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Section 1: 8-K (8-K)

Document


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 29, 2019
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.)
 
 
 
 
 
11201 USA Parkway
 
46037
Fishers, Indiana
 
(Address of Principal Executive Offices)
 
(Zip Code)
 
 
 
 
 
(317) 532-7900
(Registrant's Telephone Number, Including Area Code)
 
 
 
 
 
 
(Former Name or Former Address, if Changed Since Last Report)

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):

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 7.01
Regulation FD Disclosure

First Internet Bancorp (the “Company”) has updated its investor presentation, a copy of which is furnished as Exhibit 99.1 to this current report on Form 8-K and incorporated by reference herein. The Company intends to use the presentation, in whole or in part, in one or more meetings with investors and analysts.
The information contained in this Item 7.01 and Exhibit 99.1 is being furnished, and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under Section 18. Furthermore, the information contained in this Item 7.01 and Exhibit 99.1 shall not be deemed to be incorporated by reference into the Company's filings under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01    Financial Statements and Exhibits

Number
 
Description
 
Method of filing
 
 
Furnished electronically









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 29, 2019
 
 
 
 
 
 
 
FIRST INTERNET BANCORP
 
 
 
 
 
 
 
By:
/s/ Kenneth J. Lovik
 
 
 
Kenneth J. Lovik, Executive Vice President & Chief Financial Officer



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Section 2: EX-99.1 (EXHIBIT 99.1)

inbkinvestorpresentation
Investor Presentation Fourth Quarter 2018 Exhibit 99.1


 
Forward-Looking Statements This presentation may contain forward-looking statements with respect to the financial condition, results of operations, trends in lending policies, plans, objectives, future performance or business of the Company. Forward-looking statements are generally identifiable by 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: 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; general economic conditions; 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, tangible common equity to tangible assets, return on average tangible common equity (“ROATCE”), pre-tax, pre- provision earnings, net interest margin – FTE, 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 tangible common equity, adjusted effected income tax rate, net interest income – FTE, adjusted noninterest expense/average assets and adjusted efficiency ratio 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 presentation under the caption “Reconciliation of Non- GAAP Financial Measures.” 3


 
A Pioneer in Branchless Banking • Digital bank with unique business model and nearly 20 years of operations • Highly scalable technology driven business • Nationwide deposit gathering and asset generation platforms • Attractive lending niches with growth opportunities • History of strong growth and a pathway to greater profitability $3.5B Assets $2.7B Loans $2.7B Deposits 4


 
Nationwide Branchless Deposit Franchise $363.7 million $2.7 Billion 13.6% Total Deposits* $440.7 million 16.5% $1,284.2 million 48.1% 32% 5-year CAGR* Nationwide consumer, $398.0 million $184.7 million small business and 6.9% 14.9% commercial deposit base Innovative technology and convenience supported by exceptional service * As of Dec 31, 2018; $298 million of brokered deposits and $1.6 million of balances in US territories/Armed Forces included in headquarters/Midwest balance 5


 
Multiple Opportunities to Grow Deposits . Capitalize on the enduring trend toward branchless banking – consumers and small business are increasingly moving their banking business online . Generate an increased level of lower-cost deposits as expansion of small-business, municipal and commercial relationships continue . Selectively target consumer deposits in tech-centric markets – building off success with Gen-Xers . Draw on 20 years of branchless banking experience to attract more customers with best practices such as dedicated online relationship bankers delivering a superior client experience 6


 
National and Regional Asset Generation Platform Commercial banking franchise focused on specialized national businesses, as well as conventional lending in select regional markets National Regional . Single tenant lease financing . C&I – Central Indiana . C&I – Arizona . Public finance . Investor CRE – Central Indiana . Healthcare finance (via relationship with . Construction – Central Indiana Lendeavor) Consumer banking franchise operating on a nationwide lending platform . Digital direct-to-consumer mortgages . Specialty lending – horse trailers and RVs 7


