8-K
First Internet Bancorp (INBK)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 19, 2022
| First Internet Bancorp | |
|---|---|
| (Exact Name of Registrant as Specified in Its Charter) | |
| Indiana | |
| (State or Other Jurisdiction of Incorporation) | |
| 001-35750 | 20-3489991 |
| (Commission File Number) | (IRS Employer Identification No.) |
| 8701 E. 116th Street | 46038 |
| Fishers, Indiana | |
| (Address of Principal Executive Offices) | (Zip Code) |
| (317) 532-7900 | |
| (Registrant's Telephone Number, Including Area Code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered |
|---|---|---|
| Common Stock, without par value | INBK | The Nasdaq Stock Market LLC |
| 6.0% Fixed to Floating Subordinated Notes due 2029 | INBKZ | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition
On January 19, 2022, First Internet Bancorp (the "Company") issued a press release announcing its financial results for the quarter and year ended December 31, 2021. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.
On January 20, at 12:00 p.m. (Eastern Time), the Company will host a conference call and webcast to discuss financial results for the quarter and year ended December 31, 2021. The electronic presentation slides, which will accompany the call and webcast, are furnished as Exhibit 99.2 and are incorporated by reference herein.
The information contained in this Item 2.02, including Exhibit 99.1 and Exhibit 99.2, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing made by us under the Exchange Act or Securities Act of 1933, as amended, regardless of any general incorporation language in any such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
| Number | Description | Method of filing |
|---|---|---|
| 99.1 | Press release dated January 19, 2022 | Furnished electronically |
| 99.2 | Presentation slides dated January 19, 2022 | Furnished electronically |
| 104 | Cover Page Interactive Data File (embedded in the cover page formatted in inline XBRL) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: | January 19, 2022 |
|---|---|
| FIRST INTERNET BANCORP | |
| By: | /s/ Kenneth J. Lovik |
| Kenneth J. Lovik, Executive Vice President & Chief Financial Officer |
Document
First Internet Bancorp Reports Fourth Quarter and Full Year 2021 Results
Highlights for the fourth quarter and full year 2021 include:
•Record annual net income and diluted earnings per share of $48.1 million and $4.82, respectively
•Quarterly net income of $12.5 million, compared to $12.1 million for the third quarter of 2021 and $11.1 million for the fourth quarter of 2020
•Quarterly diluted earnings per share of $1.25, up 3.3% over the third quarter of 2021 and 11.6% over the fourth quarter of 2020
•Quarterly adjusted net income of $13.0 million, or $1.30 per diluted share, when excluding an IT contract termination fee and acquisition-related expenses
•Total quarterly revenue of $31.2 million, an 8.6% increase from the third quarter of 2021 and a 1.0% decrease from the fourth quarter of 2020
•Net interest margin and fully-taxable equivalent net interest margin both increased 30 basis points (“bps”)from the third quarter of 2021
•Repurchased 100,000 shares at an average price of $44.36 during the quarter
Fishers, Indiana, January 19, 2022 – First Internet Bancorp (the “Company”) (Nasdaq: INBK), the parent company of First Internet Bank (the “Bank”), announced today financial and operational results for the fourth quarter and full year ended December 31, 2021. Net income for the fourth quarter of 2021 was $12.5 million, or $1.25 diluted earnings per share. This compares to net income of $12.1 million, or $1.21 diluted earnings per share, for the third quarter of 2021, and net income of $11.1 million, or $1.12 diluted earnings per share, for the fourth quarter of 2020.
For the full year ended December 31, 2021, net income was a record $48.1 million and diluted earnings per share were a record $4.82, compared to net income of $29.5 million and diluted earnings per share of $2.99 for the year ended December 31, 2020.
“We generated record annual net income for 2021, closing out our 22nd year on a high note and paving the path for a bright future ahead,” said David Becker, Chairman and Chief Executive Officer. “Over the course of the year, we built momentum on several fronts. Our expanding national SBA platform steadily gained traction and contributed to our year-over-year revenue growth, while our recently formed franchise finance business funded over $80 million in loans in conjunction with our partner ApplePie Capital. Solid pipelines in SBA, franchise finance, construction and other key business lines position us well for the year ahead.
“With respect to our strategies designed to build sustainable fee revenue, our transformational acquisition of First Century Bancorp, announced in November, will add several attractive and scalable business lines,
providing us multiple growth opportunities, a further diversified revenue profile and access to a stable, low-cost deposit base,” Mr. Becker added. “This is a compelling, strategic acquisition that we believe will bolster the combined company’s long-term earnings power.
“Looking forward, we plan to further build out our national small business platform, integrate First Century Bancorp and expand our banking-as-a-service capabilities, as evidenced by our recently announced partnership with Synctera. We will also continue to look for Fintech partners that will help to further position us as a premier technology-forward digital financial services provider.”
Mr. Becker concluded, “I want to thank the entire First Internet team for their exceptional work this year. We foster a workplace culture that promotes innovation and collaboration, and we all aspire to have a more meaningful and lasting positive impact on our customers and the communities we call home. We were named one of the “Best Banks to Work For” by American Banker for the ninth consecutive year, a recognition that amplifies our success attracting, developing and retaining a talented, diverse and dedicated workforce.”
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2021 was $23.5 million, compared to $20.9 million for the third quarter of 2021, and $18.9 million for the fourth quarter of 2020. On a fully-taxable equivalent basis, net interest income for the fourth quarter of 2021 was $24.9 million, compared to $22.3 million for the third quarter of 2021, and $20.3 million for the fourth quarter of 2020.
Total interest income for the fourth quarter of 2021 was $34.2 million, an increase of 3.5% compared to the third quarter of 2021, and an increase of 1.6% compared to the fourth quarter of 2020. On a fully-taxable equivalent basis, total interest income for the fourth quarter of 2021 was $35.5 million, an increase of 3.3% compared to the third quarter of 2021, and an increase of 1.4% compared to the fourth quarter of 2020. The increase in total interest income compared to the third quarter of 2021 was driven primarily by an 18 bp increase in the yield on average interest-earning assets, partially offset by a 2.2% decrease in the average balance of those assets. The yield on interest-earning assets for the fourth quarter of 2021 increased to 3.34% from 3.16% in the linked quarter due primarily to an increase in loan fee income as well as higher yields on new loan production. Average loan balances decreased $9.3 million, or 0.3%, while the average balance of securities and other earning assets decreased $35.8 million and $47.4 million, respectively.
Total interest expense for the fourth quarter of 2021 was $10.7 million, a decrease of 11.8% compared to the third quarter of 2021, and a decrease of 27.7% compared to the fourth quarter of 2020. The decrease in total interest expense compared to the linked quarter was due primarily to a 51 bp decline in the cost of other borrowed funds and a 6 bp decline in the cost of interest-bearing deposits. The decrease in the cost of other borrowed funds reflects the recognition of $0.8 million of pre-tax costs associated with the redemption of subordinated notes in the third quarter of 2021.
During the fourth quarter of 2021, the cost of non-maturity deposits remained stable compared to the linked quarter while the average balance of these deposits decreased $31.7 million, or 1.8%. Furthermore, the cost of certificates and brokered deposits decreased by 12 bps and average balances decreased by $73.5 million, or 5.3%. During the fourth quarter of 2021, new certificates of deposit were originated at a weighted average cost of 40 bps while maturing certificates of deposit had a weighted average cost of 146 bps, a difference of 106 bps.
Net interest margin (“NIM”) improved to 2.30% for the fourth quarter of 2021, up from 2.00% for the third quarter of 2021 and 1.78% in the fourth quarter of 2020. Fully-taxable equivalent NIM (“FTE NIM”) increased by 30 bps to 2.43% for the fourth quarter of 2021, up from 2.13% for the third quarter of 2021 and 1.91% in
the fourth quarter of 2020. The increases in NIM and FTE NIM compared to the linked quarter were driven primarily by a combination of higher average loan yields and lower interest-bearing deposit costs, as well as the effect of lower securities and cash balances.
Noninterest Income
Noninterest income for the fourth quarter of 2021 was $7.7 million, compared to $7.8 million for the third quarter of 2021 and $12.7 million for the fourth quarter of 2020. The slight decrease compared to the linked quarter was driven primarily by lower revenues from mortgage banking activities, partially offset by an increase in gain on sale of loans. Gain on sale of loans totaled $4.1 million for the quarter, increasing $1.4 million compared to the third quarter of 2021, driven by a $0.9 million gain on the sale of $20.1 million of single tenant lease financing loans as well as a higher amount of U.S. Small Business Administration (“SBA”) 7(a) guaranteed loan sales in the quarter. Mortgage banking revenue totaled $2.8 million for the fourth quarter of 2021, down $1.1 million from the linked quarter due to a decrease in interest rate locks, sold loan volume and margins.
Noninterest Expense
Noninterest expense for the fourth quarter of 2021 was $17.0 million, compared to $14.5 million for both the third quarter of 2021 and the fourth quarter of 2020. The increase of $2.5 million, or 17.3%, compared to the linked quarter was due primarily to higher salaries and employee benefits, consulting and professional fees and premises and equipment. The higher salaries and employee benefits expense was due mainly to higher incentive compensation in the Company’s small business lending division, higher medical claims expense and increased headcount. The increase in consulting and professional fees was primarily due to $0.2 million of acquisition-related expenses as well as the timing of third party external loan reviews. The increase in premises and equipment was driven primarily by a $0.5 million termination fee related to an information technology contract.
Income Taxes
The Company reported an income tax expense of $2.0 million for the fourth quarter of 2021 and an effective tax rate of 13.8%, compared to an income tax expense of $2.2 million and an effective tax rate of 15.5% for the third quarter of 2021 and an income tax expense of $3.1 million and an effective tax rate of 21.6% for the fourth quarter of 2020.
Loans and Credit Quality
Total loans as of December 31, 2021 were $2.9 billion, a decrease of $48.5 million, or 1.7%, compared to September 30, 2021, and a decrease of $171.6 million, or 5.6%, compared to December 31, 2020. Total commercial loan balances were $2.4 billion as of December 31, 2021, a decrease of $41.6 million, or 1.7%, compared to September 30, 2021 and a decrease of $151.8 million, or 6.0%, compared to December 31, 2020. Compared to the linked quarter, the decline in commercial loan balances was driven primarily by net payoffs in single tenant lease financing, healthcare finance, owner-occupied commercial real estate, commercial and industrial and public finance loans as well as the sale of single tenant lease financing loans discussed above. These items were partially offset by growth in franchise finance, construction and small business lending.
Total consumer loan balances were $469.9 million as of December 31, 2021, a decrease of $5.2 million, or 1.1%, compared to September 30, 2021 and a decrease of $12.4 million, or 2.6%, compared to December 31, 2020. The decrease compared to the linked quarter was due to prepayment activity in the residential mortgage, trailers and other consumer loan portfolios.
Total delinquencies 30 days or more past due decreased to 0.04% of total loans as of December 31, 2021, down from 0.06% as of September 30, 2021 and down from 0.17% as of December 31, 2020. Overall credit quality improved as nonperforming loans to total loans was 0.26% as of December 31, 2021, compared to 0.27% at September 30, 2021 and 0.33% as of December 31, 2020.
