First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q1 2020 Earnings Presentation
36 slides from First Internet Bancorp's earnings presentation, May 22, 2020
Slide 1: Investor Presentation First Quarter 2020
Investor Presentation First Quarter 2020 Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements with respect to the financial condition, results of operations, trends in lending policies, timing of pending acquisitions, plans, objectives, future performance or business of the Company. Forward- looking statement
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures, specifically adjusted net income, adjusted diluted earnings per share, average tangibl
Slide 4: A Pioneer in Branchless Banking
A Pioneer in Branchless Banking • Digital bank with unique business model and over 20 years of operations • Highly scalable technology driven business • Nationwide deposit gathering and asset generation platforms • Attractive lending niches with growth opportunities • History of strong growth and a
Slide 5: Nationwide Branchless Deposit Franchise
Nationwide Branchless Deposit Franchise $497.9 million $3.2 Billion 15.7% Total Deposits* $569.1 million 17.9% $1,346.4 million 42.4% 27.2% 5-year CAGR* Nationwide consumer, $513.6 million $251.5 million small business and 7.9% 16.1% commercial deposit base Innovative technology and convenience supp
Slide 6: Multiple Opportunities to Grow Deposits
Multiple Opportunities to Grow Deposits . Capitalize on the enduring trend toward branchless banking – consumers and small business are increasingly moving their banking business online . Generate an increased level of lower-cost deposits as expansion of small-business, municipal and commercial rela
Slide 7: National and Regional Asset Generation Platform
National and Regional Asset Generation Platform DIVERSIFIED ASSET GENERATION PLATFORM Commercial - National Commercial - Regional . C&I – Central Indiana . Single tenant lease financing . C&I – Arizona . Small business lending . Investor CRE – Central Indiana . Public finance . Construction – Centra
Slide 8: Near-Term Earnings Catalysts
Near-Term Earnings Catalysts Well positioned for a lower interest rate environment $1.2 Billion of CDs Maturing over Next 12 Months Mortgage Banking Revenue Dollars in millions $1.2 billion with weighted 2.45% average maturity of 5.6 3.06% $4.3 months repriced 130 bps 2.68% lower 2.41% $3.7 ~$12.5
Slide 9: Small Business, Big Opportunity
Small Business, Big Opportunity . Complementary to existing business lines . Diversifies revenue in a capital efficient manner . Opportunities on both sides of the balance sheet Enhanced Treasury Upgraded Digital SBA Lending Management Capabilities Account Access 9
Slide 10: Entrepreneurial Culture Key to Success
Entrepreneurial Culture Key to Success First Internet Bank has been recognized for its innovation and is consistently ranked among the best banks to work for, enhancing its ability to attract and retain top talent . American Banker’s “Best Banks to Work For” Seven years in a row . “Top Workplaces
Slide 11: COVID-19 Response
COVID-19 Response Supporting communities, clients and colleagues Committed to serving our stakeholders during challenging times Caring for Communities: Serving Clients: Supporting Colleagues: . Focusing on leveraging core . Stepping up client interactions to . Stressing health and well-being best se
Slide 12: First Quarter 2020 Highlights
First Quarter 2020 Highlights . Diluted EPS of $0.62, up 10.7% from 1Q19 Earnings . Net income of $6.0 million, up 5.7% from 1Q19 . Total revenue of $21.2 million, up 14.0% from 1Q19 . Cost of interest-bearing deposits declined 11 bps from 4Q19 to 2.24% Key Operating . Allowance for loan losses / to
Slide 13: History of Strong Organic Growth
History of Strong Organic Growth Execution of the business strategy has driven consistent and sustained balance sheet growth Total Assets Total Loans Dollars in millions Dollars in millions CAGR: 26.8% vs. Peers1 at 13.0% $4,100 $4,168 vs. Peers1 at 14.9% CAGR: 24.8% $2,964 $2,892 $3,542 $2,716 $2,7
Slide 14: Profitability Driven by Capital Deployment
Profitability Driven by Capital Deployment Capital has been deployed into new loan verticals, driving earnings growth Net Income1,2,3 Diluted EPS1,2,3 Dollars in thousands $25,239 $25,562 $23,814 $2.50 $2.51 $2.57 $2.30 $2.39 $1.96 $17,072 $21,900 $2.30 $2.13 $12,074 $15,226 $8,929 2015 2016 2017 20
Slide 15: Growth Drives Economies of Scale
Growth Drives Economies of Scale Scalable, technology-driven model has delivered increasing efficiency and is a key component driving improved operating leverage Noninterest Income Noninterest Expense1,2 Dollars in millions $6.2 Dollars in millions $5.6 $5.4 $13.5 $12.7 $11.7 $12.6 $11.1 $11.2 $10.2
Slide 16: Liquidity and Capital
Liquidity and Capital . Long-term, consistent growth in tangible book value per share . Regulatory capital ratios are strong at both the Company and Bank levels . More than sufficient liquidity, supplemented by access to multiple funding sources, to handle an extended economic impact of COVID-19 Tan
Slide 17: Capital and Balance Sheet Management
Capital and Balance Sheet Management . Combination of lower risk asset profile and top quartile asset quality performance provides ability to maximize capital leverage . Completed the previously announced stock repurchase program in 2019 . 482,970 shares were repurchased at an aggregate amount of $1
Slide 18: Deposit Composition
Deposit Composition . Total deposits increased $24.5 million, or 0.8%, compared to 4Q19 and $367.4 million, or 13.1%, year- over-year . Strong quarterly money market growth of $144.3 million, including $52.5 million in small business . CD and brokered deposit balances decreased $130.3 million compar
Slide 19: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin . Interest income earned on loans and cash Net Interest Income – GAAP and FTE1 balances declined primarily due to the impact of Dollars in millions lower interest rates following successive Federal GAAP FTE $17.8 $17.7 Reserve rate cuts $16.8 $16.9 $16.6 .