 
Attractive Loan Growth Opportunities . Further market penetration of niche specialty lending . Public finance – geographic and product expansion; increased network of origination sources . Healthcare finance – geographic and product expansion . Entrance into new verticals – complement existing lines and add diversity . Focus is on specialty lending lines that are relatively low-risk and rooted in sustainable industries . Historic strong credit performance and/or favorable regulatory capital treatment . Long-term commitment to our specialty-line customers as major competitors often move in and out of these sectors . First Internet’s consistent market presence builds brand reputation within its niche markets 8


 
Entrepreneurial Culture Key to Success First Internet Bank has been recognized for its innovation and is consistently ranked among the best banks to work for, enhancing its ability to attract and retain top talent . 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”  Five years in a row . “Top Workplaces in Indianapolis” The Indianapolis Star  Five years in a row including being #4 in 2018 and #2 on the list in 2017 . “Best Places to Work in Indiana”  Four of last six years . Mortgage Technology 2013 awarded top honors in the Online Mortgage Originator category 9


 
History of Strong Organic Growth Execution of the business strategy has driven consistent and sustained balance sheet growth Total Assets Total Loans Dollars in millions $3,542 Dollars in millions $2,716 CAGR: 34.6% vs. Peers1 at 14.4% CAGR: 40.2% vs. Peers1 at 17.4% $2,768 $2,091 $1,854 $1,251 $1,270 $954 $971 $802 $732 $501 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Total Deposits Shareholders’ Equity Dollars in millions $2,671 Dollars in millions CAGR: 31.7% vs. Peers1 at 14.7% CAGR: 26.0% $289 $2,085 $224 $1,463 $154 $956 $104 $673 $759 $91 $97 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 1 Source: SNL Financial; Small Cap US Banks. Peer data represents median value of publically traded Small Cap banks with a market capitalization between $250 million and $1.0 billion as of 12/31/18. 10


 
Profitability Driven By Disciplined Capital Deployment Capital has been deployed into new loan verticals, driving earnings growth Net Income1,2,3 Diluted EPS1,2,3 $2.50 $23,814 $2.30 $2.39 Dollars in thousands $1.96 $2.30 $21,900 $2.13 $17,072 $1.51 $12,074 $8,929 $15,226 $0.96 $4,593 $4,324 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Return on Average Assets1,2,3 Return on Average Tangible Common Equity1,2,3 0.81% 0.78% 0.74% 0.74% 10.12% 9.84% 0.67% 9.33% 9.35% 0.72% 0.66% 7.65% 0.50% 8.77% 8.60% 4.85% 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 1 See Reconciliation of Non-GAAP Financial Measures. 2 2017 reported net income of $15.2 million included the revaluation of the Company’s net deferred tax asset which reduced net income by $1.8 million and negatively impacted Net Income, EPS, ROAA and ROATCE. 3 2018 reported net income of $21.9 million included a write-down of legacy other real estate owned which reduced net income by $1.9 million and 11 negatively impacted Net Income, EPS, ROAA and ROATCE.


 
Growth Drives Economies of Scale Scalable, technology-driven model has delivered increasing efficiency and is a key component driving improved operating leverage Net Interest Income - FTE Noninterest Expense / Average Assets1 1.85% Dollars in millions $16.9 $16.6 $17.3 $16.9 $15.5 $16.4 1.63% 1.50% 1.45% 1.47% 1.40% 1.52% $13.5 1.27% $11.8 1.23% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Efficiency Ratio1 Total Assets Per FTE 72.9% Dollars in millions $17.6 64.0% $15.6 56.8% 56.9% 57.7% 55.9% $15.1 54.2% 54.2% $13.4 $14.0 59.1% $12.1 $12.9 $10.3 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1 4Q18 results included a write-down of legacy other real estate owned which increased noninterest expense by $2.4 million. 12


