First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q4 2022 Earnings Presentation
33 slides from First Internet Bancorp's earnings presentation, Jan 25, 2023
Slide 1: Financial Results Fourth Quarter 2022
Financial Results Fourth Quarter 2022 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: Fourth Quarter and Full Year 2022 Commentary
Fourth Quarter and Full Year 2022 Commentary Loan demand was strong throughout the year as portfolio balances totaled $3.5 billion at year end, up 7.5% compared to 3Q22 and 21.2% compared to 4Q21 Rapid Federal Reserve rate hikes drove interest expense higher during the second half of the year, p
Slide 4: Fourth Quarter and Full Year 2022 Commentary
Fourth Quarter and Full Year 2022 Commentary Banking-as-a-Service and Fintech partnerships continued to move forward, going live with platform partner, Increase, and providing payments services to power the small business bill pay product from Ramp, a leading corporate card and spend management pl
Slide 5: Fourth Quarter 2022 Highlights
Fourth Quarter 2022 Highlights 5 Loans and Deposits Total portfolio loan balances increased 7.5% from 3Q22 Diversified growth led by franchise finance, single tenant lease financing and construction Growth in noninterest-bearing deposits, money market accounts, CDs and brokered deposits Profit
Slide 6: Mortgage
Mortgage While other lending lines have strong demand, the combination of housing prices, housing supply, economic uncertainty and higher interest rates have caused mortgage applications nationally to plunge to their lowest level in 26 years Due to the steep decline in mortgage volumes and the n
Slide 7: Loan Portfolio Overview
Loan Portfolio Overview Total loan portfolio balances increased 7.5% from 3Q22 and 21.2% from 4Q21 Commercial loan balances increased $184.3 million, or 7.3%, compared to 3Q22 – Growth in franchise finance, single tenant lease financing, construction, commercial and industrial and small business
Slide 8: Deposit Composition
Deposit Composition 8 Total Non-Maturity Deposits - $2.0B as of 12/31/222 Dollars in millions Total Deposits - $3.4B as of 12/31/22 Dollars in millions Total deposits increased 7.8% from 3Q22 and 8.3% from 4Q21 Non-maturity deposits (excluding BaaS – brokered deposits) increased $63.6 million, o
Slide 9: 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 9.7% and 8.8%, respectively, from 3Q22 Strong loan growth was offset by higher funding costs Total loan portfolio yield impacted by loan beta lag effect on fixed rate portfolios Increase in fund
Slide 10: Net Interest Margin Drivers
Net Interest Margin Drivers 10 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix Net Interest Margin – FTE1 Linked-Quarter Change Monthly Rate Paid on Int. Bearing Deposits vs. Fed Funds Linked-quarter FTE NIM decreased 31 bps, due primarily to higher deposit costs, partially off
Slide 11: Noninterest Income
Noninterest Income 11 Dollars in millions Noninterest Income 4Q22 Dollars in millions Noninterest Income Noninterest income of $5.8 million, compared to $4.3 million in 3Q22 and compared to $7.7 million in 4Q21 – Distributions from fund investments drove the increase in other income Gain on sale
Slide 12: Noninterest Expense
Noninterest Expense Noninterest expense of $18.5 million, compared with $18.0 million in 3Q22 – Higher other expense due to several items, none of which were individually significant – Professional fees increased due mainly to timing of third-party loan review – Lower marketing and loan expenses i
Slide 13: Asset Quality
Asset Quality Allowance for loan losses to total loans of 0.91% in 4Q22, down 1 bp from 3Q22 Quarterly provision for loan losses was $2.1 million, compared to $0.9 million in 3Q22 and a benefit of $0.2 million in 4Q21 – Increase in provision due primarily to loan growth Net charge-offs to aver
Slide 14: Capital
Capital Tangible common equity to tangible assets decreased 42 bps to 7.94%1 from 3Q22 Tangible book value per share of $39.74, up 3.7% from 3Q221 and up 3.2% from 4Q211 Repurchased 284,286 shares at an average price per share of $25.16 during 4Q22 Since 4Q21, 902,453 shares have been purcha
Slide 15: Small Business Lending
19% 18% 18%10% 6% 29% Retail Trade Accommodation and Food Services Services Manufacturing Construction Other 15% 15% 12% 11% 8% 8% 31% IN MI IL TX CA FL Other Small Business Lending $123.8 million in balances as of December 31, 2022 Nationwide platform providing growth capital to entrepreneurs a
Slide 16: Franchise Finance
17% 13% 9% 4%4% 4% 4% 45% TX CA MI GA PA NC FL Other Franchise Finance $299.8 million in balances as of December 31, 2022 Focused on providing growth financing to franchisees in a variety of industry segments Strong historical credit performance to date Average loan size of $1.0 million 16 P
Slide 17: Construction and Investor Commercial Real Estate