Slide 20: Net Interest Margin Drivers
Net Interest Margin Drivers . Linked quarter NIM decline was primarily attributable to the impact of falling short term interest rates on loans yields and cash balances, which remained elevated during the quarter – 12 bp negative impact . Lower deposit costs and improved deposit mix had a positive i
Slide 21: Loan Portfolio Overview
Loan Portfolio Overview . Total loans decreased $71.4 million, or 2.4%, compared to 4Q19 and increased $52.2 million, or 1.8%, year-over-year . Overall commercial loan balances were stable as growth in healthcare finance was offset by sales of single tenant lease financing and public finance loans .
Slide 22: COVID-19 Summary Impact
COVID-19 Summary Impact Single Tenant Small Loan Exposure to impacted industries Lease C&I & Business (As of April 30, 2020, dollars in millions) Financing OOCRE Lending Construction Quick service restaurants $211.7 $3.3 Full service restaurants $212.5 $2.0 $6.4 Hotels / accommodations $10.3 $3.7 He
Slide 23: COVID-19 Summary Impact: Payment Deferrals
COVID-19 Summary Impact Supporting clients through payment deferrals % of Balances (Dollars in millions) Deferrals1 with Deferrals Commercial and industrial $15.9 16.7% Single tenant lease financing $259.0 26.6% Owner-occupied CRE $16.2 21.7% Investor CRE $0.4 3.1% Healthcare finance $297.0 79.8% Sm
Slide 24: Single Tenant Lease Financing
Single Tenant Lease Financing Single tenant lease financing overview: Portfolio mix by major tenant Int. Car Wash . $972.3 million in balances as of March 31, 2020 7% Red Lobster . Long term financing of single tenant properties occupied 7% Wendy's by financially strong national and regional tenants
Slide 25: Public Finance
Public Finance Public finance overview: Borrower mix by credit rating . $627.7 million in balances as of March 31, 2020 1%3% 6% AAA/Aaa . 5% Provides a range of credit solutions for government and AA+/Aa1 not-for-profit entities AA/Aa2 . Borrowers’ needs include short-term financing, debt 43% AA-/Aa
Slide 26: Healthcare Finance
Healthcare Finance Portfolio mix by borrower Healthcare finance overview: 1% . $372.3 million in balances as of March 31, 2020 5% . Loan portfolio focused primarily on dental practices with Dentists some exposure to veterinary practices and other specialties . Borrowers’ needs include practice finan
Slide 27: Specialty Consumer
Specialty Consumer . $296.6 million in balances as of March 31, 2020 Geographically Diverse Portfolio . Direct-to-consumer and nationwide dealer network originations . Focused on high quality borrowers 22% 10% . Avg. credit score at orig. of 778 17% . Avg. loan size of $19,100 . Strong historical cr
Slide 28: Residential Mortgage
Residential Mortgage Diversified Portfolio with . $242.6 million in balances as of March 31, 2020 Midwest Concentration (includes home equity balances) This image cannot currently be displayed. . Direct-to-consumer originations centrally located at corporate headquarters 24% 10% . Focused on high qu
Slide 29: Small Business Lending
Small Business Lending . $67.3 million in balances as of March 31, 2020 Portfolio Mix by State . SBA will be making scheduled loan payments for 7(a) program 2% borrowers for a six month period 10% IN . These payments will be made following deferral 6% IL programs offered to borrowers impacted by COV
Slide 30: Excellent Asset Quality
Excellent Asset Quality Asset quality remains among the best in the industry driven by a strong credit culture and lower-risk asset classes NPAs / Total Assets NPLs / Total Loans 0.37% 0.31% 0.26% 0.21% 0.22% 0.23% 0.23% 0.10% 0.09% 0.02% 0.04% 0.03% 2015 2016 2017 2018 2019 1Q20 2015 2016 2017 2018
Slide 31: Long-term Strategy
Long-term Strategy . Manage balance sheet growth and deploy excess liquidity to fund loan growth and/or higher-cost deposit runoff . Continued loan production combined with loan sales to enhance noninterest income and improve mix of earning assets . Build capital through improved profitability and d
Slide 32: Appendix
Appendix 32 BANCORP
Slide 33: Loan Portfolio Composition
Loan Portfolio Composition Dollars in thousands 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 Commercial loans Commercial and industrial $ 121,966 $ 107,405 $ 110,560 $ 106,517 $ 88,874 $ 96,420 $ 95,227 Owner-occupied commercial real estate 71,872 77,569 75,317 71,908 74,384 73,392 74,737 Investor commercial
Slide 34: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 2015 2016 2017 2018 2019 TTM 1Q20 Net income - GAAP $8,929 $12,074 $15,226 $21,900 $25,239 $25,562 Adjustments: Write-down of other real estate owned - - - 1,914 - - Net deferred tax asset revaluation - - 1,846 - - - Adjusted net income $8,929 $12,074 $1
Slide 35: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Total equity - GAAP $282,087 $287,740 $288,735 $294,013 $296,120 $295,140 $304,913 $305,127 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 2013 2014 2015 2016 2017 2018 2019 1Q20 Total equity - GAAP $90,908 $96,785 $104,330 $153,942 $224,127 $288,735 $304,913 $305,127 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common e
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