The allowance for loan losses as a percentage of total loans was 0.96% as of December 31, 2021, or 0.97% when excluding PPP loans, compared to 0.95% and 0.96%, respectively, as of September 30, 2021 and 0.96% and 0.98%, respectively, as of December 31, 2020.
Net recoveries of $0.1 million were recognized during the fourth quarter of 2021, resulting in net recoveries to average loans of 0.01%, compared to net charge-offs to average loans of 0.01% for the third quarter of 2021 and 0.04% for the fourth quarter of 2020. The provision for loan losses in the fourth quarter of 2021 was a benefit of $0.2 million, compared to a benefit of $29,000 for the third quarter of 2021 and a provision of $2.9 million for the fourth quarter of 2020. The benefit recognized in the fourth quarter of 2021 primarily reflects the decrease in loan balances, partially offset by adjustments to qualitative factors that increased the overall allowance as a percentage of loans.
Capital
As of December 31, 2021, total shareholders’ equity was $380.3 million, an increase of $9.9 million, or 2.7%, compared to September 30, 2021, due primarily to the net income earned during the quarter and a decrease in accumulated other comprehensive loss, partially offset by stock repurchase activity during the quarter. Book value per common share increased to $38.99 as of December 30, 2021, up from $37.59 as of September 30, 2021 and $33.77 as of December 31, 2020. Tangible book value per share increased to $38.51, up from $37.12 and $33.29, each as of the same reference dates.
In connection with its recently announced stock repurchase program, the Company repurchased 100,000 shares of its common stock during the fourth quarter of 2021 at an average price of $44.36 per share.
The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of December 31, 2021.
| As of December 31, 2021 | ||||
|---|---|---|---|---|
| Company | Bank | |||
| Total shareholders' equity to assets | 9.03 | % | 10.17 | % |
| Tangible common equity to tangible assets 1 | 8.93 | % | 10.07 | % |
| Tier 1 leverage ratio 2 | 9.22 | % | 10.37 | % |
| Common equity tier 1 capital ratio 2 | 12.92 | % | 14.55 | % |
| Tier 1 capital ratio 2 | 12.92 | % | 14.55 | % |
| Total risk-based capital ratio 2 | 17.36 | % | 15.48 | % |
| 1 This information represents a non-GAAP financial measure. For a discussion of non-GAAP financial measures, see the section below entitled "Non-GAAP Financial Measures." | ||||
| 2 Regulatory capital ratios are preliminary pending filing of the Company's and the Bank's regulatory reports. |
Conference Call and Webcast
The Company will host a conference call and webcast at 12:00 p.m. Eastern Time on Thursday, January 20, 2022 to discuss its quarterly and full year financial results. The call can be accessed via telephone at (888) 348-3664. A recorded replay can be accessed through February 21, 2022 by dialing (877) 344-7529; passcode: 6205278.
Additionally, interested parties can listen to a live webcast of the call on Company's website at www.firstinternetbancorp.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.
About First Internet Bancorp
First Internet Bancorp is a bank holding company with assets of $4.2 billion as of December 31, 2021. The Company’s subsidiary, First Internet Bank, opened for business in 1999 as an industry pioneer in the branchless delivery of banking services. The Bank provides consumer and small business deposit, SBA financing, residential mortgage loans, consumer loans, and specialty finance services nationally as well as commercial real estate loans, construction loans, commercial and industrial loans, and treasury management services on a regional basis. First Internet Bancorp’s common stock trades on the Nasdaq Global Select Market under the symbol “INBK” and is a component of the Russell 2000® Index. Additional information about the Company is available at www.firstinternetbancorp.com and additional information about the Bank, including its products and services, is available at www.firstib.com.
Forward-Looking Statements
This press release may contain forward-looking statements, including statements with respect to the pending acquisition of First Century Bancorp and its effects on the future performance of the Company and the Bank, the expected timing of completion of the transaction and other statements concerning the financial condition, results of operations, trends in lending policies and loan programs, plans and prospective business partnerships, objectives, future performance and business of the Company. Forward-looking statements are generally identifiable by the use of words such as “anticipate,” “believe,” “confidence in,” “continue,” “could,” “designed,” “effort,” “estimate,” “expect,” “help,” “intend,” “looking forward,” “may,” “opportunities,” “optimistic,” “pending,” “plan,” “position,” “preliminary,” “remain,” “should,” “will,” “working on,” “would” 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. Such statements are subject to certain risks and uncertainties including: the effects of the COVID-19 global pandemic and other adverse public health developments on the economy, our business and operations and the business and operations of our vendors and customers: general economic conditions, whether national or regional, and conditions in the lending markets in which we participate that may have an adverse effect on the demand for our loans and other products; our credit quality and related levels of nonperforming assets and loan losses, and the value and salability of the real estate that we own or that is the collateral for our loans. Other factors that may cause such differences include: 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, SBA, healthcare finance and franchise finance loan portfolios; competition with national, regional and community financial institutions; the loss of any key members of senior management; execution of pending and future acquisition, reorganization or disposition transactions, including without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings and other anticipated benefits from such transactions; the failure of any of the closing conditions in the definitive merger agreement with First Century Bancorp to be satisfied on a timely basis or at all; 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 press release, 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.
Non-GAAP Financial Measures
This press release 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 book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, total interest income – FTE, net interest income – FTE, adjusted net interest income, adjusted net interest income – FTE, net interest margin – FTE, adjusted net interest margin, adjusted net interest margin – FTE, allowance for loan losses to loans, excluding PPP loans, adjusted total revenue, adjusted noninterest income, adjusted noninterest expense, adjusted income before income taxes, adjusted income tax provision, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity, adjusted return on average tangible common equity and adjusted effective income tax rate 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 performance 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.”
| Contact Information: | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Investors/Analysts | Media | ||||||||||||||
| Paula Deemer | Nicole Lorch | ||||||||||||||
| Director of Corporate Administration | President & Chief Operating Officer | ||||||||||||||
| (317) 428-4628 | (317) 532-7906 | ||||||||||||||
| investors@firstib.com | nlorch@firstib.com | ||||||||||||||
| First Internet Bancorp | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Summary Financial Information (unaudited) | |||||||||||||||
| Dollar amounts in thousands, except per share data | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | |||||||||||
| Net income | $ | 12,478 | $ | 12,090 | $ | 11,090 | $ | 48,114 | $ | 29,453 | |||||
| Per share and share information | |||||||||||||||
| Earnings per share - basic | $ | 1.26 | $ | 1.22 | $ | 1.12 | $ | 4.85 | $ | 2.99 | |||||
| Earnings per share - diluted | 1.25 | 1.21 | 1.12 | 4.82 | 2.99 | ||||||||||
| Dividends declared per share | 0.06 | 0.06 | 0.06 | 0.24 | 0.24 | ||||||||||
| Book value per common share | 38.99 | 37.59 | 33.77 | 38.99 | 33.77 | ||||||||||
| Tangible book value per common share 1 | 38.51 | 37.12 | 33.29 | 38.51 | 33.29 | ||||||||||
| Common shares outstanding | 9,754,455 | 9,854,153 | 9,800,569 | 9,754,455 | 9,800,569 | ||||||||||
| Average common shares outstanding: | |||||||||||||||
| Basic | 9,903,856 | 9,936,237 | 9,883,609 | 9,918,083 | 9,840,205 | ||||||||||
| Diluted | 9,989,951 | 9,988,102 | 9,914,022 | 9,976,261 | 9,842,425 | ||||||||||
| Performance ratios | |||||||||||||||
