First Internet Bancorp · NASDAQ:INBK

First Internet Bancorp — Q2 2024 Earnings Presentation

28 slides from First Internet Bancorp's earnings presentation, Jul 25, 2024

1. Slide 1: Financial Results Second Quarter 2024

   Financial Results Second Quarter 2024

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

3. Slide 3: Second Quarter 2024 Highlights

   Second Quarter 2024 Highlights  Net income of $5.8 million and diluted EPS of $0.67, up  Net interest margin of 1.67% and FTE NIM of 1.76%1; 11.5% and 13.6%, respectively, from 1Q24 both improved by 1 bp from 1Q24  Adjusted net income of $6.21,2 million, up 20.2% from  Yield on loan portfolio in

4. Slide 4: Loan Portfolio Overview

   Loan Portfolio Overview  Total portfolio loan balances increased 1.3% from 1Q24  Commercial loan balances increased $46.9 million, or 1.5%, from 1Q24  Consumer loan balances increased $7.0 million, or 0.9%, from 1Q24  2Q24 funded portfolio loan origination yields were 8.88%, up 4 bps from 1Q24 a

5. Slide 5: Deposit Composition

   Deposit Composition  Total deposits remained stable with 1Q24 and are up 10.9% from 2Q23  Diversified deposit base comprised of a combination of consumer, small business, commercial and public funds  Deposit base is further diversified by product type among checking, money market/savings and CDs

6. Slide 6: Liquidity and 2Q24 Deposit Update

   Liquidity and 2Q24 Deposit Update  Cash and unused borrowing capacity totaled $1.7 billion at June 30, 2024 – Currently represents 150% of total uninsured deposits and 197% of adjusted uninsured deposits  CD production supplemented by growth in fintech deposits drove shift in deposit mix  Liquidi

7. Slide 7: Net Interest Income and Net Interest Margin

   Net Interest Income and Net Interest Margin  Net interest income on a GAAP and FTE basis were up Net Interest Income – GAAP and FTE1 2.9% and 2.6%, respectively, from 1Q24 Dollars in millions $21.9 $22.5  Improved loan mix and higher earning asset yields were $19.5 $18.6 $21.0 partially offset by

8. Slide 8: Net Interest Margin Drivers

   Net Interest Margin Drivers  Linked-quarter FTE NIM1 increased 1 bp due to higher earning asset yields, offset by slightly higher deposit costs – Weighted average yield of 8.88% on funded portfolio originations during 2Q24 – Securities yields increased 21 bps from 1Q24 while other earning asset yie

9. Slide 9: Noninterest Income

   Noninterest Income  Noninterest income of $11.0 million, up 32.2%, from $8.3 million in 1Q24  Gain on sale of loans of $8.3 million, up 26.9%, from $6.5 million in 1Q24 – SBA loan sale volume up 18.9% from 1Q24 – Net gain on sale premiums increased 6 bps from 1Q24  Increase of $1.2 million in oth

10. Slide 10: Noninterest Expense

    Noninterest Expense  Noninterest expense of $22.3 million, up 6.2%, from $21.0 million in 1Q24  Excluding almost $0.6 million of non-recurring items1, noninterest expense totaled $21.8 million, up 3.5% from 1Q24  Excluding the nonrecurring items, the increase was driven by higher salaries and emp

11. Slide 11: Asset Quality

    Asset Quality  Allowance for credit losses to total loans of 1.10% in 2Q24, up 5 bps from 1Q24  Quarterly provision for credit losses was $4.0 million, compared to $2.4 million in 1Q24  Net charge-offs to average loans of 0.14%, compared to 0.05% in 1Q24  Nonperforming loans to total loans remai

12. Slide 12: Capital

    Capital  Tangible common equity to tangible assets increased 9 bps from 1Q24 to 6.88%1  Tangible book value per share of $42.371, up 1.3% from 1Q24  CET1 and TRBC ratios at both the Company and the Bank, adjusted for all unrealized securities losses, remain well above regulatory minimum requireme

13. Slide 13: Small Business Lending

    Small Business Lending  $270.1 million of retained balances as of June 30, 2024  Nationwide platform providing growth capital to entrepreneurs and small business owners  6th largest Small Business Administration 7(a) lender for the SBA’s year-to-date 2024 fiscal year Managed SBA 7(a) Loans Portfo