 
Capital Markets History . Following the IPO in late 2013, the Company deployed capital to fund commercial loan growth which resulted in strong revenue growth and improved profitability . Capital offerings: . 2Q18: raised $57.5 million of common equity . 3Q17: raised $55.0 million of common equity . 2016: raised $71.3 million in combination of common equity and subordinated debt . Insider ownership ensures board, management and shareholder interests are aligned Tangible Common Equity1 Regulatory Capital Ratios 15.9% 15.4% $27.80 $27.93 15.0% $27.25 14.7% 14.5% 14.2% 14.1% 14.0% $26.09 $26.05 $25.70 12.7% $24.43 13.5% $23.94 13.1% $23.52 11.9% 12.4% $23.04 11.5% 11.4% 11.4% 10.9% 8.9% 8.9% 9.7% 9.9% 8.1% 8.2% 7.9% 8.0% 7.3% 7.5% 7.7% 9.4% 6.7% 8.7% 8.9% 9.0% 8.4% 8.5% 8.2% 7.5% 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Tier 1 Leverage Tier 1 Capital Total Capital TBV Per Share TCE / TA 1 See Reconciliation of Non-GAAP Financial Measures 13


 
Capital Deployment . Combination of lower risk asset profile and top quartile asset quality performance provides ability to maximize capital leverage . Existing capital level provides capacity to handle significant balance sheet growth . Active balance sheet management to ensure growth and capital are managed efficiently Risk-Weighted Assets / Nonperforming Loans / Nonperforming Assets / Total Assets Total Loans1 Total Assets1 78% 0.86% 0.71% 68% 0.11% 0.05% INBK Peers2 Source: S&P Global Intelligence 1 Nonperforming loans and nonperforming assets include current troubled debt restructurings 2 Peer group includes publicly traded banks with assets of $2.5 billion to $5.0 billion; data as of September 30, 2018 14


 
Deposit Composition . Total deposits increased $586.4 million, or 28.1%, since 4Q17 Total Deposits - $2.7 Billion Total Non-Time Deposits - $731.4 Million As of December 31, 2018 As of December 31, 2018 1 $43.3 $38.5 2% $121.1 1% 4% $170.9 23% $528.5 20% $395.8 54% $77.4 11% $1,940.0 73% $87.3 12% Noninterest-bearing deposits Interest-bearing demand deposits Savings accounts Money market accounts Treasury management Public funds Small business Consumer Certificates and brokered deposits 1 Total non-time deposits excludes brokered non-time deposits 15


 
Loan Portfolio Overview $2,716.2 Strategic loan growth has led to a more diversified portfolio $2,493.6 7% $2,374.0 2% Dollars in millions 8% 1 $2,209.4 Commercial and Industrial 8% 2% $2,091.2 2% 9% 9% 2% 34% Commercial Real Estate $1,868.5 3% 11% 35% 37% Single Tenant Lease Financing 3% 38% 38% $1,250.8 Public Finance 42% 13% 26% $953.9 5% 24% Healthcare Finance 24% 15% 22% 7% 21% 4% 49% 4% Residential Mortgage/HE/HELOCs 14% 3% 2% 39% 1% 2% 16% 16% 16% 15% Consumer 17% 16% 19% 27% 12% 11% 11% 11% 11% 11% 12% 14% 2015 2016 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 . Growth driven by the expansion of existing markets and investments into new asset generation channels . Achieved growth and diversity while maintaining strong asset quality 1 Includes commercial and industrial and owner-occupied commercial real 16 estate balances


 
Commercial Real Estate Commercial real estate balances increased Single Tenant Lease Financing $105.0 million, or 12.2%, since 4Q17 Portfolio Diversity Red As of % of 7.0% Lobster Dollars in millions December 31, 2018 total 6.7% Walgreen's Single tenant lease financing $919.4 95.3% 5.8% Construction 39.9 4.1% Bob Evans Investor commercial real estate 5.4 0.6% 5.0% Total commercial real estate $964.7 100.0% 4.4% CVS Single tenant lease financing overview: 71.1% Burger King . Long term lease financing of single tenant All others properties occupied by financially strong lessees . Texas Originations / commitments over the past twelve 15.6% months exceeded $199 million Ohio . Nationwide platform provides ability to capitalize on 7.8% Georgia national correspondent network 6.0% North . Expertise in asset class with streamlined execution 59.5% 5.6% Carolina and credit process Florida 5.5% . Strong historical credit performance All others . Average portfolio LTV of approximately 50% 17


