First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q3 2022 Earnings Presentation
30 slides from First Internet Bancorp's earnings presentation, Oct 19, 2022
Slide 1: Financial Results Third Quarter 2022
Financial Results Third Quarter 2022 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 financial condition, results of operations, trends in lending policies and loan programs, plans and prospective business partnerships, objectives,
Slide 3: Third Quarter 2022 Highlights
Third Quarter 2022 Highlights 3 Loans and Deposits Total portfolio loan balances grew by 5.6% from 2Q22 Growth in franchise finance, single tenant lease financing, SBA and consumer Total non-maturity deposit balances decreased 4.4% from 2Q22 while CD and brokered deposit balances increased 12.
Slide 4: Loan Portfolio Overview
Loan Portfolio Overview Total loan portfolio balances increased 5.6% from 2Q22 and 10.9% from 3Q21 Commercial loan balances increased $97.3 million, or 4.0%, compared to 2Q22 – Solid growth in franchise finance, single tenant lease financing and small business lending Consumer loan balances in
Slide 5: Deposit Composition
Deposit Composition 5 Total Non-Maturity Deposits - $2.0B as of 9/30/222 Dollars in millions Total Deposits - $3.2B as of 9/30/22 Dollars in millions Total deposits increased $40.5 million, or 1.3%, compared to 2Q22, and declined 1.0% from 3Q21 Non-maturity deposits decreased $92.6 million, or 4
Slide 6: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Net interest income on a GAAP and FTE basis were both down 6.6% from 2Q22 Strong loan growth was offset by higher funding costs Loan portfolio yield impacted by lower prepayment fees as well as loan beta lag effect on fixed rate portfolios Increase
Slide 7: Net Interest Margin Drivers
Net Interest Margin Drivers 7 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix Net Interest Margin – FTE1 Linked-Quarter Change Monthly Rate Paid on Int. Bearing Deposits vs. Fed Funds Linked-quarter FTE NIM decreased 21 bps, due primarily to higher deposit costs and lower prepa
Slide 8: Noninterest Income
Noninterest Income 8 Dollars in millions Noninterest Income 3Q22 Dollars in millions Noninterest Income Noninterest income of $4.3 million, consistent with 2Q22 and compared to $7.8 million in 3Q21 Gain on sale of loans of $2.7 million, compared to $2.0 million in 2Q22 and $2.7 million in 3Q21 –
Slide 9: Noninterest Expense
Noninterest Expense Noninterest expense of $18.0 million, consistent with 2Q22 – Lower salaries and employee benefits due to $0.8 million of nonrecurring items incurred in 2Q22 – Professional fees lower due mainly to timing of third party loan review and stress testing – Higher loan expenses relat
Slide 10: Asset Quality
Asset Quality Allowance for loan losses to total loans of 0.92% in 3Q22, compared to 0.95% in both 2Q22 and 3Q21 Quarterly provision for loan losses was $0.9 million, compared to $1.2 million in 2Q22 and a benefit of $29,000 in 3Q21 Net charge-offs to average loans of 0.02%, compared to 0.04%
Slide 11: Capital
Capital Tangible common equity to tangible assets decreased 45 bps to 8.36%1 from 2Q22 Tangible book value per share of $38.34, stable with 2Q221 and up 3.3% from 3Q211 Repurchased 120,000 shares at an average price per share of $36.56 during 3Q22 Aggregate purchase price under the authorize
Slide 12: Small Business Lending
20% 19% 18% 9% 7% 27% Retail Trade Accommodation and Food Services Services Manufacturing Construction Other 16% 14% 13% 11% 9% 8% 29% IN MI IL TX CA FL Other Small Business Lending $113.0 million in balances as of September 30, 2022 There are no loans remaining under the Paycheck Protection Pro
Slide 13: Franchise Finance
18% 13% 12% 5%4%4%4% 40% TX CA MI GA IL NC PA Other Franchise Finance $225.0 million in balances as of September 30, 2022 Focused on providing growth financing to franchisees in a variety of industry segments Strong historical credit performance to date Average loan size of $1.0 million 13 P
Slide 14: Construction and Investor Commercial Real Estate
36% 19% 12% 12% 9% 9% 3% Land Subdivision Hotels (except Casino Hotels) and Motels Lessors of Residential Buildings and Dwellings Lessors of Nonresidential Buildings (except Miniwarehouses) Lessors of Miniwarehouses and Self-Storage Units Continuing Care Retirement Communities Other 80% 16% 4% IN AZ
Slide 15: Single Tenant Lease Financing
Single Tenant Lease Financing $895.3 million in balances as of September 30, 2022 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 $1.3 million 15 Portfolio Mix by Major Ve
Slide 16: Public Finance
