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| 8-K - 8-K - First Internet Bancorp | inbk-2018x05investorpresen.htm |
First Internet Bancorp Investor Presentation First Quarter 2018 Exhibit 99.1
Forward-Looking Statements This presentation may contain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance or business of the Company. Forward-looking statements are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Forward-looking statements are not a guarantee of future performance or results, are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the information in the forward-looking statements. Factors that may cause such differences include: general economic conditions; failures or breaches of or interruptions in the communications and information systems on which we rely to conduct our business; failure of our plans to grow our commercial real estate, commercial and industrial, public finance, and healthcare finance loan portfolios; competition with national, regional and community financial institutions; the loss of any key members of senior management; fluctuations in interest rates; risks relating to the regulation of financial institutions; and other factors identified in reports we file with the U.S. Securities and Exchange Commission. All statements in this presentation, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. 2
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 (“TCE”), tangible assets (“TA”), tangible book value (“TBV”) per common share, return on average assets (“ROAA”), return on average tangible common equity (“ROATCE”) and tangible common equity to tangible assets, net interest margin – FTE, adjusted net income, adjusted diluted earnings per share and pre-tax, pre-provision earnings are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures that may be presented by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the table at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.” 3
Performance Summary Strong balance sheet growth has driven increased earnings and overall growth in tangible book value per share Diluted Earnings Per Share1,2,3 Pre-Tax, Pre-Provision Earnings3 Tangible Book Value Per Share3 $0.71 $0.71 Dollars in thousands $8,198 $26.09 $26.05 $7,925 $7,740 $25.70 $0.64 $0.63 $0.61 $6,823 $6,787 $0.57 $24.43 $0.55 $5,637 $23.94 $5,179 $23.67 $23.52 $4,890 $23.04 $0.43 $0.41 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Total Assets Total Loans Total Deposits $2,768 $2,863 $2,209 $2,085 $2,177 Dollars in millions $2,633 Dollars in millions $2,091 Dollars in millions $1,997 $2,381 $1,868 $1,732 $2,053 $1,698 $1,557 $1,494 $1,463 $1,824 $1,854 $1,433 $1,389 $1,702 $1,199 $1,251 $1,112 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 1 1Q17, 2Q17 and 3Q17 amount reflects full impact of offering of 945,000 shares of common stock in December 2016. 4Q17 and 1Q18 amount reflects full impact of offering of 1,897,500 shares of common stock in September 2017. 2 4Q17 reported diluted EPS of $0.41 included the revaluation of the Company’s net deferred tax asset which reduced diluted EPS by $0.22. 4 3 See Reconciliation of Non-GAAP Financial Measures.
First Quarter 2018 Highlights . Record quarterly net income of $6.0 million, up 72% from 4Q17 and 113% from 1Q17 . Quarterly diluted EPS of $0.71, up 73% from 4Q17 and 65% from 1Q17 . Quarterly diluted EPS was up $0.08, or 13%, and net income was up $0.7 million, or 13%, compared to 4Q17 results adjusted for the net deferred tax asset revaluation1 . Quarterly net interest income of $15.4 million, up 0.4% over 4Q17 and 35% over 1Q17 . Total quarterly loan growth of $118.2 million, or 6% . Total year-over-year loan growth of $776.2 million, or 54% . Total quarterly asset growth of $95.0 million, or 3% . Total year-over-year asset growth of $809.9 million, or 39% 1 See Reconciliation of Non-GAAP Financial Measures. 5
