First Internet Bancorp · NASDAQ:INBK

First Internet Bancorp — Q4 2020 Earnings Presentation

27 slides from First Internet Bancorp's earnings presentation, Jan 20, 2021

  1. Slide 1: Financial Results Fourth Quarter 2020

    Financial Results Fourth Quarter 2020 Exhibit 99.2

  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

  3. Slide 3: Fourth Quarter 2020 Highlights

    Fourth Quarter 2020 Highlights 3 Earnings  Portfolio loan balances increased by $46.3 million, or 1.5% from 3Q20  SBA loan sales contributed $3.5 million of fee revenue  Sold $7.4 million of public finance loans at a gain of $0.2 million  Deposit balances down 3.0% due to declines in CDs and bro

  4. Slide 4: Meaningful Outperformance vs. Peers

    4 Meaningful Outperformance vs. Peers Deposit Cost Change1 Revenue % Change1 Net Interest Margin Change1 Share Price % Change2 11% 36% 38% $3 - $7bn asset banks Top quartile INBK (in bps) 1 Change from 3Q19 – 3Q20; Orange indicates median of publicly traded $3-$7bn asset U.S. banks, green represents

  5. Slide 5: 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  Annual interest expense savings of approximately $25 million expected for 2021  SBA platform is

  6. Slide 6: Loan Portfolio Overview

    Loan Portfolio Overview 6  Total portfolio loans increased $46.3 million, or 1.5%, compared to 3Q20, and increased $95.7 million, or 3.2%, year-over-year  Commercial loan balances increased $73.1 million, or 3.0%, compared to 3Q20 driven by growth in healthcare finance and construction lending  C

  7. Slide 7: Deposit Composition

    Deposit Composition 7 Total Deposits - $3.3B as of 12/31/20 Total Non-Time Deposits - $1.7B as of 12/31/201 $96.8 3% $188.6 6% $43.2 1% $1,350.6 41% $1,591.7 49% Noninterest-bearing deposits Interest-bearing demand deposits Savings accounts Money market accounts Certificates and brokered deposits $2

  8. Slide 8: Yield on Loans and Cost of Deposits

    8 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix Yield on Loans and Cost of Deposits Dollars in millions NIM – GAAP and FTE1  FTE net interest margin improved by 24 bps from 3Q20  Interest expense on deposits declined as: 1) higher cost CDs matured and were either replaced at

  9. Slide 9: Net Interest Margin Drivers

    Net Interest Margin Drivers 9 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix NIM – FTE1 Linked-Quarter Change Monthly Rate Paid on Int. Bearing-Deposits  Linked quarter NIM improvement was primarily attributable to the continued impact of lower deposit costs and higher loan yie

  10. Slide 10: Noninterest Income

    $5.4 $6.2 $5.0 $12.5 $12.7 4Q19 1Q20 2Q20 3Q20 4Q20 Noninterest Income $8.0 $3.7 $0.2 $0.3 $0.5 Mortgage banking activities Gain on sale of loans Service charges and fees Net loan servicing revenue Other  Noninterest income of $12.7 million compared to $12.5 million in 3Q20 and $5.4 million in 4Q19

  11. Slide 11: Noninterest Expense

    Noninterest Expense 11  Noninterest expense of $14.5 million compared to $16.4 million in 3Q20 and $12.6 million in 4Q19  Linked quarter increase of 1.2%, excluding 3Q20 $2.1 million write-down of legacy OREO  Lower salaries and employee benefits due mainly to timing of SBA incentive compensation

  12. Slide 12: Asset Quality

    Asset Quality 12  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 0.96% in 4Q20, or 0.98% excluding PPP loans1, due primarily to adjustments to qualitative factors related

  13. Slide 13: Liquidity and Capital

    Liquidity and Capital 13 1 See Reconciliation of Non-GAAP Financial Measures 2 Regulatory capital ratios are preliminary pending filing of the Company’s and Bank’s regulatory reports Regulatory Capital Ratios – December 31, 20202Tangible Book Value Per Share1  Regulatory capital ratios remained str

  14. Slide 14: Loan Deferral Summary

    Loan Deferral Summary 14 Deferrals (Dollars in millions) As of May 15, 2020 As of July 17, 2020 As of August 28, 2020 As of October 16, 2020 As of January 15, 2021 % of Balances with Deferrals1 Commercial and industrial $15.9 $1.7 $0.5 $0.7 $0.1 0.2% Single tenant lease financing $259.0 $276.8 $27.8

