Swap Agreements

Interest Rate Swap Agreements Back-to-Back

The Company offers interest rate swaps to certain loan customers to allow them to hedge the risk of rising interest rates on their variable rate loans.

5 unchanged sentences

The fair value assets and liabilities of centrally cleared interest rate swaps are net of variation margin settled-to-market (Level 2).

Forward Contracts

The fair values of forward contracts on to-be-announced securities are determined using quoted prices in active markets, or benchmarked thereto (Level 1).

Interest Rate Lock Commitments

19 unchanged sentences

Servicing asset 16,389 — — 16,389

Interest rate swaps assets 5,139 — 5,139 —

Interest rate swap agreements - assets (back-to-back) 200 — 200 —

16 unchanged sentences

Interest rate swaps assets 5,139 — 5,139 —

Loans held-for-sale (mandatory pricing agreements) 9,110 — 9,110 —

Forward contracts 97 97 — —

IRLCs 133 — — 133

Interest rate swap agreements - assets (back-to-back) 677 — 677 —

Interest rate swap agreements - liabilities (back-to-back) ( 677 ) — ( 677 ) —

First Internet Bancorp

20 unchanged sentences

The following describes the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis, as well as the general classification of such assets pursuant to the valuation hierarchy.

Collateral Dependent Loans

Individually Analyzed Collateral Dependent Loans

Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment.

4 unchanged sentences

Individually evaluated loans with a specific valuation allowance based on the value of the underlying collateral or a discounted cash flow analysis are classified as Level 3 assets.

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying condensed consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurement falls at December 31, 2023 and December 31, 2022.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurement falls at December 31, 2024 and December 31, 2023.

December 31, 2024

4 unchanged sentences

Collateral dependent loans $ 4,296 $ — $ — $ 4,296

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

December 31, 2023

3 unchanged sentences

(Level 2) Significant

Impaired loans 1,164 — — 1,164

Collateral dependent loans $ 2,799 $ — $ — $ 2,799

Significant (Level 3) Inputs

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

(dollars in thousands) Fair Value at

Fair Value at

December 31, 2024 Valuation

7 unchanged sentences

Discount rate

(dollars in thousands) Fair Value at

Fair Value at

December 31, 2023 Valuation

Technique Unobservable

Technique Significant Unobservable

Inputs Range Weighted - Average Range

Impaired loans $ 1,164 Fair value of collateral Discount for type of property and current market conditions 0 % - 25 %

IRLCs 133 Discounted cash flow Loan closing rates 31 % - 100 %

Collateral dependent loans $ 2,799 Fair value of collateral Discount for type of property and current market conditions 0 % - 90 %

Servicing asset 10,567 Discounted cash flow Prepayment speeds

3 unchanged sentences

For these instruments, the carrying amount is a reasonable estimate of fair value.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Securities Held-to-Maturity

8 unchanged sentences

Discounted cash flows are calculated based off of

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

the anticipated future cash flows updated to incorporate loss severities.

3 unchanged sentences

own any securities classified within Level 3 of the hierarchy as of December 31, 2024 or December 31, 2023.

Loans Held-for-Sale

For loans that are sold in an active secondary market, the fair value of these loans is estimated based on secondary market price indications for loans with similar interest rate and maturity characteristics.

The fair value of other loans held-for-sale approximates carrying value.

The fair value of loans is estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.

13 unchanged sentences

The fair value of these financial instruments approximates carrying value.

The fair value of commitments to extend credit are based on fees currently charged to enter into similar agreements with similar maturities and interest rates.

The Company determined that the fair value of commitments was zero based on the contractual value of outstanding commitments at December 31, 2023 and 2022.

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

The fair value of commitments to extend credit are based on fees currently charged to enter into similar agreements with similar maturities and interest rates.

The Company determined that the fair value of commitments was zero based on the contractual value of outstanding commitments at December 31, 2024 and 2023.

