First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q3 2021 Earnings Presentation
29 slides from First Internet Bancorp's earnings presentation, Oct 20, 2021
Slide 1: Financial Results Third Quarter 2021
Financial Results Third Quarter 2021 Exhibit 99.2
Slide 2: Forward-Looking Statements & Non-GAAP Financial Measures
Forward-Looking Statements & Non-GAAP Financial Measures This presentation contains forward-looking statements, including statements with respect to the Company’s stock repurchase program and timing and methods of executing the same, the financial condition, results of operations, trends in lending
Slide 3: Third Quarter 2021 Highlights
Third Quarter 2021 Highlights 3 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix Loans and Deposits Total portfolio loan balances declined 0.7% from 2Q21 Franchise finance, C&I and single tenant lease financing balances increased while healthcare finance, small business lendin
Slide 4: Near-term Profitability Drivers
Near-term Profitability Drivers Commercial loan growth combined with continued CD and brokered deposit repricing provides the ability to increase net interest income and expand net interest margin Annual net interest income growth expected to be between $9 and $11 million during 2022 Commercial loan
Slide 5: Loan Portfolio Overview
Loan Portfolio Overview Total loan portfolio balance declined 0.7% from 2Q21, and 2.5% from 3Q20 Commercial loan balances decreased $29.1 million, or 1.2%, compared to 2Q21, driven primarily by net payoffs in healthcare finance, small business lending (PPP loans) and public finance, partially of
Slide 6: Deposit Composition
Deposit Composition Total deposits increased $18.4 million, or 0.6%, compared to 2Q21, and decreased $147.8 million, or 4.4%, year-over-year Non-time deposit balances increased by $58.3 million, or 3.2%, compared to 2Q21 CD and brokered deposit balances decreased $39.9 million, or 2.8%, compar
Slide 7: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Adjusted net interest income – FTE was up modestly over 2Q21 Interest expense on deposits continued to decline as higher cost CDs matured and were either replaced at lower rates or not renewed Interest income was impacted by lower average loan balanc
Slide 8: Net Interest Margin Drivers
Net Interest Margin Drivers Linked quarter adjusted NIM and NIM - FTE declines were primarily attributable to the mix of interest-earning assets – Impacted by lower average loan balances and lower loan fees – Interest-earning asset yields declined 10 bps from 2Q21; elevated cash balances continue
Slide 9: Noninterest Income
Noninterest Income Noninterest income of $7.8 million, compared to $9.0 million in 2Q21 and $12.5 million in 3Q20 Mortgage banking revenue of $3.9 million, compared to $2.7 million in 2Q21 and $9.6 million in 3Q20 Gain on sale of loans of $2.7 million, compared to $3.0 million in 2Q21 and $2.0
Slide 10: Noninterest Expense
Noninterest Expense Noninterest expense of $14.5 million, compared to $15.1 million in 2Q21 and $16.4 million in 3Q20 – Lower consulting and professional fees due mainly to timing of third party loan review and stress testing – Lower other expense due primarily to seasonal expenses and gain on ORE
Slide 11: Asset Quality
Asset Quality Allowance for loan losses to total loans of 0.95% in 3Q21, or 0.96% excluding PPP loans1 Quarterly provision for loan losses was a benefit of $29,000, compared to a provision of $21,000 in 2Q21 and $2.5 million in 3Q20 Nonperforming loans declined $1.2 million from 2Q21 due prima
Slide 12: Capital
Capital Strong capital generation during the quarter – tangible common equity to tangible assets ratio increased to 8.61% Tangible book value per share of $37.12, increasing 16.1% since 3Q20 Subordinated debt issuance enhanced regulatory capital Announced a new stock repurchase program with
Slide 13: Positioned for Future Interest Rate Cycles
Positioned for Future Interest Rate Cycles 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 Increased revenue diversification – Investments in SBA
Slide 14: Small Business Lending
26% 21% 14%9% 8% 22% Services Accommodation and Food Services Retail Trade Manufacturing Construction Other 24% 18% 8%8% 3% 1% 38% IN IL CA FL AZ OR Other Small Business Lending $102.9 million in balances as of September 30, 2021 Current balance of $15.0 million outstanding under the Paycheck Pr
Slide 15: Franchise Finance