34% 16%13% 11% 8% 8% 10% Land Subdivision Hotels (except Casino Hotels) and Motels Lessors of Residential Buildings and Dwellings Lessors of Nonresidential Buildings (except Miniwarehouses) Lessors of Miniwarehouses and Self-Storage Units Continuing Care Retirement Communities Other 72% 13% 9% 3% 3%
Slide 18: Single Tenant Lease Financing
Single Tenant Lease Financing $939.2 million in balances as of December 31, 2022 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 Ver
Slide 19: Public Finance
4% 4% 6% 4% 20% 6% 6% 3%1% 1% 3% 42% AAA/Aaa AA+/Aa1 AA/Aa2 AA-/Aa3 A+/A1 A/A2 A-/A3 BBB+/Baa1 BBB/Baa2 BB+/Ba1 BB/Ba2 Non-Rated 33% 13% 13% 9% 7% 5% 5% 3% 2% 2% 8% General Obligation Essential use equipment loans Lease rental revenue Utilities Revenue Short term cash flow fin (BAN) - G.O. Public hi
Slide 20: Healthcare Finance
86% 10% 4% Dentists Veterinarians Other77% 17% 5% 1% Practice Refi or Acquisition Owner Occupied CRE Project Equipment and Other Healthcare Finance $272.5 million in balances as of December 31, 2022 Loan portfolio focused primarily on dental practices with some exposure to veterinary practices a
Slide 21: C&I and Owner-Occupied Commercial Real Estate
21% 20% 18% 13% 6% 6% 16% Construction Services Manufacturing Real Estate and Rental and Leasing Health Care and Social Assistance Arts, Entertainment, and Recreation Other 46% 30% 6% 4% 3% 11% IN AZ KS IL NY Other 46% 35% 19% C&I - Term Loans Owner Occupied CRE C&I - Lines of Credit C&I and Owner-O
Slide 22: Residential Mortgage
Residential Mortgage $408.7 million in balances as of December 31, 2022 (includes home equity balances) Direct-to-consumer originations centrally located at corporate headquarters Focused on high quality borrowers – Average loan size of $198,000 – Average credit score at origination of 748 – A
Slide 23: Specialty Consumer
23% 21% 17% 29% 10% Specialty Consumer $324.6 million in balances as of December 31, 2022 Direct-to-consumer and nationwide dealer network originations Focused on high quality borrowers – Average credit score at origination of 779 – Average loan size of $25,000 Strong historical credit perfo
Slide 24: First Internet
First INTERNET +
Slide 25: Loan Portfolio Composition
Loan Portfolio Composition 25 1 Includes carrying value adjustments of $32.5 million, $33.9 million, $35.4 million, $36.4 million, $37.5 million and $42.7 million related to terminated interest rate swaps associated with public finance loans as of December 31, 2022, September 30, 2022, June 30, 2022
Slide 26: Reconciliation
Reconciliation of Non-GAAP Financial Measures 26 Dollars in thousands 2015 2016 2017 2018 2019 2020 2021 2022 Total equity - GAAP $104,330 $153,942 $224,127 $288,735 $304,913 $330,944 $380,338 $364,974 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible com
Slide 27: Reconciliation
Reconciliation of Non-GAAP Financial Measures 27 Dollars in thousands 4Q21 1Q22 2Q22 3Q22 4Q22 Total equity - GAAP $380,338 $374,655 $365,332 $360,857 $364,974 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $375,651 $369,968 $360,645 $356,170 $360,287 Total asse
Slide 28: Reconciliation
Reconciliation of Non-GAAP Financial Measures 28 1 Assuming a 21% tax rate Dollars in thousands 4Q21 1Q22 2Q22 3Q22 4Q22 Total interest income $34,192 $36,034 $36,106 $39,099 $45,669 Adjustments: Fully-taxable equivalent adjustments 1 1,348 1,314 1,377 1,280 1,384 Total interest income - FTE $35,540
Slide 29: Reconciliation
Reconciliation of Non-GAAP Financial Measures 29 1 Assuming a 21% tax rate Dollars in thousands 4Q21 1Q22 2Q22 3Q22 4Q22 Net interest margin 2.30% 2.56% 2.60% 2.40% 2.09% Adjustments: Effect of income from tax refund advance loans 0.00% (0.28%) (0.02%) 0.00% 0.00% Adjusted net interest margin 2.30%
Slide 30: Reconciliation
Reconciliation of Non-GAAP Financial Measures 30 Dollars in thousands 4Q21 1Q22 2Q22 3Q22 4Q22 Noninterest expense $16,955 $18,780 $17,985 $17,995 $18,513 Adjustments: Acquisition-related expenses (163) (170) (103) - - Write-down of software (475) - - (125) - Nonrecurring consulting fee - (875) - -
Slide 31: Reconciliation
Reconciliation of Non-GAAP Financial Measures 31 1 Assuming a 21% tax rate Dollars in thousands 4Q21 1Q22 2Q22 3Q22 4Q22 Income tax provision - GAAP 2,004$ 1,790$ 1,279$ 987$ 503$ Adjustments:1 Acquisition-related expenses 34 36 21 - - Write-down of software 100 - - 26 - Nonrecurring consulting fee
Slide 32: Reconciliation
Reconciliation of Non-GAAP Financial Measures 32 Dollars in thousands 4Q21 1Q22 2Q22 3Q22 4Q22 Return on average assets 1.19% 1.08% 0.93% 0.82% 0.59% Effect of acquisition-related expenses 0.01% 0.01% 0.01% 0.00% 0.00% Effect of write-down of software 0.04% 0.00% 0.00% 0.01% 0.00% Effect of nonrecur
Slide 33: Reconciliation
Reconciliation of Non-GAAP Financial Measures 33 1 Assuming a 21% tax rate Dollars in thousands 4Q21 1Q22 2Q22 3Q22 4Q22 Income before income taxes - GAAP 14,482$ 12,999$ 10,824$ 9,423$ 6,854$ Adjustments: Income from tax refund advance loans - (2,864) (149) - - Provision for tax refund advance loan
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