Corporate Overview Corporate Summary 1Q18 Financial Information . First Internet Bank launched in 1999 . Total assets $2.9 billion . First state-chartered FDIC-insured . Total loans $2.2 billion Internet bank . Total deposits $2.2 billion . Headquartered in Fishers, IN with an . 1 office in Tempe, AZ TCE / tangible assets 7.70% . . Industry pioneer in branchless NPLs / total loans 0.03% delivery of consumer and commercial . ROAA 0.87% banking services . ROATCE 1 11.19% . Nationwide deposit and lending footprint . Market capitalization 2 $283.5 million . Experienced management team . Dividend yield 2 0.7% . Strong balance sheet and earnings . NASDAQ Global Select Market INBK growth 1 See Reconciliation of Non-GAAP Financial Measures 6 2 Market valuation data as of May 16, 2018
Differentiated Business Model . Nationwide consumer banking provider . Proven online / mobile retail deposit platform using scalable technology backed by exceptional customer service . Low cost delivery channel creates customer value through competitive rates and low fees . Commercial banking franchise focused on select local and national markets Local National . C&I – Central Indiana . Single tenant lease financing . C&I – Arizona . Public finance . Investor CRE – Central Indiana . Healthcare finance (via . Construction – Central Indiana relationship with Lendeavor) . National, award-winning online direct-to-consumer mortgage banking platform . National, niche consumer lending segments with solid yields and asset quality Asset class and geographic diversity provides ability to generate top tier balance sheet and revenue growth funded by a loyal, efficient and growing deposit base 7
Strategic Objectives . Drive revenue growth and positive operating leverage . Achieve consistent strong profitability . Deploy capital in an accretive manner focused on building shareholder value . Capitalize on consumer trends by capturing greater deposit market share among digital banking adopters . Maintain strong asset quality and focus on disciplined risk management . Expand asset and deposit generation channels to supplement growth and increase profitability . Continue investing in technology to remain a digital banking leader and increase efficiency 8
Corporate Recognition 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-level talent . Top Rated Online Business Bank in 2017 – Advisory HQ . TechPoint 2016 Mira Award “Tech-enabled Company of the Year” . Top 10 finalist – 2016 Indiana Public Company of the year presented by the CFA Society and FEI . Magnify Money ranked #1 amongst 2016 Best Banking Apps (Banker’s “Online Direct Banks”) . American Banker’s “Best Banks to Work For” 2017 2016 2015 2014 2013 . “Top Workplaces in Indianapolis” The Indianapolis Star 2017 (#2 on the list) 2016 2015 2014 . “Best Places to Work in Indiana” 2017 2016 2013 . Mortgage Technology 2013 awarded top honors in the Online Mortgage Originator category 9
Consistent Balance Sheet Growth Execution of the business strategy has driven consistent and sustainable balance sheet growth Total Assets Total Loans Dollars in millions $2,768 $2,863 Dollars in millions $2,091 $2,209 CAGR: 34.5% CAGR: 43.9% $1,854 $1,251 $1,270 $954 $971 $732 $802 $501 2013 2014 2015 2016 2017 1Q18 2013 2014 2015 2016 2017 1Q18 Total Deposits Shareholders' Equity Dollars in millions $2,085 $2,177 Dollars in millions $224 $225 CAGR: 31.8% CAGR: 29.0% $1,463 $154 $956 $104 $91 $97 $673 $759 2013 2014 2015 2016 2017 1Q18 2013 2014 2015 2016 2017 1Q18 10
Five Year Balance Sheet Growth . Five year balance sheet growth rates far Five Year Total Asset Growth exceed the median rates for similar 340% institutions . INBK growth over this period has been primarily organic as opposed to through 73% acquisitions INBK SNL Small Cap US Banks Five Year Total Loan Growth Five Year Total Deposit Growth 517% 298% 98% 78% INBK SNL Small Cap US Banks INBK SNL Small Cap US Banks Source: Company data and SNL Financial; financial data as of March 31, 2018; peer data represents median value of component companies. SNL Small Cap US Banks represent publicly traded small cap banks with a market capitalization of between $250 11 million and $1 billion; peer data based on index components as of March 31, 2018.