The following tables provide the carrying amounts and estimated fair values of the Company's financial instruments at December 31, 2024 and 2023:

2 unchanged sentences

Amount Fair Value Quoted Prices

Assets/Liabilities

(Level 1) Significant

2 unchanged sentences

Securities held-to-maturity 249,796 228,851 — 228,851 —

Loans held-for-sale (best efforts pricing agreements) 22,052 22,052 — 22,052

Loans held-for-sale 54,695 58,510 — 58,510 —

Net loans 4,125,877 3,935,009 — — 3,935,009

8 unchanged sentences

Amount Fair Value Quoted Prices

Assets/Liabilities

(Level 1) Significant

2 unchanged sentences

Securities held-to-maturity 227,153 207,572 — 207,572 —

Loans held-for-sale (best efforts pricing agreements) 12,401 12,401 — 12,401 —

Loans held-for-sale 22,052 22,052 — 22,052 —

Net loans 3,801,446 3,611,909 — — 3,611,909

5 unchanged sentences

Accrued interest payable 3,848 3,848 3,848 — —

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Mortgage Banking Activities

1 unchanged sentence

For most of the mortgages sold in the secondary market, the Bank hedged its mortgage banking pipeline by entering into forward contracts for the future delivery of mortgage loans to third party investors and entering into IRLCs with potential borrowers to fund specific mortgage loans that would be sold into the secondary market.

To facilitate the hedging of the loans, the Bank elected the fair value option for loans originated and intended for sale in the secondary market under mandatory pricing agreements Changes in the fair value of loans held-for-sale, IRLCs and forward contracts are recorded in the mortgage banking activities line item within noninterest income.

To facilitate the hedging of the loans, the Bank elected the fair value option for loans originated and intended for sale in the secondary market under mandatory pricing agreements.

Changes in the fair value of loans held-for-sale, IRLCs and forward contracts are recorded in the mortgage banking activities line item within noninterest income.

Refer to Note 18 for further information on derivative financial instruments.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

During the years ended December 31, 2023, 2022, and 2021, the Company originated mortgage loans held-for-sale of $ 36.3 million, $ 388.0 million, and $ 721.3 million, respectively, and received $ 46.5 million, $ 411.5 million, and $ 714.9 million from the sale of mortgage loans, respectively, into the secondary market.

During the year ended December 31, 2024, the Company had no mortgage loans held-for-sale or sold into the secondary market.

During the years ended December 31, 2023 and 2022, the Company originated mortgage loans held-for-sale of $ 36.3 million, and $ 388.0 million, respectively, and received $ 46.5 million, and $ 411.5 million from the sale of mortgage loans, respectively, into the secondary market.

During the first quarter 2023, the Company made the decision to exit the residential mortgage business.

4 unchanged sentences

Loss resulting from the change in fair value of loans held-for-sale — ( 143 ) ( 184 )

(Loss) gain resulting from the change in fair value of derivatives ( 252 ) ( 453 ) ( 2,035 )

Loss resulting from the change in fair value of derivatives — ( 252 ) ( 453 )

Net revenue from mortgage banking activities $ — $ 76 $ 5,464

8 unchanged sentences

The Company had various interest rate swap agreements designated and qualifying as accounting hedges during the reported periods.

Designating an interest rate swap as an accounting hedge allows the Company to recognize gains and losses in the condensed consolidated statements of income within the same period that the hedged item affects earnings.

Designating an interest rate swap as an accounting hedge allows the Company to recognize gains and losses in the consolidated statements of income within the same period that the hedged item affects earnings.

The Company includes the gain or loss on the hedged items in the same line item as the offsetting loss or gain on the related interest rate swaps.

For derivative instruments that are designated and qualify as cash flow hedges, any gains or losses related to changes in fair value are recorded in accumulated other comprehensive loss, net of tax.

The fair value of interest rate swaps with a positive fair value are reported in accrued income and other assets in the condensed consolidated balance sheets, while interest rate swaps with a negative fair value are reported in accrued expenses and other liabilities in the condensed consolidated balance sheets.

The fair value of interest rate swaps with a positive fair value are reported in accrued income and other assets in the consolidated balance sheets, while interest rate swaps with a negative fair value are reported in accrued expenses and other liabilities in the consolidated balance sheets.

