Business Context and Reporting Period
This Form 8-K was filed by First Internet Bancorp on January 10, 2018. The report addresses a specific event regarding the revaluation of the company's net deferred tax asset triggered by the enactment of the "Tax Cuts and Jobs Act Bill of 2017," which reduced the federal corporate tax rate from 35% to 21% effective January 1, 2018.
Key Financial Metrics
- Deferred Tax Asset Reduction: Estimated at approximately $1.8 million.
- Impact on Earnings: The reduction will be recorded as additional income tax expense in the fourth quarter of 2017.
- Impact on EPS: Estimated impact on fourth quarter 2017 earnings per diluted share is approximately ($0.22).
- Share Count: Based on an estimated fourth quarter 2017 average diluted common shares outstanding of approximately 8.5 million.
- Cash Flow Impact: The company does not anticipate future cash expenditures resulting from this reduction.
Note: This filing does not provide data on total revenue, profit, margins, debt, or liquidity for the period.
Material Changes
The primary material change is the accounting adjustment required by the new tax legislation. The company must revalue its net deferred tax asset, resulting in a one-time charge of approximately $1.8 million to the fourth quarter of 2017 financial results. This is a non-cash adjustment to the balance sheet and income statement.
Guidance, Outlook, and Risks
Management Commentary: The company notes that the revaluation is subject to further refinement as additional information becomes available and analysis is completed for the preparation of audited financial statements.
Risks and Contingencies: The filing includes standard forward-looking statement disclaimers. Identified risk factors include:
- Failures or interruptions in communications and information systems.
- Failure of plans to grow commercial real estate, commercial and industrial, and public finance loan portfolios.
- Competition with national, regional, and community financial institutions.
- Loss of key senior management members.
- Fluctuations in interest rates and general economic conditions.
- Risks relating to the regulation of financial institutions.
Investor Verification Checklist
- Verify the final audited impact of the tax rate change on the fourth quarter 2017 earnings per share once the financial statements are released.
- Confirm the exact dollar amount of the deferred tax asset write-down in the subsequent 10-Q or 10-K filing.
- Review the company's liquidity position to ensure the non-cash nature of the charge does not impact capital adequacy ratios.
- Monitor future filings for updates on the refinement of the tax revaluation estimate.