4% 4% 6% 4% 20% 6% 6% 3%1% 1% 3% 42% 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% 13% 13% 9% 9% 6% 5% 3% 2%2% 7% General Obligation Essential use equipment loans Lease rental revenue Utilities Revenue Short term cash flow fin (BAN) - G.O. Public hig
Slide 17: Healthcare Finance
87% 9% 4% Dentists Veterinarians Other79% 16% 4% 1% Practice Refi or Acquisition Owner Occupied CRE Project Equipment and Other Healthcare Finance $293.7 million in balances as of September 30, 2022 Loan portfolio focused primarily on dental practices with some exposure to veterinary practices a
Slide 18: C&I and Owner-Occupied Commercial Real Estate
23% 19% 15% 15% 6% 6% 16% Services Manufacturing Real Estate and Rental and Leasing Construction Retail Trade Wholesale Trade Other 47% 33% 5% 2% 1% 12% IN AZ IL FL OH Other 45% 37% 18% C&I - Term Loans Owner Occupied CRE C&I - Lines of Credit C&I and Owner-Occupied Commercial Real Estate $163.4 m
Slide 19: Residential Mortgage
Residential Mortgage $359.7 million in balances as of September 30, 2022 (includes home equity balances) Direct-to-consumer originations centrally located at corporate headquarters Focused on high quality borrowers – Average loan size of $190,000 – Average credit score at origination of 749 –
Slide 20: Specialty Consumer
23% 21% 17% 29% 10% Specialty Consumer $312.5 million in balances as of September 30, 2022 Direct-to-consumer and nationwide dealer network originations Focused on high quality borrowers – Average credit score at origination of 779 – Average loan size of $24,000 Strong historical credit perf
Slide 21: First Internet Bancorp
First INTERNET +
Slide 22: Loan Portfolio Composition
Loan Portfolio Composition 22 1 Includes carrying value adjustments of $33.9 million, $35.4 million, $36.4 million, $37.5 million and $42.7 million related to terminated interest rate swaps associated with public finance loans as of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 202
Slide 23: Tangible Book Value Reconciliation
Reconciliation of Non-GAAP Financial Measures 23 Dollars in thousands 2015 2016 2017 2018 2019 2020 2021 3Q22 Total equity - GAAP $104,330 $153,942 $224,127 $288,735 $304,913 $330,944 $380,338 $360,857 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible com
Slide 24: Tangible Equity and Assets Reconciliation
Reconciliation of Non-GAAP Financial Measures 24 Dollars in thousands 3Q21 4Q21 1Q22 2Q22 3Q22 Total equity - GAAP $370,442 $380,338 $374,655 $365,332 $360,857 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $365,755 $375,651 $369,968 $360,645 $356,170 Total asse
Slide 25: Interest Income and Net Interest Income Reconciliation
Reconciliation of Non-GAAP Financial Measures 25 1 Assuming a 21% tax rate Dollars in thousands 3Q21 4Q21 1Q22 2Q22 3Q22 Total interest income $33,034 $34,192 $36,034 $36,106 $39,099 Adjustments: Fully-taxable equivalent adjustments 1 1,356 1,348 1,314 1,377 1,280 Total interest income - FTE $34,390
Slide 26: Net Interest Margin Reconciliation
Reconciliation of Non-GAAP Financial Measures 26 1 Assuming a 21% tax rate Dollars in thousands 3Q21 4Q21 1Q22 2Q22 3Q22 Net interest margin 2.00% 2.30% 2.56% 2.60% 2.40% Adjustments: Effect of subordinated debt redemption cost 0.08% 0.00% 0.00% 0.00% 0.00% Effect of income from tax refund advance l
Slide 27: Noninterest Expense Reconciliation
Reconciliation of Non-GAAP Financial Measures 27 Dollars in thousands 3Q21 4Q21 1Q22 2Q22 3Q22 Noninterest expense $14,451 $16,955 $18,780 $17,985 $17,995 Adjustments: Acquisition-related expenses - (163) (170) (103) - Write-down of software - (475) - - (125) Nonrecurring consulting fee - - (875) -
Slide 28: Income Tax and Net Income Reconciliation
Reconciliation of Non-GAAP Financial Measures 28 1 Assuming a 21% tax rate Dollars in thousands 3Q21 4Q21 1Q22 2Q22 3Q22 Income tax provision - GAAP 2,220$ 2,004$ 1,790$ 1,279$ 987$ Adjustments:1 Gain on sale of premises and equipment - - - - - Subordinated debt redemption cost 170 - - - - Acquisiti
Slide 29: Return on Assets and Equity Reconciliation
Reconciliation of Non-GAAP Financial Measures 29 Dollars in thousands 3Q21 4Q21 1Q22 2Q22 3Q22 Return on average assets 1.12% 1.19% 1.08% 0.93% 0.82% Effect of gain on sale of premises and equipment 0.00% 0.00% 0.00% 0.00% 0.00% Effect of subordinated debt redemption cost 0.06% 0.00% 0.00% 0.00% 0.0
Slide 30: Income Before Income Taxes Reconciliation
Reconciliation of Non-GAAP Financial Measures 30 1 Assuming a 21% tax rate Dollars in thousands 3Q21 4Q21 1Q22 2Q22 3Q22 Income before income taxes - GAAP 14,310$ 14,482$ 12,999$ 10,824$ 9,423$ Adjustments: Income from tax refund advance loans - - (2,864) (149) - Provision for tax refund advance loa
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