The Company offers interest rate swaps to certain loan customers to allow them to hedge the risk of rising interest rates on their variable rate loans.

4 unchanged sentences

The fair value of these derivatives is based on a discounted cash flow approach.

The fair value assets and liabilities of centrally cleared interest rate swaps are net of variation margin settled-to-market.

The IRLCs and forward contracts are not designated as accounting hedges and are recorded at fair value with changes in fair value reflected in noninterest income on the condensed consolidated statements of income.

The fair value of derivative instruments with a positive fair value are reported in accrued income and other assets in the condensed consolidated balance sheets, while derivative instruments with a negative fair value are reported in accrued expenses and other liabilities in the condensed consolidated balance sheets.

The IRLCs and forward contracts are not designated as accounting hedges and were recorded at fair value with changes in fair value reflected in noninterest income on the consolidated statements of income.

The fair value of derivative instruments with a positive fair value were reported in accrued income and other assets in the consolidated balance sheets, while derivative instruments with a negative fair value were reported in accrued expenses and other liabilities in the consolidated balance sheets.

The following table presents amounts that were recorded in the consolidated balance sheets related to cumulative basis adjustments for interest rate swap derivatives designated as fair value accounting hedges as of December 31, 2024 and 2023.

5 unchanged sentences

1 These amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship.

The amounts of the designated hedged items were $ 50.0 million at December 31, 2023 and 2022.

The following tables present a summary of interest rate swap derivatives designated as fair value accounting hedges of fixed-rate receivables used in the Company's asset/liability management activities at December 31, 2023 and December 31, 2022, identified by the underlying interest rate-sensitive instruments.

No amounts were hedged as of December 31, 2024.

The amount of the designated hedged items was $ 50.0 million as of December 31, 2023.

In November 2024, the Company’s interest rate swap derivative designated as fair value hedges matured.

As a result, the Company has no remaining fair value hedge exposure at December 31, 2024.

The following table presents a summary of interest rate swap derivatives designated as fair value accounting hedges of fixed-rate receivables used in the Company's asset/liability management activities at December 31, 2023, identified by the underlying interest rate-sensitive instruments

First Internet Bancorp

5 unchanged sentences

Securities available-for-sale $ 50,000 0.8 $ 1,153 3 month SOFR 2.33 %

Total swap portfolio at December 31, 2023 $ 50,000 0.8 $ 1,153 3 month SOFR 2.33 %

December 31, 2022 Weighted Average Remaining Maturity (years) Weighted-Average Rate

Instruments Associated With

Notional Value Fair Value Receive Pay

Securities available-for-sale $ 50,000 1.8 $ 2,093 3 month LIBOR 2.33 %

Total swap portfolio at December 31, 2022 $ 50,000 1.8 $ 2,093 3 month LIBOR 2.33 %

In March 2021, the Company terminated the last layer of interest rate swaps associated with available-for-sale agency mortgage-backed securities - residential, which resulted in swap termination payments to counterparties totaling $ 1.9 million.

Total swap portfolio at December 31, 2023

$ 50,000 0.8 $ 1,153 3 month SOFR 2.33 %

In December 2024, the Company terminated interest rate swaps utilized as cash flow hedges against Federal Home Loan Bank advances, which resulted in swap termination receipts from counterparties of $ 2.9 million.

Given the Company had no further liability exposure to the underlying index hedged, the Company reclassified this amount from accumulated other comprehensive loss to the consolidated statements of income and recognized a gain on termination of interest rate swaps for the year ended December 31, 2024.

In March 2021, the Company terminated the last of layer interest rate swaps associated with available-for-sale agency mortgage-backed securities - residential, which resulted in swap termination payments to counterparties totaling $ 1.9 million.

The corresponding fair value hedging adjustment was allocated pro-rata to the underlying hedged securities and is being amortized over the remaining lives of the designated securities.

During the year ended December 31, 2023, amortization expense totaling $ 0.4 million was recognized as a reduction to interest income on securities.

The Company had amortization expense totaling $ 0.1 million and $ 0.4 million for the years ended December 31, 2024 and 2023, respectively, which was recognized as a reduction to interest income on securities.

