First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q3 2020 Earnings Presentation
26 slides from First Internet Bancorp's earnings presentation, Oct 21, 2020
Slide 1: Financial Results Third Quarter 2020
Financial Results Third Quarter 2020 Exhibit 99.2
Slide 2: Forward-Looking Statements & Non-GAAP Financial Measures
Forward-Looking Statements & Non-GAAP Financial Measures This presentation may contain forward-looking statements with respect to the financial condition, results of operations, trends in lending policies, plans, objectives, future performance or business of the Company. Forward-looking statements a
Slide 3: Third Quarter 2020 Highlights
Third Quarter 2020 Highlights . Record diluted EPS of $0.86 . Adjusted diluted EPS of $1.031 excluding write-down of legacy OREO Earnings . Record quarterly net income of $8.4 million . Total revenue of $28.7 million, an increase of 48.1% from 2Q20 . Cost of interest-bearing deposits declined 43 bps
Slide 4: Near-term Profitability Drivers
Near-term Profitability Drivers . Continued deposit repricing opportunity combined with stabilized asset yields provides significant opportunity to increase net interest income and net interest margin . Annual interest expense savings in excess of $22 million expected for 2021 . Accelerated build-ou
Slide 5: Loan Portfolio Overview
Loan Portfolio Overview . Total portfolio loans increased $39.2 million, or 1.3%, compared to 2Q20, and increased $131.6 million, or 4.6%, year-over-year . Commercial loan balances increased $56.2 million, or 2.4%, compared to 2Q20 as growth in healthcare finance and construction lending resumed fol
Slide 6: Deposit Composition
Deposit Composition . Total deposits declined $8.4 million, or 0.2%, compared to 2Q20, and increased $224.1 million, or 7.1%, year-over-year . Quarterly money market growth of $117.3 million, including $87.3 million in small business deposits . CD and brokered deposit balances decreased $138.1 milli
Slide 7: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin . FTE net interest margin improved by 17 bps from Net Interest Income – GAAP and FTE1 2Q20 Dollars in millions GAAP FTE . Interest expense on deposits declined as: 1) higher $17.7 $16.8 $16.9 cost CDs matured and were either replaced at $16.6 $15.9 lower r
Slide 8: Net Interest Margin Drivers
Net Interest Margin Drivers . Linked quarter NIM improvement was primarily attributable to the continued impact of lower deposit costs . Interest-earning asset yields expected to stabilize . Significant opportunity to continue lowering deposit costs . $931 million of CDs with a weighted average cost
Slide 9: Noninterest Income
Noninterest Income . Noninterest income of $12.5 million compared to $5.0 million in 2Q20 and $5.6 million in 3Q19 . Mortgage banking revenue of $9.6 million on strong origination volumes and higher margins . Gain on sale of loans of $2.0 million, up $1.3 million from 2Q20 . Revenue of $1.7 million
Slide 10: Noninterest Expense
Noninterest Expense . Noninterest expense of $16.4 million compared to $13.2 million in 2Q20 and $11.2 million in 3Q19 . Includes $2.1 million write-down of legacy OREO . Higher salaries and employee benefits due mainly to higher incentive compensation and growth in SBA platform . Partially offset b
Slide 11: Asset Quality
Asset Quality . Asset quality metrics remain among the industry’s best, driven by a strong credit culture and lower-risk asset classes . Allowance for loan losses to total loans increased to 0.89% in 3Q20, or 0.91% excluding PPP loans1, due primarily to adjustments to qualitative factors . Quarterly
Slide 12: Liquidity and Capital
Liquidity and Capital . Regulatory capital ratios remained strong at the Company and Bank levels . Strong capital generation during the quarter resulted in the tangible common equity to tangible assets ratio increasing 23 bps to 7.24% . Continue to have sufficient liquidity to handle the current eco
Slide 13: Loan Deferral Summary
Loan Deferral Summary . Loan deferral balances are now less than 1% of total loans since peaking in late-May at 22% . All borrowers coming off deferral programs have resumed making scheduled loan payments without delinquency Deferrals As of As of As of As of As of April 17, May 15, July 17, August 2
