First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q2 2023 Earnings Presentation
31 slides from First Internet Bancorp's earnings presentation, Jul 26, 2023
Slide 1: Financial Results Second Quarter 2023
Financial Results Second Quarter 2023 Exhibit 99.2
Slide 2: Forward-Looking Statements & Non-GAAP Financial Measures
Forward-Looking Statements & Non-GAAP Financial Measures This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements with respect to the financial condition, results of operations
Slide 3: Second Quarter 2023 Highlights
Second Quarter 2023 Highlights Net income of $3.9 million Diluted earnings per share of $0.44 3 Net interest margin of 1.53% and FTE net interest margin of 1.64%1 Pace of increase in deposit costs slowed to lowest point in past four quarters Total deposits increased 6.4% from 1Q23 Total
Slide 4: Loan Portfolio Overview
Loan Portfolio Overview Total portfolio loan balances increased 1.1% from 1Q23 Commercial loan balances increased $25.2 million, or 0.9%, compared to 1Q23 Consumer loan balances increased $16.3 million, or 2.2%, compared to 1Q23 2Q23 funded portfolio loan origination yields were up 66 bps fr
Slide 5: Deposit Composition
$1,479.7 38% $984.2 25% $368.4 10% $249.9 7% $154.4 4% $629.9 16% Consumer Small Business Commercial Public Funds BaaS Brokered2 $119.3 3% $270.0 7% $28.2 1% $434.9 11% $797.8 21%$154.4 4% $1,366.4 35% $683.2 18% Noninterest-bearing deposits Interest-bearing demand deposits Savings accounts Money ma
Slide 6: Uninsured Deposit Balances
Uninsured Deposit Balances 6 Estimated uninsured deposit balances represent 24% of total deposits, down from 26% in 1Q23 – Decrease driven primarily by decline in money market balances, conversions to ICS reciprocal deposits and drawdowns on construction-related noninterest-bearing balances Unin
Slide 7: Liquidity and 2Q23 Deposit Update
Liquidity and 2Q23 Deposit Update 7 Cash and unused borrowing capacity totaled $1.2 billion at quarter end – Cash balances up over $160 million since 1Q23 – Currently represents 127% of total uninsured deposits and 174% of adjusted uninsured deposits CD production and growth in BaaS deposits dro
Slide 8: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Net interest income on a GAAP and FTE basis were down 7.3% and 7.0%, respectively, from 1Q23 Improved loan mix and higher origination yields were offset by higher funding costs Total loan portfolio yield impacted by loan beta lag effect on fixed rate
Slide 9: Net Interest Margin Drivers
Net Interest Margin Drivers 9 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix 2 Impact of loans affected by day count for 1Q23 and 2Q23 rollforward Net Interest Margin – FTE1 Linked-Quarter Change Monthly Rate Paid on Int. Bearing Deposits vs. Fed Funds Linked-quarter FTE NIM d
Slide 10: Noninterest Income
Noninterest Income 10 Dollars in millions Noninterest Income by Type Dollars in millions Noninterest Income by Quarter Noninterest income of $5.9 million, compared to $5.4 million in 1Q23 Gain on sale of loans of $4.9 million, up 19.9% compared to $4.1 million in 1Q23 – SBA loan sale volume incr
Slide 11: Noninterest Expense
Noninterest Expense 11 1 2Q22 noninterest expense includes a $0.5 million discretionary inflation bonus, $0.3 million of accelerated equity compensation and $0.1 million of acquisition-related expenses; see Reconciliation of Non-GAAP Financial Measures in the Appendix 2 3Q22 noninterest expense incl
Slide 12: Asset Quality
Asset Quality Allowance for credit losses to total loans of 0.99% in 2Q23, down 3 bps from 1Q23 Quarterly provision for credit losses was $1.7 million, compared to $9.4 million in 1Q23 Net charge-offs to average loans of 0.17%, compared to 0.82% in 1Q23 Nonperforming loans decreased $3.0 mil
Slide 13: Capital
Capital Tangible common equity to tangible assets decreased 37 bps to 7.07%1 from 1Q23 – Impacted by deposit growth and increase in cash balances Tangible book value per share of $39.85, up from $39.23 in 1Q231 Repurchased 203,000 shares at an average price per share of $13.52 during 2Q23 Si
Slide 14: Pro Forma Capital Impact of Unrealized Securities Losses
Pro Forma Capital Impact of Unrealized Securities Losses Limited deployment of excess liquidity into the securities portfolio during the low-rate environment in 2020 and 2021 Over 62% of securities are classified as available-for-sale and reported on the balance sheet at market value Capital r
Slide 15: Small Business Lending
Small Business Lending $170.6 million in balances as of June 30, 2023 Nationwide platform providing growth capital to entrepreneurs and small business owners Top 30 Small Business Administration 7(a) lender for the SBA’s 2022 fiscal year; currently top 10 lender for SBA’s 2023 fiscal year Or
Slide 16: Franchise Finance