In June 2020, the Company terminated all fair value hedging relationships associated with loans, which resulted in swap termination payments to counterparties totaling $ 46.1 million.

1 unchanged sentence

During the years ended December 31, 2024 and 2023, amortization expense totaling $ 4.9 million and $ 4.7 million, respectively, related to these previously terminated fair value hedges was recognized as a reduction to interest income on loans.

The following tables present a summary of interest rate swap derivatives designated as cash flow accounting hedges of variable-rate liabilities used in the Company's asset/liability management activities at December 31, 2023 and December 31, 2022.

The following table presents a summary of interest rate swap derivatives designated as cash flow accounting hedges of variable-rate liabilities used in the Company's asset/liability management activities at December 31, 2023.

December 31, 2023 Weighted Average Remaining Maturity (years) Weighted-Average Rate

3 unchanged sentences

Interest rate swaps 40,000 0.4 390 Fed Funds Effective 2.78 %

December 31, 2022 Weighted Average Remaining Maturity (years) Weighted-Average Rate

Cash Flow Hedges

Notional Value Fair Value Receive Pay

Interest rate swaps $ 110,000 4.1 $ 4,787 3 month LIBOR 2.88 %

Interest rate swaps 60,000 0.6 735 1 month LIBOR 2.88 %

Interest rate swaps 40,000 1.4 1,030 Fed Funds Effective 2.78 %

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

These derivative financial instruments were entered into for the purpose of managing the interest rate risk of certain assets and liabilities.

The Company received $ 5.2 million and $ 7.7 million of cash collateral from counterparties as security for their obligations related to these swap transactions at December 31, 2023 and 2022, respectively.

As of December 31, 2024, the Company received no cash collateral from counterparties as security for their obligations related to these swap transactions.

As of December 31, 2023, the Company received $ 5.2 million of cash collateral from counterparties as security for their obligations related to these swap transactions.

The Company had no pledged cash collateral as of December 31, 2024 and December 31, 2023 to counterparties on interest rate swap agreements as security for its obligations related to these agreements.

Collateral posted and received is dependent on the market valuation of the underlying hedges.

The following table presents the notional amount and fair value of interest rate swaps, IRLCs and forward contracts utilized by the Company at December 31, 2023 and 2022.

The following table presents the notional amount and fair value of interest rate swaps utilized by the Company at December 31, 2024 and 2023.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

December 31, 2024 December 31, 2023

6 unchanged sentences

Back-to-back swaps 27,214 200 1,778 677

IRLCs — — 14,862 133

Forward contracts — — 17,000 97

Total contracts $ 27,214 $ 200 $ 201,778 $ 5,816

4 unchanged sentences

The fair values of interest rate swaps were estimated using a discounted cash flow method that incorporates current market interest rates as of the balance sheet date.

Fair values of IRLCs and forward contracts were estimated using changes in mortgage interest rates and other factors from the date the Company entered into the IRLC and the balance sheet date.

Refer to “Note 16 - Fair Value of Financial Instruments” for additional information.

5 unchanged sentences

Interest rate swap agreements $ — $ ( 2,566 ) $ 19,091

The following table summarizes the periodic changes in the fair value of derivatives not designated as hedging instruments on the condensed consolidated statements of income for the twelve months ended December 31, 2023, 2022, and 2021.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The following table summarizes the periodic changes in the fair value of derivatives not designated as hedging instruments on the consolidated statements of income for the twelve months ended December 31, 2024, 2023 and 2022.

Amount of (Loss) / Gain Recognized in the Twelve Months Ended

7 unchanged sentences

Forward contracts — ( 119 ) —

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The following table presents the effects of the Company's interest rate swap agreements on the consolidated statements of income during the twelve months ended December 31, 2024, 2023 and 2022.

2 unchanged sentences

Interest income

Loans $ — $ — $ —

Securities - taxable — — ( 253 )

Securities - non-taxable $ 1,367 $ 1,471 $ ( 244 )

8 unchanged sentences

$ 4,624 $ 5,764 $ ( 2,479 )

Noninterest income

$ 2,904 $ — $ —

Total noninterest income $ 2,904 $ — $ —

1 The Company recognized a gain on termination of interest rate swaps for the year ended December 31, 2024.

Shareholders’ Equity

On October 20, 2021, the Company's Board of Directors approved a stock repurchase program authorizing the repurchase of up to $ 30.0 million of our outstanding common stock from time to time on the open market or in privately negotiated transactions.