| Return on average assets | 1.19 | % | 1.12 | % | 1.02 | % | 1.14 | % | 0.69 | % | |||||
| Return on average shareholders' equity | 13.14 | % | 13.10 | % | 13.64 | % | 13.44 | % | 9.39 | % | |||||
| Return on average tangible common equity 1 | 13.30 | % | 13.27 | % | 13.84 | % | 13.61 | % | 9.53 | % | |||||
| Net interest margin | 2.30 | % | 2.00 | % | 1.78 | % | 2.11 | % | 1.55 | % | |||||
| Net interest margin - FTE 1,2 | 2.43 | % | 2.13 | % | 1.91 | % | 2.25 | % | 1.68 | % | |||||
| Capital ratios 3 | |||||||||||||||
| Total shareholders' equity to assets | 9.03 | % | 8.71 | % | 7.79 | % | 9.03 | % | 7.79 | % | |||||
| Tangible common equity to tangible assets 1 | 8.93 | % | 8.61 | % | 7.69 | % | 8.93 | % | 7.69 | % | |||||
| Tier 1 leverage ratio | 9.22 | % | 8.86 | % | 7.95 | % | 9.22 | % | 7.95 | % | |||||
| Common equity tier 1 capital ratio | 12.92 | % | 12.62 | % | 11.31 | % | 12.92 | % | 11.31 | % | |||||
| Tier 1 capital ratio | 12.92 | % | 12.62 | % | 11.31 | % | 12.92 | % | 11.31 | % | |||||
| Total risk-based capital ratio | 17.36 | % | 17.04 | % | 14.91 | % | 17.36 | % | 14.91 | % | |||||
| Asset quality | |||||||||||||||
| Nonperforming loans | $ | 7,401 | $ | 7,851 | $ | 10,183 | $ | 7,401 | $ | 10,183 | |||||
| Nonperforming assets | 8,618 | 9,039 | 10,218 | 8,618 | 10,218 | ||||||||||
| Nonperforming loans to loans | 0.26 | % | 0.27 | % | 0.33 | % | 0.26 | % | 0.33 | % | |||||
| Nonperforming assets to total assets | 0.20 | % | 0.21 | % | 0.24 | % | 0.20 | % | 0.24 | % | |||||
| Allowance for loan losses to: | |||||||||||||||
| Loans | 0.96 | % | 0.95 | % | 0.96 | % | 0.96 | % | 0.96 | % | |||||
| Loans, excluding PPP loans 1 | 0.97 | % | 0.96 | % | 0.98 | % | 0.97 | % | 0.98 | % | |||||
| Nonperforming loans | 376.2 | % | 356.6 | % | 289.5 | % | 376.2 | % | 289.5 | % | |||||
| Net (recoveries) charge-offs to average loans | (0.01 | %) | 0.01 | % | 0.04 | % | 0.09 | % | 0.06 | % | |||||
| Average balance sheet information | |||||||||||||||
| Loans | $ | 2,914,858 | $ | 2,933,654 | $ | 3,070,476 | $ | 2,972,224 | $ | 2,985,611 | |||||
| Total securities | 677,580 | 713,342 | 582,425 | 629,095 | 626,022 | ||||||||||
| Other earning assets | 431,621 | 479,051 | 532,466 | 466,608 | 523,788 | ||||||||||
| Total interest-earning assets | 4,056,254 | 4,148,726 | 4,219,142 | 4,094,935 | 4,175,799 | ||||||||||
| Total assets | 4,177,578 | 4,265,189 | 4,316,207 | 4,205,926 | 4,263,798 | ||||||||||
| Noninterest-bearing deposits | 113,887 | 104,161 | 86,836 | 101,825 | 74,277 | ||||||||||
| Interest-bearing deposits | 3,032,435 | 3,137,728 | 3,258,269 | 3,098,706 | 3,224,657 | ||||||||||
| Total deposits | 3,146,322 | 3,241,889 | 3,345,105 | 3,200,531 | 3,298,934 | ||||||||||
| Shareholders' equity | 376,832 | 366,187 | 323,464 | 358,105 | 313,763 |
1 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below
2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate
3 Regulatory capital ratios are preliminary pending filing of the Company's regulatory reports
| First Internet Bancorp | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Condensed Consolidated Balance Sheets (unaudited, except for December 31, 2020) | ||||||||||
| Dollar amounts in thousands | ||||||||||
| December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | ||||||||
| Assets | ||||||||||
| Cash and due from banks | $ | 7,492 | $ | 4,932 | $ | 7,367 | ||||
| Interest-bearing deposits | 435,468 | 402,583 | 412,439 | |||||||
| Securities available-for-sale, at fair value | 603,044 | 634,007 | 497,628 | |||||||
| Securities held-to-maturity, at amortized cost | 59,565 | 62,129 | 68,223 | |||||||
| Loans held-for-sale | 47,745 | 43,970 | 39,584 | |||||||
| Loans | 2,887,662 | 2,936,148 | 3,059,231 | |||||||
| Allowance for loan losses | (27,841) | (28,000) | (29,484) | |||||||
| Net loans | 2,859,821 | 2,908,148 | 3,029,747 | |||||||
| Accrued interest receivable | 16,037 | 14,866 | 17,416 | |||||||
| Federal Home Loan Bank of Indianapolis stock | 25,650 | 25,650 | 25,650 | |||||||
| Cash surrender value of bank-owned life insurance | 38,900 | 38,660 | 37,952 | |||||||
| Premises and equipment, net | 59,842 | 52,700 | 37,590 | |||||||
| Goodwill | 4,687 | 4,687 | 4,687 | |||||||
| Servicing asset | 4,702 | 4,412 | 3,569 | |||||||
| Other real estate owned | 1,188 | 1,188 | — | |||||||
| Accrued income and other assets | 46,853 | 54,360 | 64,304 | |||||||
| Total assets | $ | 4,210,994 | $ | 4,252,292 | $ | 4,246,156 | ||||
| Liabilities | ||||||||||
| Noninterest-bearing deposits | $ | 117,531 | $ | 110,117 | $ | 96,753 | ||||
| Interest-bearing deposits | 3,061,428 | 3,114,478 | 3,174,132 | |||||||
| Total deposits | 3,178,959 | 3,224,595 | 3,270,885 | |||||||
| Advances from Federal Home Loan Bank | 514,922 | 514,920 | 514,916 | |||||||
| Subordinated debt | 104,231 | 104,156 | 79,603 | |||||||
| Accrued interest payable | 2,018 | 1,568 | 1,439 | |||||||
| Accrued expenses and other liabilities | 30,526 | 36,611 | 48,369 | |||||||
| Total liabilities | 3,830,656 | 3,881,850 | 3,915,212 | |||||||
| Shareholders' equity | ||||||||||
| Voting common stock | 218,946 | 223,059 | 221,408 | |||||||
| Retained earnings | 172,431 | 160,551 | 126,732 | |||||||
| Accumulated other comprehensive loss | (11,039) | (13,168) | (17,196) | |||||||
| Total shareholders' equity | 380,338 | 370,442 | 330,944 | |||||||
| Total liabilities and shareholders' equity | $ | 4,210,994 | $ | 4,252,292 | $ | 4,246,156 | ||||
| First Internet Bancorp | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Condensed Consolidated Statements of Income (unaudited, except for the twelve months ended December 31, 2020) | ||||||||||
| Dollar amounts in thousands, except per share data | ||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||
| December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | ||||||
| Interest income | ||||||||||
| Loans | $ | 31,621 | $ | 30,126 | $ | 30,930 | $ | 123,467 | $ | 120,628 |
| Securities - taxable | 1,973 | 2,297 | 1,988 | 7,970 | 11,123 | |||||
| Securities - non-taxable | 236 | 241 | 318 | 1,017 | 1,728 | |||||
| Other earning assets | 362 | 370 | 407 | 1,429 | 3,380 | |||||
| Total interest income | 34,192 | 33,034 | 33,643 | 133,883 | 136,859 | |||||
| Interest expense | ||||||||||
| Deposits | 6,399 | 7,090 | 10,577 | 29,822 | 55,976 | |||||
| Other borrowed funds | 4,288 | 5,025 | 4,201 | 17,505 | 16,342 | |||||
| Total interest expense | 10,687 | 12,115 | 14,778 | 47,327 | 72,318 | |||||
| Net interest income | 23,505 | 20,919 | 18,865 | 86,556 | 64,541 | |||||
| (Benefit) provision for loan losses | (238) | (29) | 2,864 | 1,030 | 9,325 | |||||
| Net interest income after (benefit) provision for loan losses | 23,743 | 20,948 | 16,001 | 85,526 | 55,216 | |||||
| Noninterest income | ||||||||||
| Service charges and fees | 292 | 276 | 206 | 1,114 | 824 | |||||
| Loan servicing revenue | 544 | 511 | 379 | 1,934 | 1,159 | |||||
| Loan servicing asset revaluation | (400) | (274) | (60) | (1,069) | (432) | |||||
| Mortgage banking activities | 2,776 | 3,850 | 7,987 | 15,050 | 24,693 | |||||
| Gain on sale of loans | 4,137 | 2,719 | 3,702 | 11,598 | 8,298 | |||||
| Gain on sale of securities | — | — | — | — | 139 | |||||
| Gain on sale of premises and equipment | — | — | — | 2,523 | — | |||||
| Other | 345 | 731 | 443 | 1,694 | 1,655 | |||||
| Total noninterest income | 7,694 | 7,813 | 12,657 | 32,844 | 36,336 | |||||
| Noninterest expense | ||||||||||
| Salaries and employee benefits | 10,183 | 9,316 | 9,135 | 38,223 | 34,231 | |||||
| Marketing, advertising and promotion | 896 | 813 | 443 | 3,261 | 1,654 | |||||
| Consulting and professional fees | 1,262 | 728 | 788 | 4,054 | 3,511 | |||||
| Data processing | 425 | 380 | 426 | 1,649 | 1,528 | |||||
| Loan expenses | 654 | 383 | 630 | 2,112 | 2,036 | |||||
| Premises and equipment | 2,188 | 1,687 | 1,601 | 7,063 | 6,396 | |||||
| Deposit insurance premium | 283 | 230 | 450 | 1,213 | 1,810 | |||||
| Write-down of other real estate owned | — | — | — | — | 2,065 | |||||
| Other | 1,064 | 914 | 1,040 | 4,223 | 4,423 | |||||
| Total noninterest expense | 16,955 | 14,451 | 14,513 | 61,798 | 57,654 | |||||
| Income before income taxes | 14,482 | 14,310 | 14,145 | 56,572 | 33,898 | |||||
| Income tax provision | 2,004 | 2,220 | 3,055 | 8,458 | 4,445 | |||||
| Net income | $ | 12,478 | $ | 12,090 | $ | 11,090 | $ | 48,114 | $ | 29,453 |
| Per common share data | ||||||||||
| Earnings per share - basic | $ | 1.26 | $ | 1.22 | $ | 1.12 | $ | 4.85 | $ | 2.99 |
| Earnings per share - diluted | $ | 1.25 | $ | 1.21 | $ | 1.12 | $ | 4.82 | $ | 2.99 |
| Dividends declared per share | $ | 0.06 | $ | 0.06 | $ | 0.06 | $ | 0.24 | $ | 0.24 |
All periods presented have been reclassified to conform to the current period classification
| First Internet Bancorp | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average Balances and Rates (unaudited) | ||||||||||||||||||
