First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q2 2019 Earnings Presentation
30 slides from First Internet Bancorp's earnings presentation, Jul 29, 2019
Slide 1: Investor Presentation Second Quarter 2019
Investor Presentation Second Quarter 2019 Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 are generally identifiable by t
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures, specifically adjusted net income, adjusted diluted earnings per share, average tangibl
Slide 4: 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 5: Nationwide Branchless Deposit Franchise
Nationwide Branchless Deposit Franchise $441.8 million $3.0 Billion 14.7% Total Deposits* $525.5 million 17.5% $1,310.2 million 43.6% 32% 5-year CAGR* Nationwide consumer, $498.0 million $230.8 million small business and 7.7% 16.5% commercial deposit base Innovative technology and convenience suppor
Slide 6: 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 7: 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 . SBA – Central Indiana / Arizona . Public finance . Investor CRE – Central Indiana . Healthcare f
Slide 8: Attractive Loan Growth Opportunities
Attractive Loan Growth Opportunities . Entrance into new verticals – complement existing lines and add diversity . SBA lending – recent hiring of experienced professionals to build this line of business . Further market penetration of niche specialty lending . Public finance – geographic and product
Slide 9: 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 9
Slide 10: 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” Six years in a row . “Top Workplaces in
Slide 11: History of Strong Organic Growth
History of Strong Organic Growth Execution of the business strategy has driven consistent and sustained balance sheet growth Total Assets Total Loans Dollars in millions Dollars in millions $3,959 1 $3,542 1 $2,861 CAGR: 32.5% vs. Peers at 13.1% CAGR: 31.3% vs. Peers at 16.4% $2,716 $2,768 $2,091 $1
Slide 12: Profitability Driven by Capital Deployment
Profitability Driven by Capital Deployment Capital has been deployed into new loan verticals, driving earnings growth Net Income1,2,3 Diluted EPS1,2,3 Dollars in thousands $23,814 $23,595 $2.30 $2.50 $2.39 $2.30 $21,900 $1.96 $17,072 $21,681 $2.30 $2.13 $2.12 $12,074 $15,226 $8,929 $0.96 $4,324 2014
Slide 13: Growth Drives Economies of Scale
Growth Drives Economies of Scale Scalable, technology-driven model has delivered increasing efficiency and is a key component driving improved operating leverage Net Interest Income - FTE1 Noninterest Expense / Average Assets2 Dollars in millions $17.8 $16.9 $16.6 $17.3 $16.9 $17.7 1.50% 1.52% $15.5
Slide 14: Capital Markets History
Capital Markets History . Following the IPO in late 2013, the Company deployed capital to fund commercial loan growth which resulted in strong revenue growth and improved earnings . Capital offerings: . 2Q19: raised $37.0 million of subordinated debt . 2Q18: raised $57.5 million of common equity . 3
Slide 15: Capital and Balance Sheet Management
Capital and Balance Sheet Management . Combination of lower risk asset profile and top quartile asset quality performance provides ability to maximize capital leverage . Announced a stock repurchase program in 4Q18 to repurchase up to $10.0 million in common stock . Through the date of the Company’s
Slide 16: Deposit Composition
Deposit Composition . Total deposits increased $612.0 million, or 25.6%, since 2Q18 . Strategies to increase business money market accounts resulted in $34 million of new balances in 2Q19 . Approximately $1.0 billion of CDs with a weighted average cost of 2.74% mature over the next 12 months – provi
Slide 17: Loan Portfolio Overview
Loan Portfolio Overview Strategic loan growth has led to a more diversified portfolio $2,861.2 $2,839.9 $2,716.2 Dollars in millions 7% 7% $2,493.6 7% 2% 2% $2,374.0 2% 8% 1 Commercial and Industrial 8% 2% $2,091.2 2% 35% 36% Commercial Real Estate 9% 34% 2% 35% Single Tenant Lease Financing 37% $1,