In October 2022, the Company’s Board of Directors increased the authorization to $ 35.0 million.

The Company repurchased a total of 855,956 shares at an average price of $ 36.31 per share under the program through December 19, 2022.

On December 19, 2022, the Company's Board of Directors approved a new stock repurchase program to replace the prior program.

The new program authorized the repurchase of up to $ 25.0 million of our outstanding common stock from time to time on the open market or in privately negotiated transactions.

The stock repurchase authorization is scheduled to expire on December 31, 2024.

Under this program, the Company repurchased 502,525 shares of common stock at an average price of $ 18.40 per share during 2023, and 46,497 shares of common stock at an average price of $ 24.42 per share during 2022.

As of December 31, 2023, the Company had $ 14.6 million of remaining authority under the program.

On December 19, 2022, the Company's Board of Directors approved a stock repurchase program that authorized the repurchase of up to $ 25.0 million of our outstanding common stock from time to time on the open market or in privately negotiated transactions.

The stock repurchase authorization expired on December 31, 2024.

Under the program, the Company repurchased 559,522 shares of common stock, at an average price of $ 19.06 , for a total investment of $ 10.7 million.

First Internet Bancorp

6 unchanged sentences

Net unrealized holding (losses) gains recorded within other comprehensive income before income tax ( 42,336 ) — 19,091 ( 23,245 )

Other comprehensive (loss) income before tax ( 4,087 ) — 11,138 7,051

Income tax (benefit) provision ( 1,064 ) — 1,958 894

Other comprehensive (loss) income- net of tax ( 3,023 ) — 9,180 6,157

Balance, December 31, 2021 $ ( 2,555 ) $ — $ ( 8,484 ) $ ( 11,039 )

Net unrealized holding (losses) gains recorded within other comprehensive income before income tax ( 42,336 ) — 19,091 ( 23,245 )

Reclassification of securities available-for-sale to held-to-maturity — ( 5,402 ) — ( 5,402 )

10 unchanged sentences

Balance, December 31, 2023 $ ( 30,174 ) $ ( 2,939 ) $ 3,738 $ ( 29,375 )

Condensed Financial Information (Parent Company Only)

Presented below is condensed financial information as to financial position, results of operations, and cash flows of the Company on a non-consolidated basis:

Net unrealized holding losses recorded within other comprehensive income before income tax $ ( 1,039 ) $ — $ ( 1,082 ) $ ( 2,121 )

Reclassification of gain on termination of interest rate swaps — — ( 2,904 ) ( 2,904 )

Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity — 789 — 789

Other comprehensive (loss) income before tax ( 1,039 ) 789 ( 3,986 ) ( 4,236 )

Income tax (benefit) provision ( 800 ) 90 ( 248 ) ( 958 )

Other comprehensive (loss) income- net of tax ( 239 ) 699 ( 3,738 ) ( 3,278 )

Balance, December 31, 2024 $ ( 30,413 ) $ ( 2,240 ) $ — $ ( 32,653 )

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

Condensed Financial Information (Parent Company Only)

Presented below is condensed financial information as to financial position, results of operations, and cash flows of the Company on a non-consolidated basis:

Condensed Balance Sheets

2 unchanged sentences

Investment in common stock of subsidiaries 458,025 444,221

Premises and equipment, net — 58

Accrued income and other assets 19,983 14,127

1 unchanged sentence

Liabilities and shareholders’ equity

Subordinated debt, net of unamortized discounts and debt issuance costs of $2,162 in 2023 and $2,468 in 2022 $ 104,838 $ 104,532

Subordinated debt, net of unamortized discount and debt issuance costs of $ 1,850 and $ 2,162 in 2024 and 2023, respectively

