First Internet Bancorp · NASDAQ:INBK
First Internet Bancorp — Q3 2020 Earnings Presentation
34 slides from First Internet Bancorp's earnings presentation, Nov 13, 2020
Slide 1: Investor Presentation Third Quarter 2020
Investor Presentation Third Quarter 2020 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
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 tangible common equity, tangible assets, tangible common equity to tangib
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 $523.8 million $3.4 Billion 15.5% Total Deposits* $702.2 million 20.8% $1,263.8 million 37.5% 30.5% 5-year CAGR Nationwide consumer, $593.1 million $289.5 million small business and 8.6% 17.6% commercial deposit base Innovative technology and convenience suppo
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, especially following the experience of COVID-19 . Generate an increased level of lower-cost deposits as expansion
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: 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 8
Slide 9: 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” Eight years in a row . “Top Workplaces
Slide 10: Credit Update
Credit Update . Loan deferral balances have moved significantly lower since peaking in late- May at $647.2 million . Loans on deferral are down to $19.9 million as of October 30 2020, or 0.7% of the total loan portfolio . Significant reduction of single tenant lease financing and healthcare finance
Slide 11: Loan Deferral Summary
Loan Deferral Summary Deferrals As of As of As of As of As of As of April 17, May 15, June 19, July 17, August 28, October 30, % of Balances (Dollars in millions) 2020 2020 2020 2020 2020 2020 with Deferrals1 Commercial and $15.4 $15.9 $15.9 $1.7 $0.5 $0.7 0.9% industrial Single tenant lease $11.8 $
Slide 12: 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 in excess of $22 million expected for 2021 . Accelerated build-ou
Slide 13: Third Quarter 2020 Highlights
Third Quarter 2020 Highlights . Record diluted EPS of $0.86 . Adjusted diluted EPS of $1.031 excluding write-down of legacy OREO Earnings . Record quarterly net income of $8.4 million . Total revenue of $28.7 million, an increase of 48.1% from 2Q20 . Cost of interest-bearing deposits declined 43 bps
Slide 14: 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 $4,334 1 $4,100 1 CAGR: 29.4% vs. Peers at 13.6% CAGR: 27.0% vs. Peers at 15.3% $2,964 $3,013 $3,542 $2,716 $2
Slide 15: 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 $2.77 $27,089 $2.51 $25,239 $2.39 $2.50 $23,814 $2.30 $1.96 $2.60 $25,458 $2.30 $17,072 $21,900 $2.13 $12,074 $8,929 $15,226 201
Slide 16: 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 $12.5 Dollars in millions $16.4 $12.7 $12.6 $13.5 $13.2 $14.3 $11.1 $11.7 $1
Slide 17: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin . FTE net interest margin improved by 17 bps from Net Interest Income – GAAP and FTE1 2Q20 Dollars in millions GAAP FTE . Interest expense on deposits declined as: 1) higher $17.7 $16.8 $16.9 cost CDs matured and were either replaced at $16.6 $15.9 lower r
Slide 18: Net Interest Margin Drivers
Net Interest Margin Drivers . Linked quarter NIM improvement was primarily attributable to the continued impact of lower deposit costs . Interest-earning asset yields expected to stabilize . Significant opportunity to continue lowering deposit costs . $931 million of CDs with a weighted average cost
Slide 19: Deposit Composition
Deposit Composition . Total deposits declined $8.4 million, or 0.2%, compared to 2Q20, and increased $224.1 million, or 7.1%, year-over-year . Quarterly money market growth of $117.3 million, including $87.3 million in small business deposits . CD and brokered deposit balances decreased $138.1 milli
Slide 20: Liquidity and Capital
Liquidity and Capital . Regulatory capital ratios remained strong at the Company and Bank levels . Strong capital generation during the quarter resulted in the tangible common equity to tangible assets ratio increasing 23 bps to 7.24% . Continue to have sufficient liquidity to handle the current eco