 
Commercial & Industrial Commercial & industrial overview: As of % of . Originations / commitments over the past Dollars in millions December 31, 2018 total twelve months exceeded $105 million Commercial & industrial $114.4 56.5% Owner-occupied CRE 88.0 43.5% . Primarily serves the borrowing and treasury Total commercial & industrial $202.4 100.0% management needs of small and middle- market businesses . Seasoned banking team leverages market knowledge and experience to serve clients in Commercial & Industrial Balances a relationship-based approach Dollars inmillions $198.7 $202.4 $160.1 . Business line built organically, adding select $146.5 personnel with specialized product or market $75.8 $88.0 $111.5 expertise $44.5 $57.7 $34.3 . Indiana team focuses on Central Indiana $122.9 $102.0 $102.4 $114.4 and adjacent Midwestern markets $77.2 . Added to Arizona team to further enhance 2014 2015 2016 2017 2018 origination efforts Commercial & industrial Owner-occupied CRE . Strong credit performance to date 18


 
Public Finance Public finance originations/commitments Portfolio Composition 2.1% 1.2% during the past twelve months exceeded 2.2% 0.1% General Obligation 3.0% Essential use equipment $286 million loans 5.8% Lease rental revenue Public Finance Balances Water & Sewer Revenue Dollars in millions Dollars in millions $706.3 $610.9 $566.2 13.7% 41.2% Tax Incremental $438.3 $566.2$481.9 Financing (TIF) districts $438.3 Public higher education facilities $269.3$269.3 Gaming revenues 15.1% Sales tax, food and beverage tax, hotel tax 15.6% Income Tax supported loans 4Q17 1Q18 2Q18 3Q18 4Q18 Short term cash flow 3Q17 4Q17 1Q18 2Q18 financing (BAN) Borrower Credit Rating Public finance overview: 1.2% 2.3% . Launched in January 2017 AAA/Aaa AA+/Aa1 . Provides a range of credit solutions for government and not- 14.5% AA/Aa2 for-profit entities 28.2% AA-/Aa3 . Borrowers’ needs include short-term financing, debt refinancing, infrastructure improvements, economic 7.8% A+/A1 development and equipment financing A/A2 A-/A3 . 2.6% Initial efforts have focused on borrowers in Indiana and are 5.4% 21.8% now expanding to other geographic areas of the U.S. BBB+/Ba1 7.1% BB/Ba2 . Recent team additions will strengthen efforts in equipment Not rated and energy finance and build out nationwide platform 9.1% 19


 
Healthcare Finance Healthcare finance originations/commitments over Portfolio Composition 1.1% 0.3% the past twelve months exceeded $97 million 1.3% Practice Refinance Healthcare Finance Balances 16.1% or Acquisition Dollars in millions Owner Occupied Dollars in millions $117.0$65.6 CRE $48.9$89.5 Projects $65.6 $31.6 81.2% $48.9 Equipment $31.6 $12.4 Start Up 4Q17 1Q18 2Q18 3Q18 4Q18 3Q17 4Q17 1Q18 2Q18 California Healthcare finance overview: . Launched in second quarter 2017 Texas 32.2% . Strategic partnership with San Francisco–based Utah Lendeavor 43.6% . Currently focused on dental and veterinary practices Nevada . Borrowers’ needs include practice finance or acquisition, acquiring or refinancing owner-occupied commercial real 4.2% Arizona estate and equipment purchases 4.1% . All Others Initial efforts have primarily focused on west coast with 5.0% 10.9% plans to expand nationwide 20