Earnings and Profitability The Company remains focused on driving earnings growth and improving profitability Net Income1,2 Net Interest Margin - FTE1 $6,028 Dollars in thousands $5,344 2.57% 2.59% $4,895 2.43% 2.47% 2.48% 2.53% 2.52% 2.41% $4,001 $3,710 $3,098 $2,834 $2,832 $3,498 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Return on Average Assets1,2 Return on Average Tangible Common Equity1,2 0.87% 11.24% 11.51% 11.19% 0.80% 10.25% 0.81% 0.78% 10.07% 9.41% 9.73% 0.71% 0.71% 0.73% 0.60% 7.65% 0.52% 6.37% 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 1 See Reconciliation of Non-GAAP Financial Measures. 2 4Q17 reported net income of $3.5 million included the revaluation of the Company’s net deferred tax asset which reduced net income by $1.8 million and negatively impacted ROAA and ROATCE. 12
Increasing Economies of Scale Scalable, technology-driven model delivers increasing efficiency and is a key component driving improved operating leverage Net Interest Income Noninterest Expense / Average Assets Dollars in thousands $15,360 $15,415 $14,191 1.98% 1.93% $12,974 1.85% 1.77% $11,457 $10,904 $10,338 1.63% $9,306 1.50% 1.45% 1.47% 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Efficiency Ratio Total Assets Per FTE Dollars in millions 64.0% $14.0 $12.9 $13.4 61.2% $12.1 59.1% $10.3 56.8% 56.9% $9.6 $9.5 $9.7 55.2% 54.2% 54.2% 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 13
Interest Rate Risk Management . 1Q18 FTE net interest margin of 2.41%1 declined 18 bps compared to 4Q17 . 15 bps of decline due to change in federal corporate tax rate . 3 bps of decline due to interest rate compression / flat yield curve . Company continued the hedging strategy initiated in 4Q17 . Enhances interest rate sensitivity of longer term fixed rate assets . Offsets impact of higher short term interest rates on deposit / funding costs . Total notional value of $360.6 million of pay fixed / receive variable interest rate swaps in place to effectively convert fixed rate assets to variable rate . $272.4 million in place to hedge public finance loans . $88.2 million in place to hedge investment securities . Majority of interest rate swaps contain one year forward-start term to preserve current period net interest income while gradual interest rate tightening continues . Interest rate sensitivity in instantaneous parallel shift upward rate scenarios: % Change for Parallel Shift in Interest Rates +50 bps +100 bps +200 bps Net interest income: year 1 (1.81%) (3.46%) (7.11%) Net interest income: year 2 1.11% 2.25% 4.20% 1 See Reconciliation of Non-GAAP Financial Measures. 14
Loan Portfolio Overview 11% 11% 11% 9% 9% 1 15% 13% 3% 3% 3% 2% Commercial and industrial 5% 4% 7% Commercial real estate 38% 38% 44% 42% Single tenant lease financing 47% 39% 49% Public finance 21% 22% Healthcare finance 5% 11% 14% 1% 2% 2% 27% 19% 20% Residential mortgage/HE/HELOCs 19% 17% 16% 16% Consumer 12% 14% 13% 12% 12% 11% 11% 2015 2016 1Q17 2Q17 3Q17 4Q17 1Q18 Dollars in thousands 2015 2016 1Q17 2Q17 3Q17 4Q17 1Q18 Commercial loans Commercial and industrial $ 102,000 $ 102,437 $ 97,487 $ 107,569 $ 122,587 $ 122,940 $ 119,893 Owner-occupied commercial real estate 44,462 57,668 62,887 66,952 75,986 75,768 81,998 Investor commercial real estate 16,184 13,181 8,510 10,062 7,430 7,273 6,273 Construction 45,898 53,291 49,618 45,931 50,367 49,213 47,013 Single tenant lease financing 374,344 606,568 665,382 747,790 783,918 803,299 834,335 Public finance - - 77,995 179,873 269,347 438,341 481,923 Healthcare finance - - - 2,810 12,363 31,573 48,891 Total commercial loans 582,888 833,145 961,879 1,160,987 1,321,998 1,528,407 1,620,326 Consumer loans Residential mortgage 214,559 205,554 246,014 292,997 291,382 299,935 318,298 Home equity 43,279 35,036 34,925 33,312 31,236 30,554 29,296 Trailers 67,326 81,186 86,692 94,036 97,811 101,369 107,714 Recreational vehicles 38,597 52,350 57,234 63,514 66,619 69,196 73,005 Other consumer loans 2,389 39,913 44,265 51,052 56,490 56,968 55,466 Total consumer loans 366,150 414,039 469,130 534,911 543,538 558,022 583,779 Net def. loan fees, prem. and disc. 4,821 3,605 2,181 2,523 2,951 4,764 5,300 Total loans $ 953,859 $ 1,250,789 $ 1,433,190 $ 1,698,421 $ 1,868,487 $ 2,091,193 $ 2,209,405 1 Includes commercial and industrial and owner-occupied commercial real 15 estate balances