| Dollar amounts in thousands | ||||||||||||||||||
| Three Months Ended | ||||||||||||||||||
| December 31, 2021 | September 30, 2021 | December 31, 2020 | ||||||||||||||||
| Average Balance | Interest/Dividends | Yield/ Cost | Average Balance | Interest/Dividends | Yield/ Cost | Average Balance | Interest/Dividends | Yield/ Cost | ||||||||||
| Assets | ||||||||||||||||||
| Interest-earning assets | ||||||||||||||||||
| Loans, including loans held-for-sale 1 | $ | 2,947,053 | $ | 31,621 | 4.26 | % | $ | 2,956,333 | $ | 30,126 | 4.04 | % | $ | 3,104,251 | $ | 30,930 | 3.96 | % |
| Securities - taxable | 595,024 | 1,973 | 1.32 | % | 629,101 | 2,297 | 1.45 | % | 492,573 | 1,988 | 1.61 | % | ||||||
| Securities - non-taxable | 82,556 | 236 | 1.13 | % | 84,241 | 241 | 1.14 | % | 89,852 | 318 | 1.41 | % | ||||||
| Other earning assets | 431,621 | 362 | 0.33 | % | 479,051 | 370 | 0.31 | % | 532,466 | 407 | 0.30 | % | ||||||
| Total interest-earning assets | 4,056,254 | 34,192 | 3.34 | % | 4,148,726 | 33,034 | 3.16 | % | 4,219,142 | 33,643 | 3.17 | % | ||||||
| Allowance for loan losses | (27,946) | (28,127) | (27,805) | |||||||||||||||
| Noninterest-earning assets | 149,270 | 144,590 | 124,870 | |||||||||||||||
| Total assets | $ | 4,177,578 | $ | 4,265,189 | $ | 4,316,207 | ||||||||||||
| Liabilities | ||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||
| Interest-bearing demand deposits | $ | 210,283 | $ | 158 | 0.30 | % | $ | 198,637 | $ | 150 | 0.30 | % | $ | 165,815 | $ | 156 | 0.37 | % |
| Savings accounts | 63,575 | 58 | 0.36 | % | 62,195 | 56 | 0.36 | % | 49,209 | 54 | 0.44 | % | ||||||
| Money market accounts | 1,453,447 | 1,507 | 0.41 | % | 1,498,218 | 1,532 | 0.41 | % | 1,369,543 | 1,655 | 0.48 | % | ||||||
| Certificates and brokered deposits | 1,305,130 | 4,676 | 1.42 | % | 1,378,678 | 5,352 | 1.54 | % | 1,673,702 | 8,712 | 2.07 | % | ||||||
| Total interest-bearing deposits | 3,032,435 | 6,399 | 0.84 | % | 3,137,728 | 7,090 | 0.90 | % | 3,258,269 | 10,577 | 1.29 | % | ||||||
| Other borrowed funds | 619,115 | 4,288 | 2.75 | % | 611,975 | 5,025 | 3.26 | % | 591,806 | 4,201 | 2.82 | % | ||||||
| Total interest-bearing liabilities | 3,651,550 | 10,687 | 1.16 | % | 3,749,703 | 12,115 | 1.28 | % | 3,850,075 | 14,778 | 1.53 | % | ||||||
| Noninterest-bearing deposits | 113,887 | 104,161 | 86,836 | |||||||||||||||
| Other noninterest-bearing liabilities | 35,309 | 45,138 | 55,832 | |||||||||||||||
| Total liabilities | 3,800,746 | 3,899,002 | 3,992,743 | |||||||||||||||
| Shareholders' equity | 376,832 | 366,187 | 323,464 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 4,177,578 | $ | 4,265,189 | $ | 4,316,207 | ||||||||||||
| Net interest income | $ | 23,505 | $ | 20,919 | $ | 18,865 | ||||||||||||
| Interest rate spread | 2.18 | % | 1.88 | % | 1.64 | % | ||||||||||||
| Net interest margin | 2.30 | % | 2.00 | % | 1.78 | % | ||||||||||||
| Net interest margin - FTE 2,3 | 2.43 | % | 2.13 | % | 1.91 | % |
1 Includes nonaccrual loans
2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate
3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below
| First Internet Bancorp | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average Balances and Rates (unaudited) | ||||||||||||
| Dollar amounts in thousands | ||||||||||||
| Twelve Months Ended | ||||||||||||
| December 31, 2021 | December 31, 2020 | |||||||||||
| Average Balance | Interest/Dividends | Yield/Cost | Average Balance | Interest/Dividends | Yield/Cost | |||||||
| Assets | ||||||||||||
| Interest-earning assets | ||||||||||||
| Loans, including loans held-for-sale 1 | $ | 2,999,232 | $ | 123,467 | 4.12 | % | $ | 3,025,989 | $ | 120,628 | 3.99 | % |
| Securities - taxable | 544,613 | 7,970 | 1.46 | % | 530,849 | 11,123 | 2.10 | % | ||||
| Securities - non-taxable | 84,482 | 1,017 | 1.20 | % | 95,173 | 1,728 | 1.82 | % | ||||
| Other earning assets | 466,608 | 1,429 | 0.31 | % | 523,788 | 3,380 | 0.65 | % | ||||
| Total interest-earning assets | 4,094,935 | 133,883 | 3.27 | % | 4,175,799 | 136,859 | 3.28 | % | ||||
| Allowance for loan losses | (29,068) | (24,660) | ||||||||||
| Noninterest-earning assets | 140,059 | 112,659 | ||||||||||
| Total assets | $ | 4,205,926 | $ | 4,263,798 | ||||||||
| Liabilities | ||||||||||||
| Interest-bearing liabilities | ||||||||||||
| Interest-bearing demand deposits | $ | 195,699 | $ | 583 | 0.30 | % | $ | 145,207 | $ | 840 | 0.58 | % |
| Savings accounts | 56,967 | 203 | 0.36 | % | 40,593 | 303 | 0.75 | % | ||||
| Money market accounts | 1,434,829 | 5,892 | 0.41 | % | 1,156,084 | 11,381 | 0.98 | % | ||||
| Certificates and brokered deposits | 1,411,211 | 23,144 | 1.64 | % | 1,882,773 | 43,452 | 2.31 | % | ||||
| Total interest-bearing deposits | 3,098,706 | 29,822 | 0.96 | % | 3,224,657 | 55,976 | 1.74 | % | ||||
| Other borrowed funds | 600,035 | 17,505 | 2.92 | % | 586,372 | 16,342 | 2.79 | % | ||||
| Total interest-bearing liabilities | 3,698,741 | 47,327 | 1.28 | % | 3,811,029 | 72,318 | 1.90 | % | ||||
| Noninterest-bearing deposits | 101,825 | 74,277 | ||||||||||
| Other noninterest-bearing liabilities | 47,255 | 64,729 | ||||||||||
| Total liabilities | 3,847,821 | 3,950,035 | ||||||||||
| Shareholders' equity | 358,105 | 313,763 | ||||||||||
| Total liabilities and shareholders' equity | $ | 4,205,926 | $ | 4,263,798 | ||||||||
| Net interest income | $ | 86,556 | $ | 64,541 | ||||||||
| Interest rate spread | 1.99 | % | 1.38 | % | ||||||||
| Net interest margin | 2.11 | % | 1.55 | % | ||||||||
| Net interest margin - FTE 2,3 | 2.25 | % | 1.68 | % |
1 Includes nonaccrual loans
2 On a fully-taxable equivalent ("FTE") basis assuming a 21% tax rate
3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below
| First Internet Bancorp | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loans and Deposits (unaudited) | ||||||||||||
| Dollar amounts in thousands | ||||||||||||
| December 31, 2021 | September 30, 2021 | December 31, 2020 | ||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||
| Commercial loans | ||||||||||||
| Commercial and industrial | $ | 96,008 | 3.3 | % | $ | 107,142 | 3.6 | % | $ | 75,387 | 2.5 | % |
| Owner-occupied commercial real estate | 66,732 | 2.3 | % | 84,819 | 2.9 | % | 89,785 | 2.9 | % | |||
| Investor commercial real estate | 28,019 | 1.0 | % | 28,505 | 1.0 | % | 13,902 | 0.5 | % | |||
| Construction | 136,619 | 4.7 | % | 115,414 | 3.9 | % | 110,385 | 3.6 | % | |||
| Single tenant lease financing | 865,854 | 30.0 | % | 921,998 | 31.5 | % | 950,172 | 31.1 | % | |||
| Public finance | 592,665 | 20.5 | % | 601,738 | 20.5 | % | 622,257 | 20.3 | % | |||
| Healthcare finance | 387,852 | 13.4 | % | 417,388 | 14.2 | % | 528,154 | 17.3 | % | |||
| Small business lending | 108,666 | 3.8 | % | 102,889 | 3.5 | % | 125,589 | 4.1 | % | |||
| Franchise finance | 81,448 | 2.8 | % | 25,598 | 0.9 | % | — | — | % | |||
| Total commercial loans | 2,363,863 | 81.8 | % | 2,405,491 | 82.0 | % | 2,515,631 | 82.3 | % | |||
| Consumer loans | ||||||||||||
| Residential mortgage | 186,770 | 6.5 | % | 188,750 | 6.4 | % | 186,787 | 6.1 | % | |||
| Home equity | 17,665 | 0.6 | % | 17,960 | 0.6 | % | 19,857 | 0.6 | % | |||
| Trailers | 146,267 | 5.1 | % | 147,806 | 5.0 | % | 144,493 | 4.7 | % | |||
| Recreational vehicles | 90,654 | 3.1 | % | 90,192 | 3.1 | % | 94,405 | 3.1 | % | |||
| Other consumer loans | 28,557 | 1.0 | % | 30,398 | 1.0 | % | 36,794 | 1.2 | % | |||
| Total consumer loans | 469,913 | 16.3 | % | 475,106 | 16.1 | % | 482,336 | 15.7 | % | |||
| Net deferred loan fees, premiums, discounts and other 1 | 53,886 | 1.9 | % | 55,551 | 1.9 | % | 61,264 | 2.0 | % | |||
| Total loans | $ | 2,887,662 | 100.0 | % | $ | 2,936,148 | 100.0 | % | $ | 3,059,231 | 100.0 | % |
| December 31, 2021 | September 30, 2021 | December 31, 2020 | ||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||
| Deposits | ||||||||||||
| Noninterest-bearing deposits | $ | 117,532 | 3.7 | % | $ | 110,117 | 3.4 | % | $ | 96,753 | 3.0 | % |
| Interest-bearing demand deposits | 247,966 | 7.8 | % | 201,557 | 6.3 | % | 188,645 | 5.8 | % | |||
| Savings accounts | 59,998 | 1.9 | % | 66,762 | 2.1 | % | 43,200 | 1.3 | % | |||
| Money market accounts | 1,483,936 | 46.7 | % | 1,479,358 | 45.8 | % | 1,350,566 | 41.3 | % | |||
| Certificates of deposits | 970,107 | 30.5 | % | 1,043,898 | 32.4 | % | 1,289,319 | 39.4 | % | |||
| Brokered deposits | 299,420 | 9.4 | % | 322,903 | 10.0 | % | 302,402 | 9.2 | % | |||
| Total deposits | $ | 3,178,959 | 100.0 | % | $ | 3,224,595 | 100.0 | % | $ | 3,270,885 | 100.0 | % |
1 Includes carrying value adjustments of $37.5 million, $38.9 million and $42.7 million related to terminated interest rate swaps associated with public finance loans as of December 31, 2021, September 30, 2021 and December 31, 2020, respectively.