Slide 18: Commercial Real Estate
Commercial Real Estate Commercial real estate balances increased Single Tenant Lease Financing $153.3 million, or 16.7%, since 2Q18 Portfolio Diversity Red Lobster As of % of 7.0% Dollars in millions June 30, 2019 total 6.0% Walgreen's Single tenant lease financing $1,001.2 93.5% 5.2% Construction 4
Slide 19: Commercial & Industrial
Commercial & Industrial Commercial & industrial overview: . Originations / commitments over the past As of % of Dollars in millions June 30, 2019 total twelve months exceeded $124 million Commercial & industrial $110.1 56.7% . Primarily serves the borrowing and treasury Owner-occupied CRE 84.0 43.3%
Slide 20: Public Finance
Public Finance Public finance originations/commitments Portfolio Composition 2.6% 2.1% during the past twelve months exceeded 3.0% 0.1% General Obligation Essential use equipment $209 million 4.0% loans Water & sewer revenue 5.8% Public Finance Balances Lease rental revenue Dollars in millions 38.6%
Slide 21: Healthcare Finance
Healthcare Finance Healthcare finance originations/commitments over Portfolio Composition the past twelve months exceeded $162 million 4.7% 0.9%0.2% Practice Refinance Healthcare Finance Balances or Acquisition 13.4% Dollars in millions Owner Occupied Dollars in millions $212.4$65.6 CRE $158.8 $48.9
Slide 22: Residential Mortgage
Residential Mortgage . Award-winning national online origination platform Well Diversified Mortgage Originations* . Direct-to-consumer originations managed by sales and underwriting personnel located in Indiana- based corporate HQ 20.5% 17.5% . Geographic diversity 32.0% provides opportunity to bene
Slide 23: Excellent Asset Quality
Excellent Asset Quality Asset quality remains among the best in the industry driven by a strong credit culture and lower-risk asset classes NPAs / Total Assets NPLs / Total Loans 0.50% 0.37% 0.31% 0.21% 0.20% 0.19% 0.10% 0.09% 0.04% 0.02% 0.04% 0.03% 2014 2015 2016 2017 2018 2Q19 2014 2015 2016 2017
Slide 24: Interest Rate Risk Management
Interest Rate Risk Management . 2Q19 FTE net interest margin of 1.91%1 declined 13 bps compared to 1Q19 . Decline driven by CD volume and replacement cost and the decline in three-month LIBOR . Initiated hedging strategy in 2017 to enhance interest rate sensitivity of longer term fixed rate assets a
Slide 25: Drivers of Value Creation
Drivers of Value Creation Management has aligned interests and is committed to building shareholder value . Further extend the scope and market penetration in specialty lending lines . Diversify the revenue stream with additional sources of noninterest income . Expand deposit channels and drive mix
Slide 26: Appendix
Appendix 26 BANCORP
Slide 27: Second Quarter 2019 Highlights
Second Quarter 2019 Highlights . Quarterly net income of $6.1 million and diluted EPS of $0.60 . Quarterly net interest income of $16.1 million, up 4.2% from 2Q18 . Quarterly net interest income – FTE1 of $17.7 million, up 6.6% from 2Q18 . Quarterly revenue of $19.6 million, up 10.9% from 2Q18 . Mor
Slide 28: Loan Portfolio Composition
Loan Portfolio Composition Dollars in thousands 2016 2017 2Q18 3Q18 4Q18 1Q19 2Q19 Commercial loans Commercial and industrial $ 102,437 $ 122,940 $ 107,394 $ 105,489 $ 114,382 $ 112,146 $ 110,143 Owner-occupied commercial real estate 57,668 75,768 86,068 93,568 87,962 87,482 83,979 Investor commerci
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 2014 2015 2016 2017 2018 TTM 2Q19 Net income - GAAP $4,324 $8,929 $12,074 $15,226 $21,900 $21,681 Adjustments: Write-down of other real estate owned - - - - 1,914 1,914 Net deferred tax asset revaluation - - - 1,846 - - Adjusted net income $4,324 $8,929
Slide 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Total equity - GAAP $220,867 $224,127 $224,824 $282,087 $287,740 $288,735 $294,013 $296,120 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common
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