14. Slide 14: Construction and Investor Commercial Real Estate

    Construction and Investor Commercial Real Estate  $517.3 million of combined balances as of June 30, 2024  2Q24 unfunded commitment balances – Commercial construction/development: $490.4 million  Average current loan balance of $8.2 million for investor CRE – Residential construction/development:

15. Slide 15: Franchise Finance

    Franchise Finance  $551.1 million of balances as of June 30, 2024  Focused on providing growth financing to franchisees in a variety of industry segments  Strong historical credit performance to date  Average loan size of $832,000 Portfolio Mix by Borrower Use Portfolio Mix by State Portfolio Mi

16. Slide 16: Single Tenant Lease Financing

    Single Tenant Lease Financing  $927.5 million of balances as of June 30, 2024  Strong historical credit performance  Long-term financing of single tenant properties occupied  No delinquencies in this portfolio by historically strong national and regional tenants  Minimal office exposure; 1.3% o

17. Slide 17: Public Finance

    Public Finance  $486.2 million of balances as of June 30, 2024  No delinquencies or losses since inception  Provides a range of credit solutions for government and not-for-profit entities  Borrowers’ needs include short-term financing, debt refinancing, infrastructure improvements, economic deve

18. Slide 18: Healthcare Finance

    Healthcare Finance  $202.1 million of balances as of June 30, 2024  Average loan size of $430,000  Strong historical credit performance to date  No delinquencies in this portfolio Portfolio Mix by Borrower Use Portfolio Mix by Borrower Portfolio Mix by State 1% Practice Refi or 4% 5% Acquisition

19. Slide 19: C&I and Owner-Occupied Commercial Real Estate

    C&I and Owner-Occupied Commercial Real Estate  $173.7 million of combined balances as of June 30, 2024  Minimal office exposure; 1.9% of combined loan balances consisting of suburban office space  Current C&I LOC utilization of 25%  Average loan sizes  C&I: $553,000  Owner-occupied CRE: $854,0

20. Slide 20: Residential Mortgage

    Residential Mortgage  $404.0 million of balances as of June 30, 2024 (includes home equity balances)  Historically direct-to-consumer originations centrally located at corporate headquarters  Focused on high quality borrowers – Average loan size of $208,000 – Average credit score at origination o

21. Slide 21: Specialty Consumer

    Specialty Consumer  $396.5 million of balances as of June 30, 2024  Direct-to-consumer and nationwide dealer network originations  Focused on high quality borrowers – Average credit score at origination of 778 – Average loan size of $27,000  Strong historical credit performance Concentration by

22. Slide 22: Appendix

    Appendix 22

23. Slide 23: Loan Portfolio Composition

    Loan Portfolio Composition Dollars in thousands 2021 2022 2023 1Q24 2Q24 Commercial loans Commercial and industrial $ 96,008 $ 126,108 $ 129,349 $ 133,897 $ 115,585 Owner-occupied commercial real estate 66,732 61,836 57,286 57,787 58,089 Investor commercial real estate 28,019 93,121 132,077 128,276

24. Slide 24: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures Dollars in thousands, except for per share data 2018 2019 2020 2021 2022 2023 2Q24 Total equity - GAAP $288,735 $304,913 $330,944 $380,338 $364,974 $362,795 $371,953 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible c

25. Slide 25: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures Dollars in thousands, except for per share data 2Q23 3Q23 4Q23 1Q24 2Q24 Total equity - GAAP $354,332 $347,744 $362,795 $366,739 $371,953 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $349,645 $343,057 $358,108 $362

26. Slide 26: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures Dollars in thousands, except for per share data 2Q23 3Q23 4Q23 1Q24 2Q24 Noninterest expense $18,670 $19,756 $20,056 $21,023 $22,336 Adjustments: IT termination fees - - - - (452) Anniversary expenses - - - - (120) Adjusted noninterest expense $18,670 $1

27. Slide 27: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures Dollars in thousands, except for per share data 2Q23 3Q23 4Q23 1Q24 2Q24 Net income - GAAP $ 3,882 $ 3,409 $ 4,143 $ 5,181 $ 5,775 Adjustments: IT termination fees - - - - 357 Anniversary expenses - - - - 95 Adjusted net income $3,882 $3,409 $4,143 $5,18

28. Slide 28: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures Dollars in thousands 2Q24 Tangible common equity $367,266 Adjustments: Accumulated other comprehensive loss 30,587 Adjusted tangible common equity $397,853 Tangible assets $5,338,615 Adjustments: Cash in excess of $300 million (96,786) Adjusted tangible

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