| First Internet Bancorp | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||
| Dollar amounts in thousands, except per share data | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | |||||||||||
| Total equity - GAAP | $ | 380,338 | $ | 370,442 | $ | 330,944 | $ | 380,338 | $ | 330,944 | |||||
| Adjustments: | |||||||||||||||
| Goodwill | (4,687) | (4,687) | (4,687) | (4,687) | (4,687) | ||||||||||
| Tangible common equity | $ | 375,651 | $ | 365,755 | $ | 326,257 | $ | 375,651 | $ | 326,257 | |||||
| Total assets - GAAP | $ | 4,210,994 | $ | 4,252,292 | $ | 4,246,156 | $ | 4,210,994 | $ | 4,246,156 | |||||
| Adjustments: | |||||||||||||||
| Goodwill | (4,687) | (4,687) | (4,687) | (4,687) | (4,687) | ||||||||||
| Tangible assets | $ | 4,206,307 | $ | 4,247,605 | $ | 4,241,469 | $ | 4,206,307 | $ | 4,241,469 | |||||
| Common shares outstanding | 9,754,455 | 9,854,153 | 9,800,569 | 9,754,455 | 9,800,569 | ||||||||||
| Book value per common share | $ | 38.99 | $ | 37.59 | $ | 33.77 | $ | 38.99 | $ | 33.77 | |||||
| Effect of goodwill | (0.48) | (0.47) | (0.48) | (0.48) | (0.48) | ||||||||||
| Tangible book value per common share | $ | 38.51 | $ | 37.12 | $ | 33.29 | $ | 38.51 | $ | 33.29 | |||||
| Total shareholders' equity to assets | 9.03 | % | 8.71 | % | 7.79 | % | 9.03 | % | 7.79 | % | |||||
| Effect of goodwill | (0.10 | %) | (0.10 | %) | (0.10 | %) | (0.10 | %) | (0.10 | %) | |||||
| Tangible common equity to tangible assets | 8.93 | % | 8.61 | % | 7.69 | % | 8.93 | % | 7.69 | % | |||||
| Total average equity - GAAP | $ | 376,832 | $ | 366,187 | $ | 323,464 | $ | 358,105 | $ | 313,763 | |||||
| Adjustments: | |||||||||||||||
| Average goodwill | (4,687) | (4,687) | (4,687) | (4,687) | (4,687) | ||||||||||
| Average tangible common equity | $ | 372,145 | $ | 361,500 | $ | 318,777 | $ | 353,418 | $ | 309,076 | |||||
| Return on average shareholders' equity | 13.14 | % | 13.10 | % | 13.64 | % | 13.44 | % | 9.39 | % | |||||
| Effect of goodwill | 0.16 | % | 0.17 | % | 0.20 | % | 0.17 | % | 0.14 | % | |||||
| Return on average tangible common equity | 13.30 | % | 13.27 | % | 13.84 | % | 13.61 | % | 9.53 | % | |||||
| Total interest income | $ | 34,192 | $ | 33,034 | $ | 33,643 | $ | 133,883 | $ | 136,859 | |||||
| Adjustments: | |||||||||||||||
| Fully-taxable equivalent adjustments 1 | 1,348 | 1,356 | 1,400 | 5,453 | 5,796 | ||||||||||
| Total interest income - FTE | $ | 35,540 | $ | 34,390 | $ | 35,043 | $ | 139,336 | $ | 142,655 | |||||
| Net interest income | $ | 23,505 | $ | 20,919 | $ | 18,865 | $ | 86,556 | $ | 64,541 | |||||
| Adjustments: | |||||||||||||||
| Fully-taxable equivalent adjustments 1 | 1,348 | 1,356 | 1,400 | 5,453 | 5,796 | ||||||||||
| Net interest income - FTE | $ | 24,853 | $ | 22,275 | $ | 20,265 | $ | 92,009 | $ | 70,337 | |||||
| Net interest income | $ | 23,505 | $ | 20,919 | $ | 18,865 | $ | 86,556 | $ | 64,541 | |||||
| Adjustments: | |||||||||||||||
| Subordinated debt redemption cost | — | 810 | — | 810 | — | ||||||||||
| Adjusted net interest income | $ | 23,505 | $ | 21,729 | $ | 18,865 | $ | 87,366 | $ | 64,541 | |||||
| Net interest income | $ | 23,505 | $ | 20,919 | $ | 18,865 | $ | 86,556 | $ | 64,541 | |||||
| Adjustments: | |||||||||||||||
| Fully-taxable equivalent adjustments 1 | 1,348 | 1,356 | 1,400 | 5,453 | 5,796 | ||||||||||
| Subordinated debt redemption cost | — | 810 | — | 810 | — | ||||||||||
| Adjusted net interest income - FTE | $ | 24,853 | $ | 23,085 | $ | 20,265 | $ | 92,819 | $ | 70,337 | |||||
| Net interest margin | 2.30 | % | 2.00 | % | 1.78 | % | 2.11 | % | 1.55 | % | |||||
| Effect of fully-taxable equivalent adjustments 1 | 0.13 | % | 0.13 | % | 0.13 | % | 0.14 | % | 0.13 | % | |||||
| Net interest margin - FTE | 2.43 | % | 2.13 | % | 1.91 | % | 2.25 | % | 1.68 | % | |||||
| Net interest margin | 2.30 | % | 2.00 | % | 1.78 | % | 2.11 | % | 1.55 | % | |||||
| Effect of subordinated debt redemption cost | 0.00 | % | 0.08 | % | 0.00 | % | 0.02 | % | 0.00 | % | |||||
| Adjusted net interest margin | 2.30 | % | 2.08 | % | 1.78 | % | 2.13 | % | 1.55 | % | |||||
| Net interest margin | 2.30 | % | 2.00 | % | 1.78 | % | 2.11 | % | 1.55 | % | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Effect of fully-taxable equivalent adjustments 1 | 0.13 | % | 0.13 | % | 0.13 | % | 0.14 | % | 0.13 | % | |||||
| Effect of subordinated debt redemption cost | 0.00 | % | 0.08 | % | 0.00 | % | 0.02 | % | 0.00 | % | |||||
| Adjusted net interest margin - FTE | 2.43 | % | 2.21 | % | 1.91 | % | 2.27 | % | 1.68 | % | |||||
| Allowance for loan losses | $ | 27,841 | $ | 28,000 | $ | 29,484 | $ | 27,841 | $ | 29,484 | |||||
| Loans | $ | 2,887,662 | $ | 2,936,148 | $ | 3,059,231 | $ | 2,887,662 | $ | 3,059,231 | |||||
| Adjustments: | |||||||||||||||
| PPP loans | (3,152) | (14,981) | (50,554) | (3,152) | (50,554) | ||||||||||
| Loans, excluding PPP loans | $ | 2,884,510 | $ | 2,921,167 | $ | 3,008,677 | $ | 2,884,510 | $ | 3,008,677 | |||||
| Allowance for loan losses to loans | 0.96 | % | 0.95 | % | 0.96 | % | 0.96 | % | 0.96 | % | |||||
| Effect of PPP loans | 0.01 | % | 0.01 | % | 0.02 | % | 0.01 | % | 0.02 | % | |||||
| Allowance for loan losses to loans, excluding PPP loans | 0.97 | % | 0.96 | % | 0.98 | % | 0.97 | % | 0.98 | % |
1 Assuming a 21% tax rate
| First Internet Bancorp | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||
| Dollar amounts in thousands, except per share data | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | |||||||||||
| Total revenue - GAAP | $ | 31,199 | $ | 28,732 | $ | 31,522 | $ | 119,400 | $ | 100,877 | |||||
| Adjustments: | |||||||||||||||
| Gain on sale of premises and equipment | — | — | — | (2,523) | — | ||||||||||
| Subordinated debt redemption cost | — | 810 | — | 810 | — | ||||||||||
| Adjusted total revenue | $ | 31,199 | $ | 29,542 | $ | 31,522 | $ | 117,687 | $ | 100,877 | |||||
| Noninterest income - GAAP | $ | 7,694 | $ | 7,813 | $ | 12,657 | $ | 32,844 | $ | 36,336 | |||||
| Adjustments: | |||||||||||||||
| Gain on sale of premises and equipment | — | — | — | (2,523) | — | ||||||||||
| Adjusted noninterest income | $ | 7,694 | $ | 7,813 | $ | 12,657 | $ | 30,321 | $ | 36,336 | |||||
| Noninterest expense - GAAP | $ | 16,955 | $ | 14,451 | $ | 14,513 | $ | 61,798 | $ | 57,654 | |||||
| Adjustments: | |||||||||||||||
| Acquisition-related expenses | (163) | — | — | (163) | — | ||||||||||
| IT termination fee | (475) | — | — | (475) | — | ||||||||||
| Adjusted noninterest expense | $ | 16,317 | $ | 14,451 | $ | 14,513 | $ | 61,160 | $ | 57,654 | |||||
| Income before income taxes - GAAP | $ | 14,482 | $ | 14,310 | $ | 14,145 | $ | 56,572 | $ | 33,898 | |||||
| Adjustments: | |||||||||||||||
| Write-down of other real estate owned | — | — | — | — | 2,065 | ||||||||||
| Gain on sale of premises and equipment | — | — | — | (2,523) | — | ||||||||||
| Subordinated debt redemption cost | — | 810 | — | 810 | — | ||||||||||
| Acquisition-related expenses | 163 | — | — | 163 | — | ||||||||||
| IT termination fee | 475 | — | — | 475 | — | ||||||||||
| Adjusted income before income taxes | $ | 15,120 | $ | 15,120 | $ | 14,145 | $ | 55,497 | $ | 35,963 | |||||
| Income tax provision - GAAP | $ | 2,004 | $ | 2,220 | $ | 3,055 | $ | 8,458 | $ | 4,445 | |||||
| Adjustments: | |||||||||||||||
| Write-down of other real estate owned | — | — | — | — | 434 | ||||||||||
| Gain on sale of premises and equipment | — | — | — | (530) | — | ||||||||||
| Subordinated debt redemption cost | — | 170 | — | 170 | — | ||||||||||
| Acquisition-related expenses | 34 | — | — | 34 | — | ||||||||||
| IT termination fee | 100 | — | — | 100 | — | ||||||||||
| Adjusted income tax provision | $ | 2,138 | $ | 2,390 | $ | 3,055 | $ | 8,232 | $ | 4,879 | |||||
| Net income - GAAP | $ | 12,478 | $ | 12,090 | $ | 11,090 | $ | 48,114 | $ | 29,453 | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Adjustments: | |||||||||||||||
| Write-down of other real estate owned | — | — | — | — | 1,631 | ||||||||||
| Gain on sale of premises and equipment | — | — | — | (1,993) | — | ||||||||||
| Subordinated debt redemption cost | — | 640 | — | 640 | — | ||||||||||
| Acquisition-related expenses | 129 | — | — | 129 | — | ||||||||||
| IT termination fee | 375 | — | — | 375 | — | ||||||||||
| Adjusted net income | $ | 12,982 | $ | 12,730 | $ | 11,090 | $ | 47,265 | $ | 31,084 | |||||
| Diluted average common shares outstanding | $ | 9,989,951 | $ | 9,988,102 | $ | 9,914,022 | $ | 9,976,261 | $ | 9,842,425 | |||||
| Diluted earnings per share - GAAP | $ | 1.25 | $ | 1.21 | $ | 1.12 | $ | 4.82 | $ | 2.99 | |||||
| Adjustments: | |||||||||||||||
| Effect of write-down of other real estate owned | — | — | — | — | 0.17 | ||||||||||
| Effect of gain on sale of premises and equipment | — | — | — | (0.19) | — | ||||||||||
| Effect of subordinated debt redemption cost | — | 0.06 | — | 0.06 | — | ||||||||||
| Effect of acquisition-related expenses | 0.01 | — | — | 0.01 | — | ||||||||||
| Effect of IT termination fee | 0.04 | — | — | 0.04 | — | ||||||||||
| Adjusted diluted earnings per share | $ | 1.30 | $ | 1.27 | $ | 1.12 | $ | 4.74 | $ | 3.16 | |||||
| Return on average assets | 1.19 | % | 1.12 | % | 1.02 | % | 1.14 | % | 0.69 | % | |||||
| Effect of write-down of other real estate owned | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.04 | % | |||||
| Effect of gain on sale of premises and equipment | 0.00 | % | 0.00 | % | 0.00 | % | (0.05 | %) | 0.00 | % | |||||
| Effect of subordinated debt redemption cost | 0.00 | % | 0.06 | % | 0.00 | % | 0.02 | % | 0.00 | % | |||||
| Effect of acquisition-related expenses | 0.01 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||
| Effect of IT termination fee | 0.04 | % | 0.00 | % | 0.00 | % | 0.01 | % | 0.00 | % | |||||
| Adjusted return on average assets | 1.24 | % | 1.18 | % | 1.02 | % | 1.12 | % | 0.73 | % | |||||
| Return on average shareholders' equity | 13.14 | % | 13.10 | % | 13.64 | % | 13.44 | % | 9.39 | % | |||||
| Effect of write-down of other real estate owned | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.52 | % | |||||
| Effect of gain on sale of premises and equipment | 0.00 | % | 0.00 | % | 0.00 | % | (0.56 | %) | 0.00 | % | |||||
| Effect of subordinated debt redemption cost | 0.00 | % | 0.69 | % | 0.00 | % | 0.18 | % | 0.00 | % | |||||
| Effect of acquisition-related expenses | 0.14 | % | 0.00 | % | 0.00 | % | 0.04 | % | 0.00 | % | |||||
| Effect of IT termination fee | 0.39 | % | 0.00 | % | 0.00 | % | 0.10 | % | 0.00 | % | |||||
| Adjusted return on average shareholders' equity | 13.67 | % | 13.79 | % | 13.64 | % | 13.20 | % | 9.91 | % | |||||
