First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q4 2021 Earnings Presentation
31 slides from First Internet Bancorp's earnings presentation, Jan 19, 2022
Slide 1: Financial Results Fourth Quarter 2021
Financial Results Fourth Quarter 2021 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, including statements with respect to the pending acquisition of First Century Bancorp and its effects on the future performance of the Company and the Bank, the expected timing of compl
Slide 3: 2021: A Year of Significant Achievements
2021: A Year of Significant Achievements Generated record net income and diluted EPS, up 63% and 61%, respectively, over 2020 results Continued to build out national SBA platform Formed new franchise finance lending vertical in partnership with ApplePie Capital Announced transformational acq
Slide 4: Fourth Quarter 2021 Highlights
Fourth Quarter 2021 Highlights 4 1 4Q21 results include a $0.5 million IT contract termination fee and $0.2 million of acquisition-related expenses; see Reconciliation of Non-GAAP Financial Measures in the Appendix Loans and Deposits Total portfolio loan balances declined 1.7% from 3Q21 Solid gr
Slide 5: Loan Portfolio Overview
Loan Portfolio Overview 5 Loan Portfolio Mix2 1 Includes commercial and industrial and owner-occupied commercial real estate balances 2 Percentages may not add up to 100% due to rounding Dollars in millions 1 Total loan portfolio balances declined 1.7% from 3Q21 and 5.6% from 4Q20 Commercial loa
Slide 6: Deposit Composition
Deposit Composition 6 Total Non-Maturity Deposits - $1.9B as of 12/31/211 Dollars in millions Total Deposits - $3.2B as of 12/31/21 Dollars in millions Total deposits decreased $45.6 million, or 1.4%, compared to 3Q21, and decreased $91.9 million, or 2.8%, year-over-year Non-maturity deposit bal
Slide 7: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Adjusted net interest income – FTE was up 7.7% over 3Q21 Higher interest income was driven mainly by increased loan fees and growth in franchise finance, partially offset by lower average loan balances Interest expense on deposits continued to declin
Slide 8: Net Interest Margin Drivers
Net Interest Margin Drivers 8 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix Adjusted NIM – FTE1 Linked-Quarter Change Monthly Rate Paid on Interest-Bearing Deposits 2.25% 2.25% 2.21% Linked-quarter adjusted NIM and NIM - FTE improvement was primarily attributable to a higher
Slide 9: Noninterest Income
$12.7 $8.4 $6.4 $7.8 $7.7 $9.0 4Q20 1Q21 2Q21 3Q21 4Q21 Core Gain on sale of premises and equipment Noninterest Income 9 Dollars in millions Noninterest Income 4Q21 Dollars in millions Noninterest Income 1 Noninterest income includes a $2.5 million gain on sale of premises and equipment; see Reconci
Slide 10: Noninterest Expense
1.34% 1.49% 1.44% 1.34% 1.61% 1.55% 4Q20 1Q21 2Q21 3Q21 4Q21 Core One time items $14.5 $15.3 $15.1 $14.5 $17.0 $16.3 4Q20 1Q21 2Q21 3Q21 4Q21 Core One time items Noninterest Expense 10 1 1 Noninterest expense includes a $0.5 million IT contract termination fee and $0.2 million of acquisition-related
Slide 11: Asset Quality
Asset Quality Allowance for loan losses to total loans of 0.96% in 4Q21, or 0.97% excluding PPP loans1 Quarterly provision for loan losses was a benefit of $0.2 million, compared to a benefit of $29,000 in 3Q21 and a provision of $2.9 million in 4Q20 Nonperforming loans declined $0.5 million,
Slide 12: Capital
Capital Strong capital generation during the quarter – tangible common equity to tangible assets ratio increased to 8.93%1 Tangible book value per share of $38.51, increasing 15.7% since 4Q201 Repurchased 100,000 shares at an average price per share of $44.36 million during 4Q21 12 1 See Recon
Slide 13: Positioned for an Increasing Interest Rate Cycle
Positioned for an Increasing Interest Rate Cycle 13 Improved deposit composition – Larger percentage of non-maturity deposits (“NMD”) compared to the beginning of the last rate tightening cycle – NMD products experienced lower betas in prior cycle – Pending First Century Bancorp acquisition will b
Slide 14: Small Business Lending
25% 19% 18% 10% 7% 21% Services Accommodation and Food Services Retail Trade Real Estate and Rental and Leasing Manufacturing Other 18% 15% 13% 10% 44% IN IL FL CA Other Small Business Lending $108.7 million in balances as of December 31, 2021 Current balance of $3.2 million outstanding under th
Slide 15: Franchise Finance
29% 11% 8%5%4% 4% 4% 35% TX CA GA AZ PA MI NJ Other Franchise Finance $81.4 million in balances as of December 31, 2021 Lending activity focused on providing growth financing to franchisees in various industry segments Origination volumes expected to be in the range of $150 million in 2022 A
Slide 16: Construction and Investor Commercial Real Estate