Slide 21: Loan Portfolio Overview
Loan Portfolio Overview . Total portfolio loans increased $39.2 million, or 1.3%, compared to 2Q20, and increased $131.6 million, or 4.6%, year-over-year . Commercial loan balances increased $56.2 million, or 2.4%, compared to 2Q20 as growth in healthcare finance and construction lending resumed fol
Slide 22: Single Tenant Lease Financing
Single Tenant Lease Financing Portfolio mix by major tenant . $960.5 million in balances as of September 30, 2020 Red Lobster . Long term financing of single tenant properties occupied 7% ICWG by historically strong national and regional tenants 7% Wendy's . Burger King Weighted-average portfolio LT
Slide 23: Public Finance
Public Finance Borrower mix by credit rating . $625.6 million in balances as of September 30, 2020 1.2% . Provides a range of credit solutions for government and 2.9%5.0% AAA/Aaa 4.6% not-for-profit entities AA+/Aa1 . Borrowers’ needs include short-term financing, debt AA/Aa2 AA-/Aa3 refinancing, in
Slide 24: Healthcare Finance
Healthcare Finance Portfolio mix by borrower . $461.7 million in balances as of September 30, 2020 1% 2% . Loan portfolio focused primarily on dental practices with 7% some exposure to veterinary practices and other specialties Dentists . Borrowers’ needs include practice finance or acquisition, acq
Slide 25: C&I and Owner-Occupied Commercial Real Estate
C&I and Owner-Occupied Commercial Real Estate . $166.2 million in combined balances as of September 30, 2020 Portfolio Mix by State . Current C&I LOC utilization of 46% 2% 8% IN . Average loan sizes 5% . C&I: $354,000 AZ 6% IL . Owner-occupied CRE: $958,000 52% . Exited relationships totaling in exc
Slide 26: Small Business Lending
Small Business Lending . $123.2 million in balances as of September 30, 2020 Portfolio Mix by State . Current balance of $58.3 million outstanding under the Paycheck Protection Program consisting of 447 loans made to existing IN IL clients 22% 41% CA AZ . 7.0% of balances are on payment deferral pro
Slide 27: Residential Mortgage
Residential Mortgage . $225.2 million in balances as of September 30, 2020 National Portfolio with (includes home equity balances) Midwest Concentration . Direct-to-consumer originations centrally located at corporate headquarters . Focused on high quality borrowers 23% 9% 59% . Avg. loan size of $1
Slide 28: Specialty Consumer
Specialty Consumer . $282.5 million in balances as of September 30, 2020 Geographically Diverse Portfolio . Direct-to-consumer and nationwide dealer network originations . Focused on high quality borrowers 22% 10% . Avg. credit score at orig. of 778 18% . Avg. loan size of $19,370 . Strong historica
Slide 29: 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 0.37% 0.31% 0.32% 0.21% 0.22% 0.23% 0.23% 0.10% 0.09% 0.02% 0.04% 0.03% 2014 2015 2016 2017 2019 3Q20 2014 2015 2016 2017
Slide 30: Appendix
Appendix 30 BANCORP
Slide 31: Loan Portfolio Composition
Loan Portfolio Composition Dollars in thousands 2017 2018 2019 1Q20 2Q20 3Q20 Commercial loans Commercial and industrial $ 122,940 $ 107,405 $ 96,420 $ 95,227 $ 81,687 $ 77,116 Owner-occupied commercial real estate 75,768 77,569 86,726 87,956 86,897 89,095 Investor commercial real estate 7,273 5,391
Slide 32: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Total equity - GAAP $288,735 $294,013 $296,120 $295,140 $304,913 $305,127 $307,711 $318,102 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common
Slide 33: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 2015 2016 2017 2018 2019 TTM 3Q20 Net income - GAAP $8,929 $12,074 $15,226 $21,900 $25,239 $25,458 Adjustments: Write-down of other real estate owned - - - 1,914 - 1,631 Net deferred tax asset revaluation - - 1,846 - - - Adjusted net income $8,929 $12,07
Slide 34: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 2013 2014 2015 2016 2017 2018 2019 3Q20 Total equity - GAAP $90,908 $96,785 $104,330 $153,942 $224,127 $288,735 $304,913 $318,102 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common e
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