 
Residential Mortgage . Award-winning national online origination platform Well Diversified Mortgage Originations* . Geographic diversity provides opportunity to benefit from strengths in certain regions when 18.2% 19.3% there is weakness in 34.5% others . Highly efficient application and underwriting process 17.2% 10.8% . Full range of residential mortgage and home equity products . Central-Indiana based construction loan program *Last 12 months mortgage originations 21


 
Excellent Asset Quality Asset quality has improved significantly while balance sheet growth has continued NPAs / Total Assets NPLs / Total Loans 0.37% 0.90% 0.50% 0.09% 0.37% 0.31% 0.21% 0.04% 0.04% 0.10% 0.02% 0.03% 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Allowance for Loan Losses / NPLs Net Charge-Offs (Recoveries) / Average Loans 5,000.6% 1,959.5% 1,784.3% 2,013.1% 1,013.9% (0.07%) 293.0% 0.17% 0.00% 0.15% 0.05% 0.04% 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 22


 
Interest Rate Risk Management . 4Q18 FTE net interest margin of 2.07%1 declined 16 bps compared to 3Q18 . 16 bps decline driven by interest rate compression / flattening yield curve and significant decline in prepayment activity . Ongoing hedging strategy in place . Enhances interest rate sensitivity of longer term fixed rate assets . Total notional value of $524.1 million pay fixed / receive variable swaps against assets . $435.9 million hedging public finance loans . $88.2 million hedging securities . Extends the duration of supplemental funding sources . Total notional value of $210.0 million of pay fixed / receive variable swaps against funding . Interest rate sensitivity in instantaneous parallel shift upward rate scenarios and CD beta assumptions: % Change for Parallel Shift in Interest Rates CD Beta – 80% CD Beta – 100% +50 bps +100 bps +200 bps +50 bps +100 bps +200 bps Net interest income: year 1 1.96% 3.93% 7.50% 1.21% 2.41% 4.46% Net interest income: year 2 1.01% 3.07% 6.84% (0.62%) (0.22%) 0.22% 1 See Reconciliation of Non-GAAP Financial Measures. 23


 
Drivers of Value Creation Management has aligned interests and is committed to building shareholder value . Further extend the scope and market penetration in specialty lending lines . Diversify the revenue stream with additional sources of noninterest income . Expand deposit channels and drive mix toward an increase in low-cost deposits . Deepen niche business relationships to attract more deposits . Build upon entrepreneurial culture to attract and retain top talent 24


 
Appendix 25


 
Fourth Quarter 2018 Highlights . Quarterly net income of $3.6 million, including a $2.4 pre-tax write-down of legacy OREO, up from $3.5 million in 4Q17 . Quarterly diluted EPS of $0.35, or adjusted diluted earnings per share of $0.53 excluding the OREO write-down . Quarterly net interest income of $15.4 million, or $16.9 million on a fully-taxable equivalent basis . Total quarterly loan growth of $223 million, or 9% . Total year-over-year loan growth of $625 million, or 30% . Total quarterly asset growth of $339 million, or 11% . Total year-over-year asset growth of $774 million, or 28% 26


 
Loan Portfolio Composition Dollars in thousands 2015 2016 2017 1Q18 2Q18 3Q18 4Q18 Commercial loans Commercial and industrial $ 102,000 $ 102,437 $ 122,940 $ 119,893 $ 107,394 $ 105,489 $ 114,382 Owner-occupied commercial real estate 44,462 57,668 75,768 81,998 86,068 93,568 87,962 Investor commercial real estate 16,184 13,181 7,273 6,273 6,185 5,595 5,391 Construction 45,898 53,291 49,213 47,013 46,769 38,228 39,916 Single tenant lease financing 374,344 606,568 803,299 834,335 863,981 883,372 919,440 Public finance - - 438,341 481,923 566,184 610,858 706,342 Healthcare finance - - 31,573 48,891 65,605 89,525 117,007 Total commercial loans 582,888 833,145 1,528,407 1,620,326 1,742,186 1,826,635 1,990,440 Consumer loans Residential mortgage 214,559 205,554 299,935 318,298 337,143 362,574 399,898 Home equity 43,279 35,036 30,554 29,296 28,826 28,713 28,735 Trailers 67,326 81,186 101,369 107,714 120,957 129,571 136,620 Recreational vehicles 38,597 52,350 69,196 73,005 79,946 85,821 91,912 Other consumer loans 2,389 39,913 56,968 55,466 59,261 55,175 51,239 Total consumer loans 366,150 414,039 558,022 583,779 626,133 661,854 708,404 Net def. loan fees, prem. and disc. 4,821 3,605 4,764 5,300 5,716 5,133 17,384 Total loans $ 953,859 $ 1,250,789 $ 2,091,193 $ 2,209,405 $ 2,374,035 $ 2,493,622 $ 2,716,228 27