  15. Slide 15: Single Tenant Lease Financing

    12% 24% 22% 37% 5% Single Tenant Lease Financing 15 7% 7% 6% 5% 4% 4% 4% 4% 2%2% 55% Red Lobster ICWG Wendy's Burger King Walgreens Bob Evans Dollar General CVS 7-Eleven Taco Bell Other 24% 22% 15% 10% 10% 7% 6% 2% 2% 2% Quick Service Restaurants Full Service Restaurants Auto Parts/ Repair/Car Wash

  16. Slide 16: Public Finance

    Public Finance 16 1% 2% 5% 5% 21% 5% 6% 1% 2%1%3% 48% AAA/Aaa AA+/Aa1 AA/Aa2 AA-/Aa3 A+/A1 A/A2 A-/A3 BBB+/Baa1 BBB/Baa2 BB+/Ba1 BB/Ba2 Non-Rated 31% 16% 11% 10% 6% 6% 5% 4% 3% 3% 5% General Obligation Essential use equipment loans Utilities Revenue Lease rental revenue Public higher ed facilities -

  17. Slide 17: Healthcare Finance

    Healthcare Finance  $528.2 million in balances as of December 31, 2020  Loan portfolio focused primarily on dental practices with some exposure to veterinary practices and other specialties  Borrowers’ needs include practice finance or acquisition, acquiring or refinancing owner-occupied CRE, equ

  18. Slide 18: C&I and Owner-Occupied Commercial Real Estate

    C&I and Owner-Occupied Commercial Real Estate  $165.2 million in combined balances as of December 31, 2020  Current C&I LOC utilization of 45%  Average loan sizes  C&I: $287,000  Owner-occupied CRE: $897,000  Exited relationships totaling in excess of $65 million over the last two years to de-

  19. Slide 19: Small Business Lending

    Small Business Lending  $125.6 million in balances as of December 31, 2020  Current balance of $51.2 million outstanding under the Paycheck Protection Program  3.9% of balances are currently on payment deferral programs  SBA sales, credit and operations teams continue to expand as origination vo

  20. Slide 20: Residential Mortgage

    Residential Mortgage  $206.6 million in balances as of December 31, 2020 (includes home equity balances)  Direct-to-consumer originations centrally located at corporate headquarters  Focused on high quality borrowers  Avg. loan size of $164,000  Avg. credit score at orig. of 770  Avg. LTV at o

  21. Slide 21: Specialty Consumer

    Specialty Consumer Geographically Diverse Portfolio Concentration by State State Percentage Texas 15% California 12% Florida 6% North Carolina 4% Colorado 3% All other states 60% 21  $275.7 million in balances as of December 31, 2020  Direct-to-consumer and nationwide dealer network originations 

  22. Slide 22: Appendix

    Appendix 22 BANCORP

  23. Slide 23: Loan Portfolio Composition

    23 1 Includes carrying value adjustments of $42.7 million, $44.3 million and $46.0 million related to terminated interest rate swaps associated with public finance loans as of December 31, 2020, September 30, 2020 and June 30, 2020, respectively, and $44.6 million, $21.4 million, $5.0 million and $0

  24. Slide 24: Tangible Book Value and Capital Reconciliation

    Reconciliation of Non-GAAP Financial Measures 24 1 Assuming a 21% tax rate Dollars in thousands 4Q19 1Q20 2Q20 3Q20 4Q20 Total equity - GAAP $304,913 $305,127 $307,711 $318,102 $330,944 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $300,226 $300,440 $303,024 $3

  25. Slide 25: Allowance and Noninterest Expense Reconciliation

    Reconciliation of Non-GAAP Financial Measures 25 Dollars in thousands 4Q19 1Q20 2Q20 3Q20 4Q20 Allowance for loan losses $21,840 $22,857 $24,465 $26,917 $29,484 Loans $2,963,547 $2,892,093 $2,973,674 $3,012,914 $3,059,231 Adjustments: PPP loans - - (58,948) (58,337) (50,554) Loans, excluding PPP loa

  26. Slide 26: Net Income and EPS Reconciliation

    Reconciliation of Non-GAAP Financial Measures 26 Dollars in thousands 4Q19 1Q20 2Q20 3Q20 4Q20 Income before income taxes - GAAP $7,698 $6,282 $3,664 $9,806 $14,145 Adjustments: Write-down of other real estate owned - - - 2,065 - Adjusted income before income taxes $7,698 $6,282 $3,664 $11,871 $14,1

  27. Slide 27: Returns and Tax Rate Reconciliation

    Reconciliation of Non-GAAP Financial Measures 27 Dollars in thousands 4Q19 1Q20 2Q20 3Q20 4Q20 Return on average assets 0.69% 0.59% 0.37% 0.78% 1.02% Effect of write-down of other real estate owned 0.00% 0.00% 0.00% 0.15% 0.00% Adjusted return on average assets 0.69% 0.59% 0.37% 0.93% 1.02% Return o

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