29% 12% 6%5%4%2% 42% Lessors of Nonresidential Buildings Dental Offices Executive Offices Regulation and Administration of Utilities Elementary and Secondary Schools Land Subdivision Other 25% 21% 7% 5% 5% 37% IN CA NY AZ TX Other 57% 28% 15% Commercial Construction/ Development Residential Construc
Slide 17: Single Tenant Lease Financing
Single Tenant Lease Financing $865.9 million in balances as of December 31, 2021 Long-term financing of single tenant properties occupied by historically strong national and regional tenants Weighted-average portfolio LTV of 47% Average loan size of $1.4 million 17 Portfolio Mix by Major Ver
Slide 18: Public Finance
4% 2% 4% 4% 21% 7% 6% 2%2%1%3% 44% AAA/Aaa AA+/Aa1 AA/Aa2 AA-/Aa3 A+/A1 A/A2 A-/A3 BBB+/Baa1 BBB/Baa2 BB+/Ba1 BB/Ba2 Non-Rated 33% 15%13% 11% 6% 6% 4% 3% 2%1% 6% General Obligation Essential use equipment loans Lease rental revenue Utilities Revenue Public higher ed facilities - Revenue Tax Incremen
Slide 19: Healthcare Finance
29% 11% 5%3% 5% 4% 4% 39% CA TX NY AZ FL WA NJ Other 89% 7% 4% Dentists Veterinarians Other 78% 16% 5% 1% Practice Refi or Acquisition Owner Occupied CRE Project Equipment and Other Healthcare Finance $387.9 million in balances as of December 31, 2021 Loan portfolio focused primarily on dental p
Slide 20: C&I and Owner-Occupied Commercial Real Estate
27% 13% 11%10% 9% 6% 24% Services Construction Manufacturing Real Estate and Rental and Leasing Retail Trade Arts, Entertainment, and Recreation Other 51% 29% 5% 3% 1% 11% IN AZ IL FL OH Other 41% 48% 11% Owner Occupied CRE C&I - Term Loans C&I - Lines of Credit C&I and Owner-Occupied Commercial Rea
Slide 21: Residential Mortgage
Residential Mortgage $204.4 million in balances as of December 31, 2021 (includes home equity balances) Direct-to-consumer originations centrally located at corporate headquarters Focused on high quality borrowers – Average loan size of $150,000 – Average credit score at origination of 754 – A
Slide 22: Specialty Consumer
23% 22% 18% 28% 9% Specialty Consumer $265.5 million in balances as of December 31, 2021 Direct-to-consumer and nationwide dealer network originations Focused on high quality borrowers – Average credit score at origination of 777 – Average loan size of $21,000 Strong historical credit perfor
Slide 23: First Internet Bank
First INTERNET +
Slide 24: Loan Portfolio Composition
Loan Portfolio Composition 24 1 Includes carrying value adjustments of $37.5 million, $38.9 million, $40.4 million, $41.6 million and $42.7 million related to terminated interest rate swaps associated with public finance loans as of December 31, 2021, September 30, 2021, June 30, 2021, March 31, 202
Slide 25: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 25 Dollars in thousands 2014 2015 2016 2017 2018 2019 2020 2021 Total equity - GAAP $96,785 $104,330 $153,942 $224,127 $288,735 $304,913 $330,944 $380,338 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible comm
Slide 26: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 26 Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Total equity - GAAP $330,944 $344,566 $358,641 $370,442 $380,338 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $326,257 $339,879 $353,954 $365,755 $375,651 Total asse
Slide 27: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 27 1 Assuming a 21% tax rate Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Net interest income $18,865 $20,525 $21,607 $20,919 $23,505 Adjustments: Fully-taxable equivalent adjustments 1 1,400 1,356 1,394 1,356 1,348 Net interest income - FTE $20,265 $21
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 28 1 Assuming a 21% tax rate Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Allowance for loan losses $29,484 $30,642 $28,066 $28,000 $27,841 Loans $3,059,231 $3,058,694 $2,957,608 $2,936,148 $2,887,662 Adjustments: PPP loans (50,554) (53,365) (39,682) (1
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 29 Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Total revenue - GAAP 31,522$ 28,900$ 30,569$ 28,732$ 31,199$ Adjustments: Gain on sale of premises and equipment - - (2,523) - - Subordinated debt redemption cost - - - 810 - Adjusted total revenue 31,522$
Slide 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 30 Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Income tax provision - GAAP 3,055$ 1,857$ 2,377$ 2,220$ 2,004$ Adjustments: Gain on sale of premises and equipment - - (530) - - Subordinated debt redemption cost - - - 170 - Acquisition-related expenses -
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 31 Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Return on average assets 1.02% 1.02% 1.25% 1.12% 1.19% Effect of gain on sale of premises and equipment 0.00% 0.00% (0.19%) 0.00% 0.00% Effect of subordinated debt redemption cost 0.00% 0.00% 0.00% 0.06% 0
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