Commercial Real Estate Commercial real estate balances increased Single Tenant Lease Financing $164.1 million, or 22.7%, since 1Q17 Portfolio Diversity As of % of Dollars in millions March 31, 2018 total 7.7% Red Lobster Single tenant lease financing $834.3 94.0% 7.4% Walgreen's Construction 47.0 5.3% 5.3% Investor commercial real estate 6.3 0.7% CVS 5.1% Total commercial real estate $887.6 100.0% 4.3% Bob Evans 70.2% Single tenant lease financing overview: Burger King . Long term lease financing of single tenant All others properties occupied by financially strong lessees . Originations / commitments over the past twelve Texas months exceeded $265 million 16.7% Ohio . Nationwide platform provides ability to capitalize on 7.3% Georgia national correspondent network 58.4% 6.2% California . Expertise in asset class with streamlined execution 5.8% North and credit process 5.6% Carolina . Strong historical credit performance All others . Average portfolio LTV of approximately 51% 16
Commercial & Industrial Commercial & industrial overview: Commercial & industrial balances increased . Originations / commitments over the past $41.5 million, or 25.9%, since 1Q17 twelve months exceeded $121 million As of % of . Primarily serves the borrowing and treasury Dollars in millions March 31, 2018 total management needs of small and middle- Commercial & industrial $119.9 59.4% market businesses Owner-occupied CRE 82.0 40.6% . Seasoned banking team leverages market Total commercial & industrial $201.9 100.0% knowledge and experience to serve clients in a relationship-based approach Commercial & Industrial Balances Dollars in millions $201.9 . Business line built organically, adding select $198.7 personnel with specialized product or market $160.1 $146.5 $75.8 $82.0 expertise $111.5 $57.7 . Indiana team focuses on Central Indiana $44.5 and adjacent Midwestern markets $34.3 $122.9 $119.9 . $102.0 $102.4 Added to Arizona team to further enhance $77.2 origination efforts . Strong credit performance to date 2014 2015 2016 2017 1Q18 Commercial & industrial Owner-occupied CRE 17
Public Finance Public finance originations/commitments during Portfolio Composition the past twelve months exceeded $418 million 1.3% General Obligation/G.O. Equivalent 1.9%0.5% Public Finance Balances Water & sewer revenue 3.4% 3.7% Essential use equipment Dollars in millions $481.9 loans $438.3 7.3% Lease rental revenue 41.2% $269.3 Tax Incremental 10.4% Financing (TIF) districts $179.9 Public higher education facilities Gaming revenues 12.6% Income tax supported 2Q17 3Q17 4Q17 1Q18 17.7% loans Sales tax, food and beverage tax, hotel tax Short term financing Public finance overview: (BAN) . Launched in January 2017 Borrower Credit Rating . Provides a range of credit solutions for government and AA+/Aa1 not-for-profit entities 14.0% . Borrowers’ needs include short-term financing, debt 5.1% A+/A1 refinancing, infrastructure improvements, economic 43.7% development and equipment financing A/A2 . Initial efforts have focused on borrowers in Indiana and 22.7% are now expanding to other geographic areas of the U.S. BBB+/Baa1 . Recent team additions will strengthen efforts in 14.5% Not rated equipment and energy finance and build out nationwide platform 18