 
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 2013 2014 2015 2016 2017 2018 Total equity - GAAP $90,908 $96,785 $104,330 $153,942 $224,127 $288,735 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible common equity $86,221 $92,098 $99,643 $149,255 $219,440 $284,048 Total assets - GAAP $ 802,342 $ 970,503 $ 1,269,870 $ 1,854,335 $ 2,767,687 $ 3,541,692 Adjustments: Goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Tangible assets $ 797,655 $ 965,816 $ 1,265,183 $ 1,849,648 $ 2,763,000 $ 3,537,005 Common shares outstanding 4,448,326 4,439,575 4,481,347 6,478,050 8,411,077 10,170,778 Book value per common share $20.44 $21.80 $23.28 $23.76 $26.65 $28.39 Effect of goodwill (1.06) (1.06) (1.04) (0.72) (0.56) (0.46) Tangible book value per common share $19.38 $20.74 $22.24 $23.04 $26.09 $27.93 Total shareholders' equity to assets ratio 11.33% 9.97% 8.22% 8.30% 8.10% 8.15% Effect of goodwill (0.52%) (0.43%) (0.34%) (0.23%) (0.16%) (0.12%) Tangible common equity to tangible assets ratio 10.81% 9.54% 7.88% 8.07% 7.94% 8.03% Total average equity - GAAP $64,704 $93,796 $100,428 $124,023 $178,212 $259,416 Adjustments: Average goodwill (4,687) (4,687) (4,687) (4,687) (4,687) (4,687) Average tangible common equity $60,017 $89,109 $95,741 $119,336 $173,525 $254,729 Return on average shareholders' equity 7.10% 4.61% 8.89% 9.74% 8.54% 8.44% Effect of goodwill 0.55% 0.24% 0.44% 0.38% 0.23% 0.16% Return on average tangible common equity 7.65% 4.85% 9.33% 10.12% 8.77% 8.60% 28


 
Reconciliation of Non-GAAP Financial Measures Dollars in thousands 2013 2014 2015 2016 2017 2018 Net Income $ 4,593 $ 4,324 $ 8,929 $ 12,074 $ 15,226 $ 21,900 Adjustments: Income tax provision 1,566 2,126 4,736 5,911 7,702 2,052 Provision for loan losses 324 349 1,946 4,330 4,872 3,892 Pre-tax, pre-provision earnings $ 6,483 $ 6,799 $ 15,611 $ 22,315 $ 27,800 $ 27,844 Net interest margin 2.67% 2.65% 2.85% 2.49% 2.39% 2.09% Effect of fully-taxable equivalent adjustments 1 0.12% 0.00% 0.02% 0.06% 0.18% 0.16% Net interest margin - FTE 6.79% 6.65% 2.87% 2.55% 2.57% 2.25% Income before income taxes - GAAP $ 6,159 $ 6,450 $ 13,665 $ 17,985 $ 22,928 $ 23,952 Adjustments: Write-down of other real estate owned - - - - - 2,423 Net deferred tax asset valuation - - - - - - Adjusted income before income taxes $ 6,159 $ 6,450 $ 13,665 $ 17,985 $ 22,928 $ 26,375 Income tax (benefit) provision - GAAP $ 1,566 $ 2,126 $ 4,736 $ 5,911 $ 7,702 $ 2,052 Adjustments Write-down of other real estate owned - - - - - 509 Net deferred tax asset revaluation - - - - (1,846) - Adjusted income tax provision $ 1,566 $ 2,126 $ 4,736 $ 5,911 $ 5,856 $ 2,561 Net income - GAAP $ 4,593 $ 4,324 $ 8,929 $ 12,074 $ 15,226 $ 21,900 Adjustments: Write-down of other real estate owned - - - - - 1,914 Net deferred tax asset revaluation - - - - 1,846 - Adjusted net income $4,593 $4,324 $8,929 $12,074 $17,072 $23,814 1 Assuming a 21% tax rate in 2018 and a 35% tax rate in 2017 29