| Return on average tangible common equity | 13.30 | % | 13.27 | % | 13.84 | % | 13.61 | % | 9.53 | % | |||||
| Effect of write-down of other real estate owned | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.53 | % | |||||
| Effect of gain on sale of premises and equipment | 0.00 | % | 0.00 | % | 0.00 | % | (0.56 | %) | 0.00 | % | |||||
| Effect of subordinated debt redemption cost | 0.00 | % | 0.70 | % | 0.00 | % | 0.18 | % | 0.00 | % | |||||
| Effect of acquisition-related expenses | 0.14 | % | 0.00 | % | 0.00 | % | 0.04 | % | 0.00 | % | |||||
| Effect of IT termination fee | 0.40 | % | 0.00 | % | 0.00 | % | 0.10 | % | 0.00 | % | |||||
| Adjusted return on average tangible common equity | 13.84 | % | 13.97 | % | 13.84 | % | 13.37 | % | 10.06 | % | |||||
| Effective income tax rate | 13.8 | % | 15.5 | % | 21.6 | % | 15.0 | % | 13.1 | % | |||||
| Effect of write-down of other real estate owned | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.5 | % | |||||
| Effect of gain on sale of premises and equipment | 0.0 | % | 0.0 | % | 0.0 | % | (0.4 | %) | 0.0 | % | |||||
| Effect of subordinated debt redemption cost | 0.0 | % | 0.3 | % | 0.0 | % | 0.1 | % | 0.0 | % | |||||
| Effect of acquisition-related expenses | 0.1 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | |||||
| Effect of IT termination fee | 0.2 | % | 0.0 | % | 0.0 | % | 0.1 | % | 0.0 | % | |||||
| Adjusted effective income tax rate | 14.1 | % | 15.8 | % | 21.6 | % | 14.8 | % | 13.6 | % |
inbkearningspresentation
Financial Results Fourth Quarter 2021 Exhibit 99.2
Forward-Looking Statements & Non-GAAP Financial Measures This presentation may contain forward-looking statements, including statements with respect to the pending acquisition of First Century Bancorp and its effects on the future performance of the Company and the Bank, the expected timing of completion of the transaction and other statements concerning the financial condition, results of operations, trends in lending policies and loan programs, plans and prospective business partnerships, objectives, future performance and business of the Company. Forward-looking statements are generally identifiable by the use of words such as “anticipate,” “believe,” “confidence in,” “continue,” “could,” “designed,” “effort,” “estimate,” “expect,” “help,” “intend,” “looking forward,” “may,” “opportunities,” “optimistic,” “pending,” “plan,” “position,” “preliminary,” “remain,” “should,” “will,” “working on,” “would” 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. Such statements are subject to certain risks and uncertainties including: the effects of the COVID-19 global pandemic and other adverse public health developments on the economy, our business and operations and the business and operations of our vendors and customers: general economic conditions, whether national or regional, and conditions in the lending markets in which we participate that may have an adverse effect on the demand for our loans and other products; our credit quality and related levels of nonperforming assets and loan losses, and the value and salability of the real estate that we own or that is the collateral for our loans. Other factors that may cause such differences include: 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, SBA, healthcare finance and franchise finance loan portfolios; competition with national, regional and community financial institutions; the loss of any key members of senior management; execution of pending and future acquisitions, reorganization or disposition transactions, including without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings and other anticipated benefits from such transactions; the failure of any of the closing conditions in the definitive merger agreement with First Century Bancorp to be satisfied on a timely basis or at all; 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. 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 book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, net interest income – FTE, adjusted net interest income, adjusted net interest income – FTE, net interest margin – FTE, adjusted net interest margin, adjusted net interest margin – FTE, allowance for loan losses to loans, excluding PPP loans, adjusted total revenue, adjusted noninterest income, adjusted noninterest expense, adjusted noninterest expense to average assets, adjusted income before income taxes, adjusted income tax provision, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity, adjusted return on average tangible common equity and adjusted effective income tax rate 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 performance 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 presentation under the caption “Reconciliation of Non-GAAP Financial Measures.” 2
2021: A Year of Significant Achievements Generated record net income and diluted EPS, up 63% and 61%, respectively, over 2020 results Continued to build out national SBA platform Formed new franchise finance lending vertical in partnership with ApplePie Capital Announced transformational acquisition of First Century Bancorp that will help position us as a premier technology-forward, growth- oriented digital financial services provider Published our inaugural ESG report, highlighting our commitment to heightened corporate transparency, responsibility and accountability 3
Fourth Quarter 2021 Highlights 4 1 4Q21 results include a $0.5 million IT contract termination fee and $0.2 million of acquisition-related expenses; see Reconciliation of Non-GAAP Financial Measures in the Appendix Loans and Deposits Total portfolio loan balances declined 1.7% from 3Q21 Solid growth in franchise finance, construction and small business lending (ex. PPP) Non-maturity deposit balances increased 2.8% from 3Q21 while CD and brokered deposit balances decreased 7.1% Profitability and Capital ROAA of 1.19%, ROAE of 13.14% and ROATCE of 13.30%1 Adjusted ROAA of 1.24%1, adj. ROAE of 13.67%1 and adj. ROATCE of 13.84%1 Tangible common equity / tangible assets increased 32 bps from 3Q21 to 8.93%1 Repurchased 100,000 common shares under authorized repurchase program Key Operating Trends Cost of interest-bearing deposits declined 6 bps from 3Q21 to 0.84% NIM of 2.30% and FTE NIM of 2.43%, both increases of 30 bps from 3Q21 SBA loan sales contributed $3.3 million of fee revenue Asset quality remained strong with NPAs to total assets of 0.20% Earnings Diluted EPS of $1.25; adjusted diluted EPS of $1.30, up 16% from 4Q201 Net income of $12.5 million; adjusted net income of $13.0 million, up 17% from 4Q201 Total revenue of $31.2 million, down 1% from 4Q20
Loan Portfolio Overview 5 Loan Portfolio Mix2 1 Includes commercial and industrial and owner-occupied commercial real estate balances 2 Percentages may not add up to 100% due to rounding Dollars in millions 1 Total loan portfolio balances declined 1.7% from 3Q21 and 5.6% from 4Q20 Commercial loan balances decreased $41.6 million, or 1.7%, compared to 3Q21 – Due primarily to net payoffs in single tenant lease financing, healthcare finance, owner-occupied commercial real estate, commercial and industrial and public finance loans as well as a sale of $20.1 million of single tenant lease financing loans – Partially offset by solid growth in franchise finance, construction and small business lending Consumer loan balances decreased $5.2 million, or 1.1%, compared to 3Q21 11% 10% 10% 10% 9% 16% 16% 11% 8% 7% 3% 1% 2% 4% 4%2% 4% 11% 17% 13%22% 26% 24% 20% 21%38% 34% 34% 31% 30% 2% 2% 2% 4% 6% 9% 7% 6% 6% 6% $2,091.0 $2,716.2 $2,963.5 $3,059.2 $2,887.7 2017 2018 2019 2020 2021 Commercial and Industrial Construction and Investor CRE Single Tenant Lease Financing Public Finance Healthcare Finance Small Business Lending Franchise Finance Residential Mortgage/HE/HELOCs Consumer
Deposit Composition 6 Total Non-Maturity Deposits - $1.9B as of 12/31/211 Dollars in millions Total Deposits - $3.2B as of 12/31/21 Dollars in millions Total deposits decreased $45.6 million, or 1.4%, compared to 3Q21, and decreased $91.9 million, or 2.8%, year-over-year Non-maturity deposit balances increased by $51.7 million, or 2.8%, compared to 3Q21 CD and brokered deposit balances decreased $97.3 million, or 7.1%, compared to 3Q21 Cost of interest-bearing deposits declined 6 bps from 3Q21 to 0.84% $117.5 4% $248.0 8% $60.0 2% $1,483.9 46% $1,269.5 40% Noninterest-bearing deposits Interest-bearing demand deposits Savings accounts Money market accounts Certificates and brokered deposits $399.4 21% $130.1 7% $674.4 35% $705.5 37% Commercial Public funds Small business Consumer 1 Total non-maturity deposits excludes brokered non-maturity deposits
Net Interest Income and Net Interest Margin Adjusted net interest income – FTE was up 7.7% over 3Q21 Higher interest income was driven mainly by increased loan fees and growth in franchise finance, partially offset by lower average loan balances Interest expense on deposits continued to decline as higher cost CDs matured and were either replaced at lower rates or not renewed 7 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix Yield on Loans and Cost of Interest-Bearing Deposits NIM – GAAP and Adjusted FTE1 3.96% 4.07% 4.10% 4.04% 4.26% 1.29% 1.12% 0.99% 0.90% 0.84% 4Q20 1Q21 2Q21 3Q21 4Q21 Yield on loans Cost of interest-bearing deposits $18.9 $20.5 $21.6 $20.9 $23.5 $20.3 $21.9 $23.0 $23.1 $24.9 4Q20 1Q21 2Q21 3Q21 4Q21 GAAP Adjusted FTE 1.78% 2.04% 2.11% 2.00% 2.30% 1.91% 2.18% 2.25% 2.21% 2.43% 4Q20 1Q21 2Q21 3Q21 4Q21 GAAP Adjusted FTE Net Interest Income – GAAP and Adjusted FTE1 Dollars in millions
Net Interest Margin Drivers 8 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix Adjusted NIM – FTE1 Linked-Quarter Change Monthly Rate Paid on Interest-Bearing Deposits 2.25% 2.25% 2.21% Linked-quarter adjusted NIM and NIM - FTE improvement was primarily attributable to a higher yield on interest- earning assets and lower deposit costs – Loan yields increased 22 bps from 3Q21, driven by higher loan fees and higher yields on new production – Interest-earning asset yields increased 18 bps in from 3Q21 Ongoing opportunity to continue lowering deposit costs – $712.8 million of CDs with a weighted average cost of 1.02% mature in the next twelve months – replacement cost is currently in the range of 0.55% – Higher cost CD maturities partially offset by growth in lower cost non-maturity deposit accounts +21 bps -3 bps+5 bps -1 bp 1.42% 1.23% 1.07% 0.96% 0.92% 0.89% 0.88% 0.85% 0.84% 0.82% 0.80% 0.90% 1.00% 1.10% 1.20% 1.30% 1.40% 1.50% Sep-20 Dec-20 Mar-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 2.21% 2.43%