Healthcare Finance Healthcare finance originations since Portfolio Composition launching in 2017 have totaled $50.3 million Healthcare Finance Balances Dollars in millions $48.9 California 36.1% $31.6 46.2% Texas Nevada $12.4 Other $2.8 7.8% 9.9% 2Q17 3Q17 4Q17 1Q18 Healthcare finance overview: 1.4% Practice Refinance . Launched in second quarter 2017 2.7% or Acquisition . Strategic partnership with San Francisco–based 16.5% Lendeavor Owner Occupied CRE . Currently focused on dental and veterinary practices . Borrowers’ needs include practice finance or acquisition, 79.4% Equipment acquiring or refinancing owner-occupied commercial real estate and equipment purchases Projects . Initial efforts have primarily focused on west coast with plans to expand nationwide 19
Residential Mortgage . Award-winning national Last 12 Months of Mortgage Originations – Regional Distribution online origination platform . Highly efficient application and underwriting process 19.8% 20.2% . Sales and marketing 29.8% efforts re-focused on purchase mortgage business 19.5% . Full range of residential 10.7% mortgage and home equity products . Central-Indiana based construction loan program 20
Nationwide Branchless Deposit Franchise . Nationwide consumer, Total Deposits – $2.2 Billion – Regional Distribution small business and As of March 31, 2018 commercial deposit base . Scalable technology $328.7 million and customer 15.1% convenience supported $398.2 million by exceptional service 18.3% $813.1 million 37.3% . Deposit relationships in all 50 states, including desirable metropolitan $256.5 million $380.6 million markets 11.8% 17.5% . Average consumer interest checking account balance of $17,500 far exceeds $1.3 million of balances in US territories/Armed Forces the national average included in headquarters/Midwest balance 21
Deposit Composition . Total deposits increased $620.0 million, or 39.8%, since 1Q17 . Treasury management, small business deposits and municipal deposits provide significant opportunities for increasing lower-cost deposits Total Deposits - $2.2 Billion Total Non-Time Deposits - $799.0 Million As of March 31, 2018 As of March 31, 2018 $47.7 2% $99.0$60.2 5% 3% $187.6 23% $592.1 27% $71.0 $478.2 $1,378.1 9% 60% 63% $62.2 8% Noninterest-bearing deposits Interest-bearing demand deposits Savings accounts Money market accounts Treasury management Small business Public funds Consumer Time deposits 22
Asset Quality Asset quality has improved significantly while balance sheet growth has continued on a strong upward trend NPAs / Total Assets NPLs / Total Loans 0.37% 0.90% 0.50% 0.09% 0.37% 0.31% 0.21% 0.20% 0.04% 0.02% 0.04% 0.03% 2013 2014 2015 2016 2017 1Q18 2013 2014 2015 2016 2017 1Q18 Allowance for Loan Losses / NPLs Net Charge-Offs (Recoveries) / Average Loans 5,000.6% 2,361.2% 1,959.5% 1,784.3% 1,013.9% 293.0% 0.17% 0.00% (0.07%) 0.15% 0.05% 0.05% 2013 2014 2015 2016 2017 1Q18 2013 2014 2015 2016 2017 1Q18 23
Capital . Following the initial public offering in late 2013, the Company deployed capital to fund commercial loan growth, driving revenue growth and improved profitability . 2016/2017 capital offerings: . 2Q16: raised $22.8 million of common equity . 3Q16: issued $25.0 million in publicly traded subordinated debt . 4Q16: raised $23.5 million of common equity . 3Q17: raised $55.0 million of common equity . Insider ownership ensures board, management and shareholder interests are aligned Tangible Common Equity1 Regulatory Capital Ratios 15.0% $26.09 $26.05 14.7% $25.70 14.2% 14.1% 13.7% 14.0% $24.43 12.5% 12.7% $23.94 $23.67 $23.52 11.4% $22.93 $23.04 11.5% 11.9% 11.4% 11.4% 10.9% 10.7% 10.1% 9.4% 9.7% 8.1% 8.2% 7.7% 7.3% 7.5% 7.9% 7.7% 8.9% 6.8% 6.7% 8.7% 8.5% 8.1% 8.4% 8.2% 7.7% 7.6% 7.5% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 TBV Per Share1 TCE / TA 1 Tier 1 Leverage Tier 1 Capital Total Capital 1 See Reconciliation of Non-GAAP Financial Measures 24
