First Internet Bancorp · NASDAQ:INBK

First Internet Bancorp — Q2 2021 Earnings Presentation

28 slides from First Internet Bancorp's earnings presentation, Jul 21, 2021

  1. Slide 1: Financial Results Second Quarter 2021

    Financial Results Second Quarter 2021 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: Second Quarter 2021 Highlights

    Second Quarter 2021 Highlights 3 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix Loans and Deposits  Total portfolio loan balances declined 3.3% from 1Q21  C&I and investor CRE increased while healthcare finance, single tenant lease financing and public finance experienced net

  4. Slide 4: Meaningful Outperformance vs. Peers

    Meaningful Outperformance vs. Peers 4 1 Change from 1Q20 – 1Q21; Orange indicates median of publicly traded $3-$7bn asset U.S. banks, green represents top quartile; peer data includes FTE net interest margin data if available 2 Change from 6/30/2020 – 6/30/2021; Orange indicates median of publicly t

  5. Slide 5: Near-term Profitability Drivers

    Near-term Profitability Drivers Continued deposit repricing combined with stabilized asset yields provides significant opportunity to increase net interest income and net interest margin Annual interest expense savings of approximately $26 million expected for 2021 SBA platform is hitting its stride

  6. Slide 6: Loan Portfolio Overview

    Loan Portfolio Overview  Total loan portfolio balance declined 3.3% from 1Q21, and was comparable to 2Q20  Commercial loan balances decreased $85.1 million, or 3.4%, compared to 1Q21, driven primarily by net payoffs in healthcare finance, single tenant lease financing and public finance, partially

  7. Slide 7: Deposit Composition

    Deposit Composition  Total deposits declined $11.5 million, or 0.4%, compared to 1Q21, and decreased $174.6 million, or 5.2%, year-over-year  Non-time deposit balances increased by $64.1 million compared to 1Q21  CD and brokered deposit balances decreased $75.5 million compared to 1Q21  Cost of

  8. Slide 8: Net Interest Income and Net Interest Margin

    Net Interest Income and Net Interest Margin  FTE net interest margin improved 7 bps from 1Q21  Interest expense on deposits declined as higher cost CDs matured and were either replaced at lower rates or not renewed  Interest income on loans was relatively stable while the average balance of loans

  9. Slide 9: Net Interest Margin Drivers

    Net Interest Margin Drivers  Linked quarter NIM improvement was primarily attributable to the continued impact of lower deposit costs – Impact of modestly higher loan yields offset by lower average loan balances – Interest-earning asset yields declined 5 bps from 1Q21 due to composition; expected t

  10. Slide 10: Noninterest Income

    Noninterest Income  Noninterest income of $9.0 million, compared to $8.4 million in 1Q21 and $5.0 million in 2Q20  Mortgage banking revenue of $2.7 million, compared to $5.8 million in 1Q21 and $3.4 million in 2Q20  Gain on sale of loans of $3.0 million, compared to $1.7 million in 1Q21 and $0.8

  11. Slide 11: Noninterest Expense

    Noninterest Expense  Noninterest expense of $15.1 million, compared to $15.3 million in 1Q21 and $13.2 million in 2Q20 – Decrease in salaries and employee benefits from 1Q21 due mainly to lower medical claims expense – Decrease in deposit insurance premium due to year-over-year decline in total ass

  12. Slide 12: Asset Quality

    Asset Quality  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 of 0.95% in 2Q21, or 0.96% excluding PPP loans1  Quarterly provision for loan losses of $21,000, compared to $1.3 million

  13. Slide 13: Capital

    Capital  Strong capital generation during the quarter resulted in the tangible common equity to tangible assets ratio increasing 31 bps to 8.43%  Tangible book value per share of $35.92, increasing 16.2% since 2Q20  Regulatory capital ratios remained strong at the Company and Bank levels 13 1 See

  14. Slide 14: Positioned for Future Interest Rate Cycles

    Positioned for Future Interest Rate Cycles 14  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

  15. Slide 15: Single Tenant Lease Financing

    Single Tenant Lease Financing  $913.1 million in balances as of June 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 15 Portfolio Mix by Major Vertica

  16. Slide 16: Public Finance

    4% 2% 5% 4% 21% 6% 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 32% 16% 13% 11% 6% 5% 4% 3% 2%2% 6% General Obligation Essential use equipment loans Lease rental revenue Utilities Revenue Public higher ed facilities - Revenue Tax Increme

