First Internet Bancorp · NASDAQ:INBK

First Internet Bancorp — Q4 2020 Earnings Presentation

34 slides from First Internet Bancorp's earnings presentation, Feb 1, 2021

  1. Slide 1: Investor Presentation Fourth Quarter 2020

    Investor Presentation Fourth Quarter 2020 Exhibit 99.1

  2. 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

  3. Slide 3: Non-GAAP Financial Measures

    Non-GAAP Financial Measures 3 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 tang

  4. Slide 4: 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 clear pathway to greater profita

  5. Slide 5: Nationwide Branchless Deposit Franchise

    Nationwide Branchless Deposit Franchise 5 $3.3 Billion Total Deposits* $678.2 million 20.7% $285.3 million 8.7% $1,230.0 million 37.6% $592.8 million 18.1% $484.8 million 14.8% * As of December 31, 2020; $117 million of brokered deposits and $2.1 million of balances in US territories/Armed Forces in

  6. Slide 6: Multiple Opportunities to Grow Deposits

    Multiple Opportunities to Grow Deposits 6  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 expansi

  7. Slide 7: Diversified Asset Generation Platform

    7 Commercial - National Commercial - Regional DIVERSIFIED ASSET GENERATION PLATFORM  C&I – Central Indiana  C&I – Arizona  Investor CRE – Central Indiana  Construction – Central Indiana  Single tenant lease financing  Small business lending  Public finance  Healthcare finance (via relationsh

  8. 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 8 Enhanced Treasury Management Capabilities Upgraded Digital Account Access SBA Lending

  9. Slide 9: Entrepreneurial Culture Key to Success

    9 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 Workplace

  10. Slide 10: Loan Deferral Summary

    Loan Deferral Summary 10 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

  11. Slide 11: 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

  12. Slide 12: Fourth Quarter 2020 Highlights

    Fourth Quarter 2020 Highlights 12 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 br

  13. Slide 13: Meaningful Outperformance vs. Peers

    13 Meaningful Outperformance vs. Peers Total Deposit Cost Change1 Revenue % Change1 Net Interest Margin Change1 Share Price % Change2 13% 40% 52% $3 - $7bn asset banks Top quartile INBK (in bps) 1 Change from 4Q19 – 4Q20; Orange indicates median of publicly traded $3-$7bn asset U.S. banks, green rep

  14. Slide 14: History of Strong Organic Growth

    $954 $1,251 $2,091 $2,716 $2,964 $3,059 2015 2016 2017 2018 2019 2020 vs. Peers1 at 15.3% $956 $1,463 $2,085 $2,671 $3,154 $3,271 2015 2016 2017 2018 2019 2020 $104 $154 $224 $289 $305 $331 2015 2016 2017 2018 2019 2020 Dollars in millions Total Assets Total Loans Total Deposits Shareholders’ Equity

  15. Slide 15: Capital deployed into new loan verticals, driving earnings growth

    9.33% 10.12% 8.77% 8.60% 8.65% 9.53% 9.84% 9.35% 10.06% 2015 2016 2017 2018 2019 2020 0.81% 0.74% 0.66% 0.72% 0.65% 0.69% 0.74% 0.78% 0.73% 2015 2016 2017 2018 2019 2020 $8,929 $12,074 $15,226 $23,814 $25,239 $29,453 $17,072 $21,900 $31,084 2015 2016 2017 2018 2019 2020 15 Capital has been deployed

  16. Slide 16: Growth Drives Economies of Scale

    Growth Drives Economies of Scale 16 Scalable, technology-driven model has delivered increasing efficiency and is a key component driving improved operating leverage 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix. 2 3Q20 results included a write-down of legacy other real estate o

  17. Slide 17: Net Interest Income and Net Interest Margin

    17 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

  18. Slide 18: Net Interest Margin Drivers

    Net Interest Margin Drivers 18 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 yi

  19. Slide 19: Deposit Composition

    Deposit Composition 19 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 $

  20. Slide 20: Liquidity and Capital

    Liquidity and Capital 20 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

  21. Slide 21: Loan Portfolio Overview

    Loan Portfolio Overview 21  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 

  22. Slide 22: Single Tenant Lease Financing

    12% 24% 22% 37% 5% Single Tenant Lease Financing 22 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

  23. Slide 23: Public Finance

    Public Finance 23 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 -

  24. Slide 24: 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

  25. Slide 25: 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-

  26. Slide 26: 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

  27. Slide 27: 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

  28. Slide 28: 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% 28  $275.7 million in balances as of December 31, 2020  Direct-to-consumer and nationwide dealer network originations 

  29. Slide 29: Excellent Asset Quality

    Excellent Asset Quality 29 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 Allowance for Loan Losses / NPLs Net Charge-Offs (Recoveries) / Average Loans 0.37% 0.31% 0.21% 0.10% 0.22% 0.24% 2014

  30. Slide 30: Appendix

    Appendix 30 BANCORP

  31. Slide 31: Loan Portfolio Composition

    31 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

  32. Slide 32: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures 321 Assuming a 21% tax rate Dollars in thousands 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 Total equity - GAAP $294,013 $296,120 $295,140 $304,913 $305,127 $307,711 $318,102 $330,944 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,

  33. Slide 33: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures 33 2015 2016 2017 2018 2019 2020 Net income - GAAP $8,929 $12,074 $15,226 $21,900 $25,239 $29,453 Adjustments: Write-down of other real estate owned - - - 1,914 - 1,631 Net deferred tax asset revaluation - - 1,846 - - - Adjusted net income $8,929 $12,074

  34. Slide 34: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures 34 Dollars in thousands 2013 2014 2015 2016 2017 2018 2019 4Q20 Total equity - GAAP $90,908 $96,785 $104,330 $153,942 $224,127 $288,735 $304,913 $330,944 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible commo

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