$ 105,150 $ 104,838

Accrued expenses and other liabilities 1,792 2,308

2 unchanged sentences

Total liabilities and shareholders’ equity $ 491,005 $ 469,941

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

Condensed Statements of Income

2 unchanged sentences

Dividends from bank subsidiary $ 16,000 $ 12,000 $ 8,000

Gain on sale of premises and equipment — — 2,523

Other 905 188 285

8 unchanged sentences

Income tax benefit ( 2,080 ) ( 1,817 ) ( 1,874 )

Income (loss) before equity in undistributed net income of subsidiaries 5,448 1,492 ( 5,733 )

Income before equity in undistributed net income of subsidiaries 9,509 5,448 1,492

Equity in undistributed net income of subsidiaries 15,767 2,969 34,049

9 unchanged sentences

Securities available-for-sale

Net unrealized holding gains (losses) on securities available-for-sale recorded within other comprehensive income before income tax 7,339 ( 42,336 ) ( 4,087 )

Income tax provision (benefit) 1,682 ( 9,060 ) ( 1,064 )

Net effect on other comprehensive income (loss) 5,657 ( 33,276 ) ( 3,023 )

Net unrealized holding (losses) gains on securities available-for-sale recorded within other comprehensive income before income tax ( 1,039 ) 7,339 ( 42,336 )

Income tax (benefit) provision ( 800 ) 1,682 ( 9,060 )

Net effect on other comprehensive (loss) income ( 239 ) 5,657 ( 33,276 )

Securities held-to-maturity

5 unchanged sentences

Net unrealized holding (losses) gains on cash flow hedging derivatives recorded within other comprehensive income before income tax ( 1,082 ) ( 2,566 ) 19,091

Reclassification of gain on termination of interest rate swaps ( 2,904 )

Income tax (benefit) provision ( 248 ) ( 590 ) 4,893

Net effect on other comprehensive (loss) income ( 3,738 ) ( 1,976 ) 14,198

Total other comprehensive income (loss) 4,261 ( 22,597 ) 6,157

Total other comprehensive (loss) income ( 3,278 ) 4,261 ( 22,597 )

Comprehensive income $ 21,998 $ 12,678 $ 12,944

11 unchanged sentences

Share-based compensation expense 363 256 795

Gain on sale of premises and equipment — — ( 2,523 )

Net change in other assets 1,506 ( 1,819 ) 350

Net change in other liabilities ( 522 ) 358 ( 490 )

Net cash provided by (used in) operating activities 4,561 2,476 ( 5,596 )

Net cash provided by operating activities 11,168 4,561 2,476

Investing activities

Net proceeds from sale of premises and equipment — — 8,116

Other investing activities ( 3,578 ) ( 2,727 ) ( 3,561 )

Purchase of equity investments ( 7,221 ) ( 3,578 ) ( 2,727 )

Net cash (used in) provided by investing activities ( 7,221 ) ( 3,578 ) ( 2,727 )

1 unchanged sentence

Cash dividends paid ( 2,078 ) ( 2,156 ) ( 2,317 )

Net proceeds from issuance of subordinated debt — — 58,658

Repayment of subordinated debt — — ( 35,000 )

Repayment of Bank loan — — ( 3,000 )

Repurchase of common stock ( 283 ) ( 9,340 ) ( 27,780 )

1 unchanged sentence

Net cash (used in) provided by financing activities ( 2,543 ) ( 11,649 ) ( 30,347 )

Net (decrease) increase in cash and cash equivalents ( 10,666 ) ( 30,598 ) 12,325

Net increase (decrease) in cash and cash equivalents 1,404 ( 10,666 ) ( 30,598 )

Cash and cash equivalents at beginning of year 11,593 22,259 52,857

Cash and cash equivalents at end of year $ 12,997 $ 11,593 $ 22,259

The prior year Condensed Statements of Income and Condensed Statements of Cash Flows presented above were voluntarily revised to correct an immaterial error.

As a result, the following changes were made to the 2022 statements:

• Dividends received from subsidiary are presented in total income.

• Equity in undistributed net income of subsidiaries reflects the difference in subsidiary income and dividends received.

The above changes had no effect on 2022 net income.