Investment Summary . Strong earnings growth improving profitability . Demonstrated track record of deploying capital to fuel loan growth while maintaining strong asset quality . Investments in commercial lending platforms are producing results . Geographic and credit product diversity provide ability to generate sustained balance sheet growth . Consumer banking platform well-positioned to capitalize on changing consumer preferences . Full service, technology-driven model designated to deliver increasing efficiency . Experienced management team committed to building shareholder value 25
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Total equity - GAAP $135,679 $137,154 $153,942 $157,491 $163,830 $220,867 $224,127 $224,824 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $130,992 $132,467 $149,255 $152,804 $159,143 $216,180 $219,440 $220,137 Total assets - GAAP $ 1,702,468 $ 1,824,196 $ 1,854,335 $ 2,052,803 $ 2,381,271 $ 2,633,422 $ 2,767,687 $ 2,862,728 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible assets $ 1,697,781 $ 1,819,509 $ 1,849,648 $ 2,048,116 $ 2,376,584 $ 2,628,735 $ 2,763,000 $ 2,858,041 Common shares outstanding 5,533,050 5,533,050 6,478,050 6,497,662 6,513,577 8,411,077 8,411,077 8,450,925 Book value per common share $24.52 $24.79 $23.76 $24.24 $25.15 $26.26 $26.65 $26.60 Effect of goodwill (0.85) (0.85) (0.72) (0.72) (0.72) (0.56) (0.56) (0.55) Tangible book value per common share $23.67 $23.94 $23.04 $23.52 $24.43 $25.70 $26.09 $26.05 Total shareholders' equity to assets ratio 7.97% 7.52% 8.30% 7.67% 6.88% 8.39% 8.10% 7.85% Effect of goodwill (0.25%) (0.24%) (0.23%) (0.21%) (0.18%) (0.17%) (0.16%) (0.15%) Tangible common equity to tangible assets ratio 7.72% 7.28% 8.07% 7.46% 6.70% 8.22% 7.94% 7.70% Total average equity - GAAP $117,913 $135,666 $135,974 $154,798 $161,228 $173,459 $222,670 $223,131 Adjustments: Average goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Average tangible common equity $113,226 $130,979 $131,287 $150,111 $156,541 $168,772 $217,983 $218,444 Return on average shareholders' equity 9.67% 9.08% 10.85% 7.42% 9.95% 11.20% 6.23% 10.96% Effect of goodwill 0.40% 0.33% 0.39% 0.23% 0.30% 0.31% 0.14% 0.23% Return on average tangible common equity 10.07% 9.41% 11.24% 7.65% 10.25% 11.51% 6.37% 11.19% 26
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Net Income $ 2,834 $ 3,098 $ 3,710 $ 2,832 $ 4,001 $ 4,895 $ 3,498 $ 6,028 Adjustments: Income tax provision 1,421 1,521 1,671 1,023 1,464 1,694 3,521 862 Provision for loan losses 924 2,204 256 1,035 1,322 1,336 1,179 850 Pre-tax, pre-provision earnings $ 5,179 $ 6,823 $ 5,637 $ 4,890 $ 6,787 $ 7,925 $ 8,198 $ 7,740 Net interest margin 2.39% 2.42% 2.42% 2.50% 2.43% 2.31% 2.35% 2.26% Effect of fully-taxable equivalent adjustments 1 0.04% 0.05% 0.06% 0.07% 0.10% 0.21% 0.24% 0.15% Net interest margin - FTE 2.43% 2.47% 2.48% 2.57% 2.53% 2.52% 2.59% 2.41% Net income - GAAP $ 2,834 $ 3,098 $ 3,710 $ 2,832 $ 4,001 $ 4,895 $ 3,498 $ 6,028 Adjustments: Net deferred tax asset revaluation - - - - - - 1,846 - Adjusted net income $2,834 $3,098 $3,710 $2,832 $4,001 $4,895 $5,344 $6,028 Diluted average common shares outstanding 4,992,025 5,622,181 5,761,931 6,602,200 6,597,991 6,854,614 8,527,599 8,542,363 Diluted earnings per share - GAAP $ 0.57 $ 0.55 $ 0.64 $ 0.43 $ 0.61 $ 0.71 $ 0.41 $ 0.71 Adjustments: Effect of net deferred tax asset revaluation - - - - - - 0.22 - Adjusted diluted earnings per share $ 0.57 $ 0.55 $ 0.64 $ 0.43 $ 0.61 $ 0.71 $ 0.63 $ 0.71 Return on average assets 0.71% 0.71% 0.81% 0.60% 0.73% 0.78% 0.52% 0.87% Effect of net deferred tax asset revaluation 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.28% 0.00% Adjusted return on average assets 0.71% 0.71% 0.81% 0.60% 0.73% 0.78% 0.80% 0.87% Return on average tangible common equity 10.07% 9.41% 11.24% 7.62% 10.25% 11.51% 6.37% 11.19% Effect of net deferred tax asset revaluation 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 3.36% 0.00% Adjusted return on average tangible common equity 10.07% 9.41% 11.24% 7.62% 10.25% 11.51% 9.73% 11.19% 1 Assuming a 21% tax rate in 2018 and a 35% tax rate in 2017 27
First Internet Bancorp Investor Presentation First Quarter 2018