Slide 14: Single Tenant Lease Financing
Single Tenant Lease Financing Portfolio mix by major tenant . $960.5 million in balances as of September 30, 2020 Red Lobster . Long term financing of single tenant properties occupied 7% ICWG by historically strong national and regional tenants 7% Wendy's . Burger King Weighted-average portfolio LT
Slide 15: Public Finance
Public Finance Borrower mix by credit rating . $625.6 million in balances as of September 30, 2020 1.2% . Provides a range of credit solutions for government and 2.9%5.0% AAA/Aaa 4.6% not-for-profit entities AA+/Aa1 . Borrowers’ needs include short-term financing, debt AA/Aa2 AA-/Aa3 refinancing, in
Slide 16: Healthcare Finance
Healthcare Finance Portfolio mix by borrower . $461.7 million in balances as of September 30, 2020 1% 2% . Loan portfolio focused primarily on dental practices with 7% some exposure to veterinary practices and other specialties Dentists . Borrowers’ needs include practice finance or acquisition, acq
Slide 17: C&I and Owner-Occupied Commercial Real Estate
C&I and Owner-Occupied Commercial Real Estate . $166.2 million in combined balances as of September 30, 2020 Portfolio Mix by State . Current C&I LOC utilization of 46% 2% 8% IN . Average loan sizes 5% . C&I: $354,000 AZ 6% IL . Owner-occupied CRE: $958,000 52% . Exited relationships totaling in exc
Slide 18: Small Business Lending
Small Business Lending . $123.2 million in balances as of September 30, 2020 Portfolio Mix by State . Current balance of $58.3 million outstanding under the Paycheck Protection Program consisting of 447 loans made to existing IN IL clients 22% 41% CA AZ . 2.7% of balances are on payment deferral pro
Slide 19: Residential Mortgage
Residential Mortgage . $225.2 million in balances as of September 30, 2020 National Portfolio with (includes home equity balances) Midwest Concentration . Direct-to-consumer originations centrally located at corporate headquarters . Focused on high quality borrowers 23% 9% 59% . Avg. loan size of $1
Slide 20: Specialty Consumer
Specialty Consumer . $282.5 million in balances as of September 30, 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 18% . Avg. loan size of $19,370 . Strong historica
Slide 21: Appendix
Appendix 21 BANCORP
Slide 22: Loan Portfolio Composition
Loan Portfolio Composition Dollars in thousands 2017 2018 2019 1Q20 2Q20 3Q20 Commercial loans Commercial and industrial $ 122,940 $ 107,405 $ 96,420 $ 95,227 $ 81,687 $ 77,116 Owner-occupied commercial real estate 75,768 77,569 86,726 87,956 86,897 89,095 Investor commercial real estate 7,273 5,391
Slide 23: Dollars in thousands 3Q19 4Q19 Total equity - GAAP $295,140 $304,913 $305,127 $307,711 $318,102
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 3Q19 4Q19 1Q20 2Q20 3Q20 Total equity - GAAP $295,140 $304,913 $305,127 $307,711 $318,102 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $290,453 $300,226 $300,440 $303,024 $313,415 Tota l a sse
Slide 24: Dollars in thousands 3Q19 4Q19 Allowance for loan losses $21,683 $21,840 $22,857 $24,465 $26,917
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 3Q19 4Q19 1Q20 2Q20 3Q20 Allowance for loan losses $21,683 $21,840 $22,857 $24,465 $26,917 Loans $2,881,272 $2,963,547 $2,892,093 $2,973,674 $3,012,914 Adjustments: PPP loans - - - (58,948) (58,337) Loans, excluding PPP loans $2,881,
Slide 25: Dollars in thousands 3Q19 4Q19 Income before income taxes - GAAP $6,775 $7,698 $6,282
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 3Q19 4Q19 1Q20 2Q20 3Q20 Income before income taxes - GAAP $6,775 $7,698 $6,282 $3,664 $9,806 Adjustments: Write-down of other real estate owned - - - - 2,065 Adjusted income before income taxes $6,775 $7,698 $6,282 $3,664 $11,871 In
Slide 26: Dollars in thousands 3Q19 4Q19 Return on average assets 0.63% 0.69% 0.59% 0.37% 0.78%
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 3Q19 4Q19 1Q20 2Q20 3Q20 Return on average assets 0.63% 0.69% 0.59% 0.37% 0.78% Effect of write-down of other real estate owned 0.00% 0.00% 0.00% 0.00% 0.15% Adjusted return on average assets 0.63% 0.69% 0.59% 0.37% 0.93% Return on a
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