$12.7 $8.4 $6.4 $7.8 $7.7 $9.0 4Q20 1Q21 2Q21 3Q21 4Q21 Core Gain on sale of premises and equipment Noninterest Income 9 Dollars in millions Noninterest Income 4Q21 Dollars in millions Noninterest Income 1 Noninterest income includes a $2.5 million gain on sale of premises and equipment; see Reconciliation of Non-GAAP Financial Measures in the Appendix 1 Noninterest income of $7.7 million, compared to $7.8 million in 3Q21 and $12.7 million in 4Q20 Gain on sale of loans of $4.1 million, compared to $2.7 million in 3Q21 and $3.7 million in 4Q20 – 4Q21 includes $0.9 million of gain on sale of $20.1 million of single tenant lease financing loans – SBA gain on sale revenue increased $0.5 million from 3Q21 Mortgage banking revenue of $2.8 million, compared to $3.9 million in 3Q21 and $8.0 million in 4Q20 $0.3 $0.2 $4.1 $2.8 $0.3 Service charges and fees Net loan servicing revenue Gain on sale of loans Mortgage banking activities Other
1.34% 1.49% 1.44% 1.34% 1.61% 1.55% 4Q20 1Q21 2Q21 3Q21 4Q21 Core One time items $14.5 $15.3 $15.1 $14.5 $17.0 $16.3 4Q20 1Q21 2Q21 3Q21 4Q21 Core One time items Noninterest Expense 10 1 1 Noninterest expense includes a $0.5 million IT contract termination fee and $0.2 million of acquisition-related expenses; see Reconciliation of Non-GAAP Financial Measures in the Appendix Dollars in millions Noninterest Expense Noninterest Expense / Average Assets 1 Noninterest expense of $17.0 million, compared to $14.5 million in both 3Q21 and 4Q20 – Increased salaries and employee benefits due mainly to higher incentive compensation, medical claims and headcount – Elevated consulting and professional fees due mainly to $0.2 million of acquisition-related expenses and timing of third party loan review and stress testing – Higher premises and equipment expense driven by $0.5 million termination fee related to an IT contract Noninterest expense / average assets remains well below the industry average
Asset Quality Allowance for loan losses to total loans of 0.96% in 4Q21, or 0.97% excluding PPP loans1 Quarterly provision for loan losses was a benefit of $0.2 million, compared to a benefit of $29,000 in 3Q21 and a provision of $2.9 million in 4Q20 Nonperforming loans declined $0.5 million, or 5.7%, from 3Q21 Net recoveries to average loans were 0.01%, compared to net charge-offs to average loans of 0.01% in 3Q21 Delinquencies 30 days or more past due of 0.04%, compared to 0.06% in 3Q21 and 0.17% in 4Q20 11 0.33% 0.48% 0.31% 0.27% 0.26% 4Q20 1Q21 2Q21 3Q21 4Q21 0.04% 0.02% 0.35% 0.01% -0.01% 4Q20 1Q21 2Q21 3Q21 4Q21 0.24% 0.35% 0.25% 0.21% 0.20% 4Q20 1Q21 2Q21 3Q21 4Q21 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix NPLs / Total Loans NPAs / Total Assets Net Charge-Offs (Recoveries) / Avg. Loans
Capital Strong capital generation during the quarter – tangible common equity to tangible assets ratio increased to 8.93%1 Tangible book value per share of $38.51, increasing 15.7% since 4Q201 Repurchased 100,000 shares at an average price per share of $44.36 million during 4Q21 12 1 See Reconciliation of Non-GAAP Financial Measures in the Appendix 2 Regulatory capital ratios are preliminary pending filing of the Company’s and Bank’s regulatory reports Company Bank Total shareholders' equity to assets 9.03% 10.17% Tangible common equity to tangible assets1 8.93% 10.07% Tier 1 leverage ratio 9.22% 10.37% Common equity tier 1 capital ratio 12.92% 14.55% Tier 1 capital ratio 12.92% 14.55% Total risk-based capital ratio 17.36% 15.48% $20.74 $22.24 $23.04 $26.09 $27.93 $30.82 $33.29 $38.51 2014 2015 2016 2017 2018 2019 2020 2021 Tangible Book Value Per Share1 Regulatory Capital Ratios – December 31, 20212
Positioned for an Increasing Interest Rate Cycle 13 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 – Pending First Century Bancorp acquisition will bring funding diversification with low cost deposit platforms Greater revenue diversification – Investments in SBA and mortgage technology have led to a higher proportion of noninterest income to total revenue – Pending First Century Bancorp acquisition will further increase the proportion of noninterest income to total revenue Increased focus on higher-yielding variable rate and short duration loan originations – Construction and retained SBA balances have been increasing relative to total loans Total Revenue Composition 8% 25% 66% 11% 49% 40% 84% 16% 74% 26% Deposit Composition 12/31/2016 12/31/2021 2017 20211 DDA MMDA & Savings CDs & Brokered Deposits Net Interest Income Noninterest Income 1 2021 total revenue and noninterest income excludes $2.5 million gain on sale of premises and equipment
25% 19% 18% 10% 7% 21% Services Accommodation and Food Services Retail Trade Real Estate and Rental and Leasing Manufacturing Other 18% 15% 13% 10% 44% IN IL FL CA Other Small Business Lending $108.7 million in balances as of December 31, 2021 Current balance of $3.2 million outstanding under the Paycheck Protection Program – $11.8 million of PPP loans forgiven during 4Q21 SBA sales, credit and operations teams in place to support expanded loan production 14 1 Excludes PPP loans Managed SBA 7(a) Loans1 Portfolio Mix by State Portfolio Mix by Major Industry $74.9 $78.9 $83.6 $88.0 $105.5 $166.0 $179.6 $196.9 $213.4 $230.5 $11.6 $3.4 $5.6 $9.8 $13.8 $252.5 $262.0 $286.1 $311.2 $349.8 4Q20 1Q21 2Q21 3Q21 4Q21 Retained Balance Servicing Portfolio Held For Sale
29% 11% 8%5%4% 4% 4% 35% TX CA GA AZ PA MI NJ Other Franchise Finance $81.4 million in balances as of December 31, 2021 Lending activity focused on providing growth financing to franchisees in various industry segments Origination volumes expected to be in the range of $150 million in 2022 Average loan size of $925,500 15 Portfolio Mix by Borrower Use Portfolio Mix by State Portfolio Mix by Brand 37% 27% 9% 9% 7% 3% 8% Indoor Recreation Beauty Salons Full-Service Restaurants Fitness and Recreational Sports Centers Limited-Service Restaurants Pet and Pet Supply Stores Other 33% 13% 5%4% 4% 4% 37% Urban Air Adventure Park My Salon Suite F45 Training Sola Salon Studios Scooter's Coffee Goldfish Swim School Other
29% 12% 6%5%4%2% 42% Lessors of Nonresidential Buildings Dental Offices Executive Offices Regulation and Administration of Utilities Elementary and Secondary Schools Land Subdivision Other 25% 21% 7% 5% 5% 37% IN CA NY AZ TX Other 57% 28% 15% Commercial Construction/ Development Residential Construction/ Development Investor Commercial Real Estate Construction and Investor Commercial Real Estate $164.6 million in combined balances as of December 31, 2021 Average current loan balance of $1.1 million for investor CRE Average commitment sizes for construction – Commercial construction/development: $15.1 million – Residential construction/development: $1.5 million 16 Portfolio by Loan Type Portfolio Mix by State Portfolio Mix by Major Industry Unfunded commitments as of December 31, 2021 – Commercial construction/development: $148.2 million – Residential construction/development: $51.3 million
Single Tenant Lease Financing $865.9 million in balances as of December 31, 2021 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 $1.4 million 17 Portfolio Mix by Major Vertical Portfolio Mix by Major Tenant Portfolio Mix by Geography Strong historical credit performance No delinquencies in this portfolio 25% 22% 16% 10% 9% 6% 6% 2% 1% 3% Quick Service Restaurants Full Service Restaurants Auto Parts/ Repair/Car Wash Convenience/Fuel Pharmacies Specialty Retailers Dollar Stores Medical Bank Branches Other 6% 5% 5% 4% 4% 4% 4% 4% 3% 3% 58% Red Lobster Burger King Wendy's CVS Bob Evans Caliber Collision Dollar General Walgreens ICWG Taco Bell Other 12% 25% 20% 36% 7%
4% 2% 4% 4% 21% 7% 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 33% 15%13% 11% 6% 6% 4% 3% 2%1% 6% General Obligation Essential use equipment loans Lease rental revenue Utilities Revenue Public higher ed facilities - Revenue Tax Incremental Financing (TIF) districts Sales tax, food and bev tax, hotel tax Income Tax supported loans Municipally owned health care facilities Short term cash flow fin (BAN) - G.O. Other 60% 6% 5% 4% 4% 3% 3% 3% 12% IN OK IA OH MO MI GA MS Other Public Finance $592.7 million in balances as of December 31, 2021 Provides a range of credit solutions for government and not-for-profit entities Borrowers’ needs include short-term financing, debt refinancing, infrastructure improvements, economic development and equipment financing 18 Local governmental units to begin receiving discretionary federal stimulus funds, which will provide relief from potential budget shortfalls caused by the COVID-19 pandemic No delinquencies or losses since inception Portfolio Mix by Repayment Source Borrower Mix by Credit Rating Portfolio Mix by State
29% 11% 5%3% 5% 4% 4% 39% CA TX NY AZ FL WA NJ Other 89% 7% 4% Dentists Veterinarians Other 78% 16% 5% 1% Practice Refi or Acquisition Owner Occupied CRE Project Equipment and Other Healthcare Finance $387.9 million in balances as of December 31, 2021 Loan portfolio focused primarily on dental practices with some exposure to veterinary practices and other specialties Average loan size of $570,000 No delinquencies in this portfolio 19 Portfolio Mix by Borrower Use Portfolio Mix by Borrower Portfolio Mix by State
27% 13% 11%10% 9% 6% 24% Services Construction Manufacturing Real Estate and Rental and Leasing Retail Trade Arts, Entertainment, and Recreation Other 51% 29% 5% 3% 1% 11% IN AZ IL FL OH Other 41% 48% 11% Owner Occupied CRE C&I - Term Loans C&I - Lines of Credit C&I and Owner-Occupied Commercial Real Estate $162.7 million in combined balances as of December 31, 2021 Current C&I LOC utilization of 35% Average loan sizes C&I: $551,000 Owner-occupied CRE: $758,000 20 Portfolio by Loan Type Portfolio Mix by State Portfolio Mix by Major Industry
Residential Mortgage $204.4 million in balances as of December 31, 2021 (includes home equity balances) Direct-to-consumer originations centrally located at corporate headquarters Focused on high quality borrowers – Average loan size of $150,000 – Average credit score at origination of 754 – Average LTV at origination of 68% Strong historical credit performance 21 Concentration by State Concentration by Loan Type State Percentage Indiana 68% California 14% Florida 3% New York 2% Georgia 1% All other states 12% National Portfolio with Midwest Concentration 16% 2% 70% 6% 6% Loan Type Percentage Single Family Residential 72% SFR Construction to Permanent 19% Home Equity – LOC 8% Home Equity – Closed End 1%
