First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q2 2020 Earnings Presentation
31 slides from First Internet Bancorp's earnings presentation, Jul 27, 2020
Slide 1: Investor Presentation Second Quarter 2020
Investor Presentation Second Quarter 2020 Exhibit 99.1
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, strategy, future performance or business of the Company. Forward-looking st
Slide 3: 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 4: Nationwide Branchless Deposit Franchise
Nationwide Branchless Deposit Franchise $538.3 million $3.4 Billion 15.9% Total Deposits* $674.8 million 20% $1,326.7 million 39.2% 28.7% 5-year CAGR* Nationwide consumer, $560.8 million $280.2 million small business and 8.3% 16.6% commercial deposit base Innovative technology and convenience suppor
Slide 5: 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 6: 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 7: 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 7
Slide 8: 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 9: 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 . Accelerated build-out of SBA platform – sales and operations hiring has increased due to competit
Slide 10: Second Quarter 2020 Highlights
Second Quarter 2020 Highlights . Diluted EPS of $0.40 Earnings . Net income of $3.9 million . Total revenue of $19.4 million . Cost of interest-bearing deposits declined 30 bps from 1Q20 to 1.94% 1 Key Operating . Allowance for loan losses / total loans, excluding PPP, increased to 0.84% Trends . Ac
Slide 11: Loan Portfolio Overview
Loan Portfolio Overview . Total loans increased $81.6 million, or 2.8%, compared to 1Q20, and increased $112.5 million, or 3.9%, year-over-year . Commercial loan balances increased $98.9 million, or 4.3%, compared to 1Q20 as growth in small business (PPP loans), public finance, and construction lend
Slide 12: Deposit Composition
Deposit Composition . Total deposits increased $202.3 million, or 6.4%, compared to 1Q20, and $374.5 million, or 12.5%, year- over-year . Quarterly money market growth of $311.2 million, including $219.3 million in small business . CD and brokered deposit balances decreased $161.2 million compared t
Slide 13: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin . Interest income earned on loans, securities and Net Interest Income – GAAP and FTE1 cash balances declined primarily due to the Dollars in millions impact of lower interest rates following the GAAP FTE $17.7 $16.8 $16.9 Federal Reserve rate cuts in March
Slide 14: Net Interest Margin Drivers
Net Interest Margin Drivers . Linked quarter NIM decline primarily attributable to the impact of significantly lower short-term interest rates on loan and securities yields as well as cash balances, which remained elevated during the quarter . Interest-earning asset yields expected to stabilize . Si
Slide 15: Noninterest Income
Noninterest Income . Noninterest income of $5.0 million compared to $6.2 million in 1Q20 and $3.5 million in 2Q19 . Continued strong mortgage banking revenue of $3.4 million . Gain on sale of loans of $0.8 million, down from 1Q20 . Sold $11.5 million of SBA 7(a) guaranteed loans in 2Q20 . No portfol
Slide 16: Noninterest Expense
Noninterest Expense . Noninterest expense of $13.2 million compared to $13.5 million in 1Q20 . Lower consulting and professional fees, loan expenses and deposit insurance premium were partially offset by higher other expenses . Increase in other expenses driven by $250,000 charitable contribution to
Slide 17: 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 0.82% in 2Q20, or 0.84% excluding PPP loans1, from 0.79% in 1Q20, due primarily to adjustments to qualitative
Slide 18: Liquidity and Capital
Liquidity and Capital . Regulatory capital ratios remained strong at the Company and Bank levels . Expect to have sufficient liquidity, supplemented by access to multiple funding sources, to handle the current economic impact of COVID-19 . Increase in cash balances and PPP loans impacted the Company
Slide 19: Exposure to COVID-19 Impacted Industries
Exposure to COVID-19 Impacted Industries Small Loan exposure to impacted industries Single Tenant C&I & Business (As of June 30, 2020, dollars in millions) Lease Financing OOCRE Lending Construction Quick service restaurants $227.1 $2.7 Full service restaurants $214.3 $3.3 $4.5 Hotels / accommodatio
Slide 20: Loan Deferral Summary
Loan Deferral Summary . Loan deferral balances have moved lower since peaking in late-May at $647.2 million . All borrowers coming off deferral programs have resumed making scheduled loan payments . Significant portion of single tenant deferrals are scheduled to resume payments in August Deferrals A
Slide 21: Single Tenant Lease Financing
Single Tenant Lease Financing Portfolio mix by major tenant . $980.3 million in balances as of June 30, 2020 Red Lobster . Long term financing of single tenant properties occupied 7% ICWG by historically strong national and regional tenants 7% Wendy's . Weighted-average portfolio LTV of 54% (55% for
Slide 22: Public Finance
Public Finance Borrower mix by credit rating . $647.1 million in balances as of June 30, 2020 1% . Provides a range of credit solutions for government and 3% 5% AAA/Aaa 5% not-for-profit entities AA+/Aa1 . Borrowers’ needs include short-term financing, debt AA/Aa2 AA-/Aa3 refinancing, infrastructure
Slide 23: Healthcare Finance
Healthcare Finance Portfolio mix by borrower . $381.0 million in balances as of June 30, 2020 1% . Loan portfolio focused primarily on dental practices with 6% some exposure to veterinary practices and other specialties Dentists . Borrowers’ needs include practice finance or acquisition, acquiring o
Slide 24: C&I and Owner-Occupied Commercial Real Estate
C&I and Owner-Occupied Commercial Real Estate . $168.6 million in combined balances as of June 30, 2020 Portfolio Mix by State . Current C&I LOC utilization of 34% 2% 5% IN . Average loan sizes 5% AZ . C&I: $346,000 5% . Owner-occupied CRE: $1.0 million IL 56% . Exited relationships totaling in exce
Slide 25: Small Business Lending
Small Business Lending . $118.5 million in balances as of June 30, 2020 Portfolio Mix by State . Approved and funded 449 loans totaling $58.9 million to date IN under the Paycheck Protection Program 21% . SBA will be making scheduled loan payments for 7(a) IL program borrowers for a six month period
Slide 26: Residential Mortgage
Residential Mortgage . $231.3 million in balances as of June 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 24% 10% 55% . Avg. loan size of $183,5
Slide 27: Specialty Consumer
Specialty Consumer . $291.6 million in balances as of June 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 779 18% . Avg. loan size of $19,300 . Strong historical cre
Slide 28: 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 the mix of earning assets . Build capital through improved profitability a
Slide 29: Appendix
Appendix 29 BANCORP
Slide 30: Loan Portfolio Composition
Loan Portfolio Composition Dollars in thousands 2017 2018 2019 1Q20 2Q20 Commercial loans Commerical and industrial $ 122,940 $ 107,405 $ 96,420 $ 95,227 $ 81,687 Owner-occupied commercial real estate 75,768 77,569 86,726 87,956 86,897 Investor commerical real estate 7,273 5,391 12,567 13,421 13,286
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 2Q19 3Q19 4Q19 1Q20 2Q20 Total equity - GAAP $296,120 $295,140 $304,913 $305,127 $307,711 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $291,433 $290,453 $300,226 $300,440 $303,024 Tota l a sse
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