  17. Slide 17: Healthcare Finance

    28% 11% 6%4%5%4% 4% 38% CA TX NY AZ FL WA NJ Other 89% 6% 5% Dentists Veterinarians Other 79% 16% 4% 1% Practice Refi or Acquisition Owner Occupied CRE Project Equipment and Other Healthcare Finance 17 Portfolio Mix by Borrower Use Portfolio Mix by Borrower Portfolio Mix by State  $455.9 million in

  18. Slide 18: Construction and Investor Commercial Real Estate

    44% 21% 7% 7% 7% 5% 9% Land Subdivision Hotels and Motels Continuing Care Retirement Communities Medicinal and Botanical Manufacturing Lessors of Nonresidential Buildings Assisted Living Facilities Other 63% 33% 4% IN AZ OH 60%20% 20% Commercial Construction/ Development Residential Construction/ De

  19. Slide 19: C&I and Owner-Occupied Commercial Real Estate

    40% 15%10% 8% 7% 5% 15% Services Construction Real Estate and Rental and Leasing Retail Trade Health Care and Social Assistance Manufacturing Other 58% 23% 4% 4% 3% 8% IN AZ IL OH FL Other 48% 41% 11% Owner Occupied CRE C&I - Term Loans C&I - Lines of Credit C&I and Owner-Occupied Commercial Real Es

  20. Slide 20: Small Business Lending

    23% 19% 13% 12% 8% 8% 17% Services Accommodation and Food Services Health Care and Social Assistance Retail Trade Manufacturing Construction Other 25% 17% 14%7%3% 1% 33% IN IL CA FL AZ OR Other Small Business Lending  $123.3 million in balances as of June 30, 2021  Current balance of $39.7 million

  21. Slide 21: Residential Mortgage

    Residential Mortgage  $194.7 million in balances as of June 30, 2021 (includes home equity balances)  Direct-to-consumer originations centrally located at corporate headquarters  Focused on high quality borrowers – Average loan size of $154,000 – Average credit score at origination of 770 – Avera

  22. Slide 22: Specialty Consumer

    23% 22% 18% 28% 9% Specialty Consumer  $271.8 million in balances as of June 30, 2021  Direct-to-consumer and nationwide dealer network originations  Focused on high quality borrowers – Average credit score at origination of 771 – Average loan size of $20,285  Strong historical credit performanc

  23. Slide 23: First INTERNET

    First INTERNET

  24. Slide 24: Loan Portfolio Composition

    Loan Portfolio Composition 24 1 Includes carrying value adjustments of $40.4 million, $41.6 million and $42.7 million related to terminated interest rate swaps associated with public finance loans as of June 30, 2021, March 31, 2021 and December 31, 2020, respectively, and $21.4 million and $5.0 mil

  25. Slide 25: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures 25 Dollars in thousands 2Q20 3Q20 4Q20 1Q21 2Q21 Total equity - GAAP $307,711 $318,102 $330,944 $344,566 $358,641 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $303,024 $313,415 $326,257 $339,879 $353,954 Total asse

  26. Slide 26: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures 26 Dollars in thousands 2Q20 3Q20 4Q20 1Q21 2Q21 Net interest income $14,426 $16,232 $18,865 $20,525 $21,607 Adjustments: Fully-taxable equivalent adjustments 1 1,437 1,424 1,400 1,356 1,394 Net interest income - FTE $15,863 $17,656 $20,265 $21,881 $23,0

  27. Slide 27: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures 27 Dollars in thousands 2Q20 3Q20 4Q20 1Q21 2Q21 Total revenue - GAAP $19,399 $28,727 $31,522 $28,900 $30,569 Adjustments: Gain on sale of premises and equipment - - - - (2,523) Adjusted revenue $19,399 $28,727 $31,522 $28,900 $28,046 Income before incom

  28. Slide 28: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures 28 Dollars in thousands 2Q20 3Q20 4Q20 1Q21 2Q21 Return on average assets 0.37% 0.78% 1.02% 1.02% 1.25% Effect of write-down of other real estate owned 0.00% 0.15% 0.00% 0.00% 0.00% Effect of gain on sale of premises and equipment 0.00% 0.00% 0.00% 0.00%

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