12% 12% 12% 10% 9% 7% 7% 31% PA TX CA NY KY NC AZ Other Franchise Finance $25.6 million in balances as of September 30, 2021 Loan portfolio focused on providing growth financing to franchisees in various industry segments Franchise finance origination volumes expected to be $100 million by yea
Slide 16: Construction and Investor Commercial Real Estate
37% 25%10% 7% 6% 5% 10% Land Subdivision Hotels and Motels Continuing Care Retirement Communities Medicinal and Botanical Manufacturing Lessors of Nonresidential Buildings Assisted Living Facilities Other 60%35% 5% IN AZ OH 57% 23% 20% Commercial Construction/ Development Residential Construction/ D
Slide 17: Single Tenant Lease Financing
Single Tenant Lease Financing $922.0 million in balances as of September 30, 2021 Long-term financing of single tenant properties occupied by historically strong national and regional tenants Weighted-average portfolio LTV of 48% Average loan size of $1.4 million 17 Portfolio Mix by Major Ve
Slide 18: Public Finance
4% 2% 5% 4% 21% 6% 6% 2%2%1%3% 45% AAA/Aaa AA+/Aa1 AA/Aa2 AA-/Aa3 A+/A1 A/A2 A-/A3 BBB+/Baa1 BBB/Baa2 BB+/Ba1 BB/Ba2 Non-Rated 32% 16% 13% 11% 6% 6% 4% 2% 2% 2% 6% General Obligation Essential use equipment loans Lease rental revenue Utilities Revenue Public higher ed facilities - Revenue Tax Increm
Slide 19: Healthcare Finance
28% 11% 6%5%4%4% 4% 38% CA TX NY AZ FL WA NJ Other 89% 7% 4% Dentists Veterinarians Other 79% 16% 4% 1% Practice Refi or Acquisition Owner Occupied CRE Project Equipment and Other Healthcare Finance $417.4 million in balances as of September 30, 2021 Loan portfolio focused primarily on dental pr
Slide 20: C&I and Owner-Occupied Commercial Real Estate
38% 12% 9%7% 6% 7% 21% Services Construction Real Estate and Rental and Leasing Retail Trade Health Care and Social Assistance Manufacturing Other 55% 21% 4% 3% 3% 14% IN AZ IL OH FL Other 44% 43% 13% Owner Occupied CRE C&I - Term Loans C&I - Lines of Credit C&I and Owner-Occupied Commercial Real Es
Slide 21: Residential Mortgage
Residential Mortgage $206.7 million in balances as of September 30, 2021 (includes home equity balances) Direct-to-consumer originations centrally located at corporate headquarters Focused on high quality borrowers – Avg. loan size of $154,000 – Avg. credit score at orig. of 755 – Avg. LTV at
Slide 22: Specialty Consumer
23% 22% 18% 28% 9% Specialty Consumer $268.4 million in balances as of September 30, 2021 Direct-to-consumer and nationwide dealer network originations Focused on high quality borrowers – Avg. credit score at orig. of 777 – Avg. loan size of $21,000 Strong historical credit performance 22 Co
Slide 23: First Internet
First INTERNET
Slide 24: Loan Portfolio Composition
Loan Portfolio Composition 24 1 Includes carrying value adjustments of $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 September 30, June 30, 2021, March 31, 2021 and December 31, 2020, respectively, a
Slide 25: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 25 Dollars in thousands 3Q20 4Q20 1Q21 2Q21 3Q21 Total equity - GAAP $318,102 $330,944 $344,566 $358,641 $370,442 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $313,415 $326,257 $339,879 $353,954 $365,755 Total asse
Slide 26: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 26 1 Assuming a 21% tax rate Dollars in thousands 3Q20 4Q20 1Q21 2Q21 3Q21 Net interest income $16,232 $18,865 $20,525 $21,607 $20,919 Adjustments: Fully-taxable equivalent adjustments 1 1,424 1,400 1,356 1,394 1,356 Net interest income - FTE $17,656 $20
Slide 27: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 27 Dollars in thousands 3Q20 4Q20 1Q21 2Q21 3Q21 Allowance for loan losses $26,917 $29,484 $30,642 $28,066 $28,000 Loans $3,012,914 $3,059,231 $3,058,694 $2,957,608 $2,936,148 Adjustments: PPP loans (58,337) (50,554) (53,365) (39,682) (14,981) Loans, exc
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 28 Dollars in thousands 3Q20 4Q20 1Q21 2Q21 3Q21 Total revenue - GAAP 28,727$ 31,522$ 28,900$ 30,569$ 28,732$ Adjustments: Gain on sale of premises and equipment - - - (2,523) - Subordinated debt redemption cost - - - - 810 Adjusted revenue 28,727$ 31,52
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 29 Dollars in thousands 3Q20 4Q20 1Q21 2Q21 3Q21 Diluted average common shares outstanding 9,773,224 9,914,022 9,963,036 9,881,422 9,988,102 Diluted earnings per share - GAAP 0.86$ 1.12$ 1.05$ 1.31$ 1.21$ Adjustments: Effect of write-down of other real e
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