 
Reconciliation of Non-GAAP Financial Measures 2013 2014 2015 2016 2017 2018 Diluted average common shares outstanding 3,050,001 4,507,995 4,554,219 5,239,082 7,149,302 9,508,653 Diluted earnings per share - GAAP $ 1.51 $ 0.96 $ 1.96 $ 2.30 $ 2.13 $ 2.30 Adjustments: Effect of write-down of other real estate owned - - - - - 0.20 Effect of net deferred tax asset revaluation - - - - 0.26 - Adjusted diluted earnings per share $ 1.51 $ 0.96 $ 1.96 $ 2.30 $ 2.39 $ 2.50 Return on average assets 0.67% 0.50% 0.81% 0.74% 0.66% 0.72% Effect of write-down of other real estate owned 0.00% 0.00% 0.00% 0.00% 0.00% 0.06% Effect of net deferred tax asset revaluation 0.00% 0.00% 0.00% 0.00% 0.08% 0.00% Adjusted return on average assets 0.67% 0.50% 0.81% 0.74% 0.74% 0.78% Return on average tangible common equity 7.65% 4.85% 9.33% 10.12% 8.77% 8.60% Effect of write-down of other real estate owned 0.00% 0.00% 0.00% 0.00% 0.00% 0.75% Effect of net deferred tax asset revaluation 0.00% 0.00% 0.00% 0.00% 1.07% 0.00% Adjusted return on average tangible common equity 7.65% 4.85% 9.33% 10.12% 9.84% 9.35% Effective income tax rate 25.4% 33.0% 34.7% 32.9% 33.6% 8.6% Effect of write-down of other real estate owned 0.0% 0.0% 0.0% 0.0% 0.0% 1.1% Effect of net deferred tax asset revaluation 0.0% 0.0% 0.0% 0.0% (8.1%) 0.0% Adjusted effective income tax rate 25.4% 33.0% 34.7% 32.9% 25.5% 9.7% 30


 
Reconciliation of Non-GAAP Financial Measures Dollars in millions 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Net interest income $ 11.5 $ 13.0 $ 14.2 $ 15.4 $ 15.4 $ 15.5 $ 16.0 $ 15.4 Adjustments: Fully-taxable equivalent adjustments 1 0.3 0.5 1.3 1.5 1.0 1.1 1.3 1.5 Net interest income - FTE $ 11.8 $ 13.5 $ 15.5 $ 16.9 $ 16.4 $ 16.6 $ 17.3 $ 16.9 Noninterest expense/average assets 1.85% 1.63% 1.50% 1.45% 1.47% 1.40% 1.27% 1.52% Effect of write-down of other real estate owned 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.29% Adjusted noninterest expense/average assets 1.85% 1.63% 1.50% 1.45% 1.47% 1.40% 1.27% 1.23% Efficiency ratio 64.0% 56.8% 54.2% 54.2% 56.9% 57.7% 55.9% 72.9% Effect of write-down of other real estate owned 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 13.8% Adjusted efficiency ratio 64.0% 56.8% 54.2% 54.2% 56.9% 57.7% 55.9% 59.1% 1 Assuming a 21% tax rate in 2018 and a 35% tax rate in 2017 31


 
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