First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q4 2019 Earnings Presentation
31 slides from First Internet Bancorp's earnings presentation, Jan 27, 2020
Slide 1: Investor Presentation Fourth Quarter 2019
Investor Presentation Fourth 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 $458.9 million $3.2 Billion 14.6% Total Deposits* $578.5 million 18.3% $1,324.2 million 42.0% 33% 5-year CAGR* Nationwide consumer, $546.3 million $246.1 million small business and 7.8% 17.3% 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 . Small business lending . Investor CRE – Central Indiana . Public finance . Construction – Centra
Slide 8: Near-Term Earnings Catalysts
Near-Term Earnings Catalysts Well positioned for a lower interest rate environment $1.1 Billion of CDs Maturing over Next 12 Months Mortgage Banking Revenue $1.1 billion with Dollars in millions 2.59% 3.06% $4.3 weighted average 2.86% remaining maturity 2.68% 1.90% of 5.7 months 2.41% repriced 69
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” Seven years in a row . “Top Workplaces
Slide 11: Fourth Quarter 2019 Highlights
Fourth Quarter 2019 Highlights . Record net income of $7.1 million and record diluted EPS of $0.72 . Earnings Record annual net income of $25.2 million and record annual diluted EPS of $2.51 . Improved return on average assets and average tangible common equity . Total revenue of $20.8 million, up 1
Slide 12: 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 1 $2,964 1 vs. Peers at 14.6% CAGR: 33.4% vs. Peers at 12.9% $4,100 CAGR: 32.3% $2,716 $3,542 $2,091 $2,768 $1
Slide 13: 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 $25,239 $23,814 $2.30 $2.39 $2.50 $2.51 $1.96 $17,072 $2.30 $21,900 $2.13 $12,074 $15,226 $8,929 $0.96 $4,324 2014 2015 2016 201
Slide 14: 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 Noninterest Income Noninterest Expense1,2 Dollars in millions Dollars in millions $12.7 $12.6 $5.6 $11.7 $5.4 $11.1 $11.2 $10.2 $10.2 $10.
Slide 15: 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 16: 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 . Completed the previously announced stock repurchase program in 3Q19 . 482,970 shares were repurchased at an aggregate amount of $1
Slide 17: Deposit Composition
Deposit Composition . Total deposits increased $5.7 million, or 0.2%, compared to 3Q19 and $482.6 million, or 18.1%, year- over-year . Strong quarterly money market growth of $88.3 million, including $73.4 million in small business . CD and brokered deposit balances decreased $90.3 million compared
Slide 18: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin . Net interest income stabilized, following recent Net Interest Income – GAAP and FTE1 declines Dollars in millions GAAP FTE $17.8 $17.7 . Stable loan yields and declining deposit costs $16.9 $16.8 $16.9 . NIM contracted 3 bps sequentially due mainly to lo
Slide 19: Net Interest Margin Drivers
Net Interest Margin Drivers . Linked quarter NIM decline was primarily attributable to the impact of elevated cash balances combined with falling short-term interest rates – 7 bp negative impact . Lower deposit costs and improved deposit mix had a positive impact of 4 bps . Higher loan yields added
Slide 20: Loan Portfolio Overview
Loan Portfolio Overview . Total loans increased $82.3 million, or 2.9%, compared to 3Q19 and $247.3 million, or 9.1%, year-over- year . Quarterly commercial loan growth of $93.5 million driven by healthcare finance and the SBA loan portfolio acquisition . Sold $53.7 million of single tenant lease fi
Slide 21: Commercial Real Estate
Commercial Real Estate Commercial real estate balances increased Single Tenant Lease Financing $104.0 million, or 10.8%, since 4Q18 Portfolio Diversity Red Lobster As of % of 7.8% Dollars in millions December 31, 2019 total 6.2% ICWG Single tenant lease financing $995.9 93.2% 4.9% Construction 60.3
Slide 22: Commercial & Industrial
Commercial & Industrial Commercial & industrial overview: As of % of . Originations / commitments over the past Dollars in millions December 31, 2019 total twelve months exceeded $115 million Commercial & industrial $96.4 56.8% Owner-occupied CRE 73.4 43.2% . Primarily serves the borrowing and treas
Slide 23: Public Finance
Public Finance Portfolio Composition General Obligation Public finance originations/commitments 2.6% 2.6% 4.2% Essential use equipment during the past twelve months exceeded 2.9% loans $94 million 4.8% Lease rental revenue Utilities Revenue Public Finance Balances 29.2% Tax Incremental 5.7% DollarsD
Slide 24: Healthcare Finance
Healthcare Finance Healthcare finance originations/commitments over Portfolio Composition the past twelve months exceeded $205 million 4.4% 1.0% 0.1% Practice Refinance Healthcare Finance Balances or Acquisition 14.0% Dollars in millions $300.6 Owner Occupied Dollars in millions $65.6 $251.5 CRE $21
Slide 25: 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 26.4% 14.8% . Geographic diversity 28.4% provides opportunity to bene
Slide 26: 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% 0.22% 0.23% 0.10% 0.09% 0.04% 0.02% 0.04% 0.03% 2014 2015 2016 2017 2018 4Q19 2014 2015 2016 2017
Slide 27: 2020 Strategy and Outlook
2020 Strategy and Outlook . 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 mix of earning assets . Build capital through improved profitabilit
Slide 28: Appendix
Appendix 28 BANCORP
Slide 29: Loan Portfolio Composition
Loan Portfolio Composition Dollars in thousands 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 Commercial loans Commercial and industrial $ 101,326 $ 121,966 $ 107,405 $ 110,560 $ 106,517 $ 88,874 $ 96,420 Owner-occupied commercial real estate 55,637 71,872 77,569 75,317 71,908 74,384 73,392 Investor commercial
Slide 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 2014 2015 2016 2017 2018 2019 Net income - GAAP $4,324 $8,929 $12,074 $15,226 $21,900 $25,239 Adjustments: Write-down of other real estate owned - - - - 1,914 - Net deferred tax asset revaluation - - - 1,846 - - Adjusted net income $4,324 $8,929 $12,074
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Total equity - GAAP $224,824 $282,087 $287,740 $288,735 $294,013 $296,120 $295,140 $304,913 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common
First Internet Bancorp — Q4 2019 Earnings Presentation on 6ix