Franchise Finance $390.5 million in balances as of June 30, 2023 Focused on providing growth financing to franchisees in a variety of industry segments Strong historical credit performance to date Average loan size of $0.9 million 16 Portfolio Mix by Borrower Use Portfolio Mix by State Portf
Slide 17: Construction and Investor Commercial Real Estate
Construction and Investor Commercial Real Estate $330.0 million in combined balances as of June 30, 2023 Average current loan balance of $5.5 million for investor CRE Average commitment sizes for construction – Commercial construction/development: $17.2 million – Residential construction/devel
Slide 18: Single Tenant Lease Financing
Single Tenant Lease Financing $947.5 million in balances as of June 30, 2023 Long-term financing of single tenant properties occupied by historically strong national and regional tenants Weighted-average portfolio LTV of 47% Average loan size of $1.3 million 18 Portfolio Mix by Major Vertica
Slide 19: Public Finance
4%2% 5% 5% 23% 7% 6% 2%1% 1% 3% 41% AAA/Aaa AA+/Aa1 AA/Aa2 AA-/Aa3 A+/A1 A/A2 A-/A3 BBB+/Baa1 BBB/Baa2 BB+/Ba1 BB/Ba2 Non-Rated 34% 14% 13% 10% 6% 6% 3% 2% 2% 2% 8% General Obligation Essential use equipment loans Lease rental revenue Utilities Revenue Public higher ed facilities - Revenue Tax Incre
Slide 20: Healthcare Finance
Healthcare Finance $245.1 million in balances as of June 30, 2023 Average loan size of $483,000 No delinquencies in this portfolio 20 Portfolio Mix by Borrower Use Portfolio Mix by Borrower Portfolio Mix by State 20 76% 18% 5% 1% Practice Refi or Acquisition Owner Occupied CRE Project Equipmen
Slide 21: C&I and Owner-Occupied Commercial Real Estate
C&I and Owner-Occupied Commercial Real Estate $172.0 million in combined balances as of June 30, 2023 Current C&I LOC utilization of 43% Average loan sizes C&I: $708,000 Owner-occupied CRE: $831,000 21 Portfolio by Loan Type Portfolio Mix by State Portfolio Mix by Major Industry 21 48% 35%
Slide 22: Residential Mortgage
Residential Mortgage $420.5 million in balances as of June 30, 2023 (includes home equity balances) Historically direct-to-consumer originations centrally located at corporate headquarters Focused on high quality borrowers – Average loan size of $203,000 – Average credit score at origination o
Slide 23: Specialty Consumer
23% 21% 17% 29% 10% Specialty Consumer $352.1 million in balances as of June 30, 2023 Direct-to-consumer and nationwide dealer network originations Focused on high quality borrowers – Average credit score at origination of 778 – Average loan size of $24,000 Strong historical credit performan
Slide 24: First Internet Bank
First INTERNET +
Slide 25: Loan Portfolio Composition
Loan Portfolio Composition 25 1 Includes carrying value adjustments of $30.5 million, $31.5 million, $32.5 million, $37.5 million and $42.7 million related to terminated interest rate swaps associated with public finance loans as of June 30, 2023, March 31, 2023, December 31, 2022, December 31, 2021
Slide 26: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 26 Dollars in thousands, except for per share data 2016 2017 2018 2019 2020 2021 2022 2Q23 Total equity - GAAP $153,942 $224,127 $288,735 $304,913 $330,944 $380,338 $364,974 $354,332 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (
Slide 27: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 27 1 Assuming a 21% tax rate Dollars in thousands, except for per share data 2Q22 3Q22 4Q22 1Q23 2Q23 Total equity - GAAP $365,332 $360,857 $364,974 $355,572 $354,332 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $3
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 28 Dollars in thousands 2Q22 3Q22 4Q22 1Q23 2Q23 Noninterest income $6,820 $4,314 $5,807 $5,446 $5,871 Adjustments: Mortgage-related revenue - - - (65) - Adjusted noninterest income $6,820 $4,314 $5,807 $5,381 $5,871 Noninterest expense $17,985 $17,995 $
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 29 1 Assuming a 21% tax rate Dollars in thousands 2Q22 3Q22 4Q22 1Q23 2Q23 Income (loss) before income taxes - GAAP 10,824$ 9,423$ 6,854$ (5,349)$ 3,648$ Adjustments: Mortgage-related revenue - - - (65) - Mortgage-related costs - - - 3,052 - Acquisition-
Slide 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 30 Dollars in thousands, except for per share data 2Q22 3Q22 4Q22 1Q23 2Q23 Net income (loss) - GAAP $9,545 $8,436 $6,351 (3,017)$ 3,882$ Adjustments: Mortgage-related revenue - - - (51) - Mortgage-related costs - - - 2,411 - Acquisition-related expenses
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 31 Dollars in thousands 2Q23 Tangible common equity $349,645 Adjustments: Accumulated other comprehensive loss 33,186 Adjusted tangible common equity $382,831 Tangible assets $4,942,362 Adjustments: Cash in excess of $300 million (165,631) Adjusted tangi
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