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

Recent Accounting Pronouncements

ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (June 2016)

The main objective of this update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

To achieve this objective, the amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The amendments affect entities holding financial assets that are not accounted for at fair value through net income.

The amendments affect loans, debt securities, off-balance-sheet credit exposures, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

The amendments in this update affect an entity to varying degrees depending on the credit quality of the assets held by the entity, their duration, and how the entity applies current GAAP.

There is diversity in practice in applying the incurred loss methodology, which means that before transition some entities may be more aligned under current GAAP than others to the new measure of expected credit losses.

The following describes the main provisions of this update.

• Assets Measured at Amortized Cost:

The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

The statements of income reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increase or decrease of credit losses that have taken place during the period.

The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances.

• Available-for-Sale Debt Securities:

Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses.

Available-for-sale accounting recognizes that value may be realized either through collection of contractual cash flows or through sale of the security.

Therefore, the amendments limit the amount of the allowance for credit losses to the amount by which fair value is below amortized cost because the classification as available-for-sale is premised on an investment strategy that recognizes that the investment could be sold at fair value if cash collection would result in the realization of an amount less than fair value.

• In May 2019, the FASB issued ASU 2019-05 - Financial Instruments - Credit Losses (Topic 326) - Targeted Transition Relief.

This ASU allows an option for preparers to irrevocably elect the fair value option, on an instrument-by-instrument basis, for eligible financial assets measured at amortized cost basis upon adoption of the credit losses standard.

This increases the comparability of financial statement information provided by institutions that otherwise would have reported similar financial instruments using different measurement methodologies, potentially decreasing costs for financial statement preparers while providing more useful information to investors and other users.

The Company formed a current expected credit losses (“CECL”) working group that discussed implementation matters related to the completeness and accuracy of historical data, model development and corporate governance documentation.

The new allowance model estimates credit losses over the expected life of the portfolio and includes a qualitative framework to account for drivers of losses that the quantitative model does not capture.

The CECL working group discussed results from parallel model runs for each portfolio segment, assumptions related to unfunded commitments and economic forecast factors.

Model validation was completed by an independent third party in the fourth quarter 2022.

The ASU allows for several different methods of calculating the Allowance for Credit Losses (“ACL”) and based on its analysis of observable data, the Company determined the discounted cash flow method to be the most appropriate for all its loan segments.

First Internet Bancorp

Notes to Consolidated Financial Statements

(Tabular dollar amounts in thousands except per share data)

The Company adopted this guidance on January 1, 2023 and recorded a $ 3.0 million pre-tax one-time cumulative effect adjustment to the ACL in retained earnings on the consolidated balance sheet as of the beginning of 2023, as is required in the guidance.

In addition, the Company recorded a one-time $ 2.5 million pre-tax cumulative effect adjustment to the allowance for unfunded commitments in retained earnings on the consolidated balance sheet.

The qualitative impact of the new accounting standard is directed by many of the same factors that impacted the previous methodology for calculating the ACL, including but not limited to, quality and experience of staff, changes in the value of collateral, concentrations of credit in loan types or industries and changes to lending policies.

In addition, the Company also uses reasonable and supportable forecasts.

Examples of this are regression analyses of data from the Federal Open Market Committee quarterly economic projections for change in real GDP, housing price index and national unemployment.

The following table presents the impact of the adoption of ASC 326 as of January 1, 2023:

January 1, 2023

(dollars in thousands) Pre-ASC 326 Adoption Impact of ASC 326 Adoption As Reported Under ASC 326

Commercial loans

Commercial and industrial $ 1,711 $ ( 120 ) $ 1,591

Owner-occupied commercial real estate 651 62 713

Investor commercial real estate 1,099 ( 191 ) 908

Construction 2,074 ( 435 ) 1,639

Single tenant lease financing 10,519 ( 346 ) 10,173

Public finance 1,753 ( 135 ) 1,618

Healthcare finance 2,997 1,034 4,031

Small business lending 2,168 334 2,502

Franchise finance 3,988 ( 313 ) 3,675

Total commercial loans 26,960 ( 110 ) 26,850

Consumer loans

Residential mortgage 1,559 406 1,965

Home equity 69 133 202

Other consumer 3,149 2,533 5,682

Total consumer loans 4,777 3,072 7,849

Total allowance for credit losses $ 31,737 $ 2,962 $ 34,699

Liability for off-balance sheet credit exposures $ — $ 2,504 $ 2,504

The Company also performed an assessment to determine if an allowance for credit loss was needed for available-for-sale and held-to-maturity securities.