23% 22% 18% 28% 9% Specialty Consumer $265.5 million in balances as of December 31, 2021 Direct-to-consumer and nationwide dealer network originations Focused on high quality borrowers – Average credit score at origination of 777 – Average loan size of $21,000 Strong historical credit performance 22 Concentration by State Concentration by Loan Type State Percentage Texas 16% California 6% North Carolina 6% Florida 4% Indiana 4% All other states 64% Geographically Diverse Portfolio Loan Type Percentage Trailers 55% Recreational Vehicles 34% Other consumer 11%
23 Appendix
Loan Portfolio Composition 24 1 Includes carrying value adjustments of $37.5 million, $38.9 million, $40.4 million, $41.6 million and $42.7 million related to terminated interest rate swaps associated with public finance loans as of December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively, and $21.4 million and $5.0 million as of December 31, 2019 and December 31, 2018, respectively, related to interest rate swaps associated with public finance loans. Dollars in thousands 2018 2019 2020 1Q21 2Q21 3Q21 4Q21 Commercial loans Commercial and industrial 107,405$ 96,420$ 75,387$ 71,835$ 96,203$ 107,142$ 96,008$ Owner-occupied commercial real estate 77,569 86,726 89,785 87,930 87,136 84,819 66,732 Investor commercial real estate 5,391 12,567 13,902 14,832 28,871 28,505 28,019 Construction 39,916 60,274 110,385 123,483 117,970 115,414 136,619 Single tenant lease financing 919,440 995,879 950,172 941,322 913,115 921,998 865,854 Public finance 706,342 687,094 622,257 637,600 612,138 601,738 592,665 Healthcare finance 117,007 300,612 528,154 510,237 455,890 417,388 387,852 Small business lending 17,370 46,945 125,589 132,490 123,293 102,889 108,666 Franchise finance - - - - - 25,598 81,448 Total commercial loans 1,990,440 2,286,517 2,515,631 2,519,729 2,434,616 2,405,491 2,363,863 Consumer loans Residential mortgage 399,898 313,849 186,787 190,148 177,148 188,750 186,770 Home equity 28,735 24,306 19,857 17,949 17,510 17,960 17,665 Trailers 136,620 146,734 144,493 143,454 148,795 147,806 146,267 Recreational vehicles 91,912 102,702 94,405 92,221 91,030 90,192 90,654 Other consumer loans 51,239 45,873 36,794 34,534 31,971 30,398 28,557 Total consumer loans 708,404 633,464 482,336 478,306 466,454 475,106 469,913 Net def. loan fees, prem., disc. and other 1 17,384 43,566 61,264 60,659 56,538 55,551 53,886 Total loans 2,716,228$ 2,963,547$ 3,059,231$ 3,058,694$ 2,957,608$ 2,936,148$ 2,887,662$
Reconciliation of Non-GAAP Financial Measures 25 Dollars in thousands 2014 2015 2016 2017 2018 2019 2020 2021 Total equity - GAAP $96,785 $104,330 $153,942 $224,127 $288,735 $304,913 $330,944 $380,338 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $92,098 $99,643 $149,255 $219,440 $284,048 $300,226 $326,257 $375,651 Common shares outstanding 4,439,575 4,481,347 6,478,050 8,411,077 10,170,778 9,741,800 9,800,569 9,754,455 Book value per common share $22.95 $23.28 $23.76 $26.65 $28.39 $31.30 $33.77 $38.99 Effect of goodwill (1.04) (1.06) (0.72) (0.56) (0.46) (0.48) (0.48) (0.48) Tangible book value per common share $20.74 $22.24 $23.04 $26.09 $27.93 $30.82 $33.29 $38.51
Reconciliation of Non-GAAP Financial Measures 26 Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Total equity - GAAP $330,944 $344,566 $358,641 $370,442 $380,338 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $326,257 $339,879 $353,954 $365,755 $375,651 Total assets - GAAP $4,246,156 $4,188,570 $4,204,642 $4,252,292 $4,210,994 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Tangible assets $4,241,469 $4,183,883 $4,199,955 $4,247,605 $4,206,307 Common shares outstanding 9,800,569 9,823,831 9,854,153 9,854,153 9,754,455 Book value per common share $33.77 $35.07 $36.39 $37.59 $38.99 Effect of goodwill (0.48) (0.47) (0.47) (0.47) (0.48) Tangible book value per common share $33.29 $34.60 $35.92 $37.12 $38.51 Total shareholders' equity to assets 7.79% 8.23% 8.53% 8.71% 9.03% Effect of goodwill (0.10%) (0.11%) (0.10%) (0.10%) (0.10%) Tangible common equity to tangible assets 7.69% 8.12% 8.43% 8.61% 8.93% Total average equity - GAAP $323,464 $335,968 $352,894 $366,187 $376,832 Adjustments: Average goodwill (4,687) (4,687) (4,687) (4,687) (4,687) Average tangible common equity $318,777 $331,281 $348,207 $361,500 $372,145 Return on average shareholders' equity 13.64% 12.61% 14.88% 13.10% 13.14% Effect of goodwill 0.20% 0.18% 0.21% 0.17% 0.16% Return on average tangible common equity 13.84% 12.79% 15.09% 13.27% 13.30%
Reconciliation of Non-GAAP Financial Measures 27 1 Assuming a 21% tax rate Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Net interest income $18,865 $20,525 $21,607 $20,919 $23,505 Adjustments: Fully-taxable equivalent adjustments 1 1,400 1,356 1,394 1,356 1,348 Net interest income - FTE $20,265 $21,881 $23,001 $22,275 $24,853 Net interest income $18,865 $20,525 $21,607 $20,919 $23,505 Adjustments: Subordinated debt redemption cost - - - 810 - Adjusted net interest income $18,865 $20,525 $21,607 $21,729 $23,505 Net interest income - FTE $20,265 $21,881 $23,001 $22,275 $24,853 Adjustments: Subordinated debt redemption cost - - - 810 - Adjusted net interest income - FTE $20,265 $21,881 $23,001 $23,085 $24,853 Net interest margin 1.78% 2.04% 2.11% 2.00% 2.30% Adjustments: Effect of fully-taxable equivalent adjustments 1 0.13% 0.14% 0.14% 0.13% 0.13% Net interest margin - FTE 1.91% 2.18% 2.25% 2.13% 2.43% Net interest margin 1.78% 2.04% 2.11% 2.00% 2.30% Adjustments: Effect of subordinated debt redemption cost 0.00% 0.00% 0.00% 0.08% 0.00% Adjusted net interest margin 1.78% 2.04% 2.11% 2.08% 2.30% Net interest margin - FTE 1.91% 2.18% 2.25% 2.13% 2.43% Adjustments: Effect of subordinated debt redemption cost 0.00% 0.00% 0.00% 0.08% 0.00% Adjusted net interest margin - FTE 1.91% 2.18% 2.25% 2.21% 2.43%
Reconciliation of Non-GAAP Financial Measures 28 1 Assuming a 21% tax rate Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Allowance for loan losses $29,484 $30,642 $28,066 $28,000 $27,841 Loans $3,059,231 $3,058,694 $2,957,608 $2,936,148 $2,887,662 Adjustments: PPP loans (50,554) (53,365) (39,682) (14,981) (3,152) Loans, excluding PPP loans $3,008,677 $3,005,329 $2,917,926 $2,921,167 $2,884,510 Allowance for loan losses to loans 0.96% 1.00% 0.95% 0.95% 0.96% Effect of PPP loans 0.02% 0.02% 0.01% 0.01% 0.01% Allowance for loan losses to loans, excluding PPP loans 0.98% 1.02% 0.96% 0.96% 0.97%
Reconciliation of Non-GAAP Financial Measures 29 Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Total revenue - GAAP 31,522$ 28,900$ 30,569$ 28,732$ 31,199$ Adjustments: Gain on sale of premises and equipment - - (2,523) - - Subordinated debt redemption cost - - - 810 - Adjusted total revenue 31,522$ 28,900$ 28,046$ 29,542$ 31,199$ Noninterest income $12,657 $8,375 $8,962 $7,813 $7,694 Adjustments: Gain on sale of premises and equipment - - (2,523) - - Adjusted noninterest income $12,657 $8,375 $6,439 $7,813 $7,694 Noninterest expense $14,513 $15,317 $15,075 $14,451 $16,955 Adjustments: Acquisition-related expenses - - - - (163) IT termination fee - - - - (475) Adjusted noninterest expense $14,513 $15,317 $15,075 $14,451 $16,317 Noninterest expense/average assets 1.34% 1.49% 1.44% 1.34% 1.61% Effect of acquisition-related expenses 0.00% 0.00% 0.00% 0.00% (0.02%) Effect of IT termination fee 0.00% 0.00% 0.00% 0.00% (0.04%) Adjusted noninterest expense/average assets 1.34% 1.49% 1.44% 1.34% 1.55% Income before income taxes - GAAP $14,145 $12,307 $15,473 $14,310 $14,482 Adjustments: Gain on sale of premises and equipment - - (2,523) - - Subordinated debt redemption cost - - - 810 - Acquisition-related expenses - - - - 163 IT termination fee - - - - 475 Adjusted income before income taxes $14,145 $12,307 $12,950 $15,120 $15,120
Reconciliation of Non-GAAP Financial Measures 30 Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Income tax provision - GAAP 3,055$ 1,857$ 2,377$ 2,220$ 2,004$ Adjustments: Gain on sale of premises and equipment - - (530) - - Subordinated debt redemption cost - - - 170 - Acquisition-related expenses - - - - 34 IT termination fee - - - - 100 Adjusted income tax provision 3,055$ 1,857$ 1,847$ 2,390$ 2,138$ Net income - GAAP $11,090 $10,450 $13,096 $12,090 $12,478 Adjustments: Gain on sale of premises and equipment - - (1,993) - - Subordinated debt redemption cost - - - 640 - Acquisition-related expenses - - - - 129 IT termination fee - - - - 375 Adjusted net income $11,090 $10,450 $11,103 $12,730 $12,982 Diluted average common shares outstanding 9,914,022 9,963,036 9,881,422 9,988,102 9,989,951 Diluted earnings per share - GAAP 1.12$ 1.05$ 1.31$ 1.21$ 1.25$ Adjustments: Effect of gain on sale of premises and equipment - - (0.20) Effect of subordinated debt redemption cost - - - 0.06 - Effect of acquisition-related expenses - - - - 0.01 Effect of IT termination fee - - - - 0.04 Adjusted diluted earnings per share $1.12 $1.05 $1.11 $1.27 $1.30
Reconciliation of Non-GAAP Financial Measures 31 Dollars in thousands 4Q20 1Q21 2Q21 3Q21 4Q21 Return on average assets 1.02% 1.02% 1.25% 1.12% 1.19% Effect of gain on sale of premises and equipment 0.00% 0.00% (0.19%) 0.00% 0.00% Effect of subordinated debt redemption cost 0.00% 0.00% 0.00% 0.06% 0.00% Effect of acquisition-related expenses 0.00% 0.00% 0.00% 0.00% 0.01% Effect of IT termination fee 0.00% 0.00% 0.00% 0.00% 0.04% Adjusted return on average assets 1.02% 1.02% 1.06% 1.18% 1.24% Return on average shareholders' equity 13.64% 12.67% 14.88% 13.10% 13.14% Effect of gain on sale of premises and equipment 0.00% 0.00% (2.26%) 0.00% 0.00% Effect of subordinated debt redemption cost 0.00% 0.00% 0.00% 0.69% 0.00% Effect of acquisition-related expenses 0.00% 0.00% 0.00% 0.00% 0.14% Effect of IT termination fee 0.00% 0.00% 0.00% 0.00% 0.39% Adjusted return on average shareholders' equity 13.64% 12.67% 12.62% 13.79% 13.67% Return on average tangible common equity 13.84% 12.79% 15.09% 13.27% 13.30% Effect of gain on sale of premises and equipment 0.00% 0.00% (2.30%) 0.00% 0.00% Effect of subordinated debt redemption cost 0.00% 0.00% 0.00% 0.70% 0.00% Effect of acquisition-related expenses 0.00% 0.00% 0.00% 0.00% 0.14% Effect of IT termination fee 0.00% 0.00% 0.00% 0.00% 0.40% Adjusted return on average tangible common equity 13.84% 12.79% 12.79% 13.97% 13.84% Effective income tax rate 21.6% 15.1% 15.4% 15.5% 13.8% Effect of gain on sale of premises and equipment 0.0% 0.0% (1.10%) 0.0% 0.0% Effect of subordinated debt redemption cost 0.0% 0.0% 0.0% 0.3% 0.0% Effect of acquisition-related expenses 0.0% 0.0% 0.0% 0.0% 0.1% Effect of IT termination fee 0.0% 0.0% 0.0% 0.0% 0.2% Adjusted effective income tax rate 21.6% 15.1% 14.3% 15.8% 14.1%