First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q2 2020 Earnings Presentation
25 slides from First Internet Bancorp's earnings presentation, Jul 22, 2020
Slide 1: Financial Results Second Quarter 2020
Financial Results Second 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: 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 4: 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 5: 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 6: 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 7: 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 8: 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 9: 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 10: 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 11: 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 12: 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 13: 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 14: 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 15: 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 16: 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 17: 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 18: 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 19: 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 20: 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 21: 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 22: 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 23: Appendix
Appendix 23 BANCORP
Slide 24: 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 25: 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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