The Company analyzed available-for-sale securities investment securities that were in an unrealized loss position as of January 1, 2023 and determined the decline in fair value for those securities was not related to credit, but rather related to changes in interest rates and general market conditions.

As such, no ACL was recorded for available-for-sale securities.

The Company analyzed held-to-maturity securities and recorded a $ 0.3 million one-time cumulative adjustment to the allowance in retained earnings.

ASU 2020-04 - Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (March 2020) and ASU 2022-06 - Deferral of sunset Date of Topic 848

In March 2020, FASB issued ASU 2020-04 to ease the potential burden in accounting for the transition away from the LIBOR on financial reporting.

The ASU provides optional expedients and exceptions for applying GAAP to contract modification and hedge accounting relationships.

The guidance is effective March 12, 2020 through December 31, 2024.

The Company adopted this guidance in 2023 and it did not have a material impact on the condensed consolidated financial statements.

Segment Information

The Company operates as a single reportable segment, managing the business and assessing financial performance on a consolidated basis.

While there are several lines of business within the operating segment, they are closely interrelated and cannot operate independently.

Accordingly, the CODM evaluates operations and financial performance on a Company-wide basis and all of the Company’s operations are aggregated into one reportable operating segment.

The CODM regularly receives and reviews the Company’s net income on a consolidated basis and uses key metrics to evaluate the overall performance of the Company and make decisions regarding the allocation of resources.

Additionally, the CODM reviews budget-to-actual variances to analyze these profit measures as a single operating segment.

The function of CODM is performed by the Finance Committee.

This Committee consists of the highest level of management that is responsible for the Company’s overall resource allocation and performance.

The Finance Committee includes the Chairman and Chief Executive Officer, President and Chief Operating Officer and Executive Vice President and Chief Financial Officer.

First Internet Bancorp

1 unchanged sentence

(Tabular dollar amounts in thousands except per share data)

ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures (March 2022)

Recent Accounting Pronouncements

ASU 2023-02 - Investments - Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (March 2023)

In March 2023, the FASB issued ASU No.

2022-02, Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.

This ASU eliminates the separate recognition and measurement guidance for Troubled Debt Restructurings ("TDRs") by creditors.

The elimination of the TDR guidance may be adopted prospectively for loan modifications after adoption or on a modified retrospective basis, which would also apply to loans previously modified, resulting in a cumulative effect adjustment to retained earnings in the period of adoption for changes in the allowance for credit losses.

The ASU requires an entity to disclose current-period gross write-offs by year of origination for financing receivables within the scope of Subtopic 326-20.

This guidance is effective on January 1, 2023, with early adoption permitted.

Using a prospective approach, the Company adopted this guidance on January 1, 2023 and it did not have a material impact on the condensed consolidated financial statements.

2023-02, Investments - Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.

This ASU permits companies to account for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.

The Company adopted this guidance on January 1, 2024 and it did not have a material impact on its consolidated financial statements.

ASU 2023-07 - Segment Reporting (Topic 280):

4 unchanged sentences

The guidance is effective for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024 with early adoption permitted.

The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements.

The Company adopted this guidance in 2024 and it did not have a material impact on its consolidated financial statements.

ASU 2023-09 - Income Taxes (Topic 740):

4 unchanged sentences

The guidance is effective for annual periods beginning after December 15, 2024 with early adoption permitted.

The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

ASU 2024-03 - Income Statement-Reporting Comprehensive Income - Expense Disaggregations Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (November 2024)

In November 2024, the FASB issued ASU No.

2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregations Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

This ASU requires additional disclosures of the nature of expenses included in the Company’s income statement.

The new standard requires disclosures about specific types of expenses included the income statement.

The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures