First Internet Bancorp(US:INBK)2022-01-20 21:37Financial Data and Key Metrics Changes - The company reported a record annual net income of $48.1 million for 2021, with diluted earnings per share of $4.82, both up over 60% compared to 2020 [9] - The fully taxable equivalent net interest margin for the year was 2.25%, an increase of 57 basis points from 1.68% in 2020 [9][10] - The return on average assets improved to 1.14%, up 45 basis points from the previous year [10] - The tangible common equity to tangible assets ratio increased to 8.93% at year-end [11][45] Business Line Data and Key Metrics Changes - The company saw strong growth in its SBA platform, with originations particularly strong during the fourth quarter [11] - The franchise finance business unit funded over $18 million in loans since its launch in July 2021, with a target of $115 million in origination volumes for 2022 [12] - Total loans at the end of Q4 were $2.9 billion, down 5.6% from the previous year, with notable growth in franchise finance and construction lending [26] - The company originated $54 million in SBA 7(a) loans during the quarter, with $14 million retained on the balance sheet [27] Market Data and Key Metrics Changes - Overall deposit balances were down modestly from the end of Q3, but non-maturity deposits increased by $51.6 million [29] - The company realized $26 million in deposit interest savings for the full year 2021 [29] - The net interest income for Q4 was $23.5 million, a 12.4% increase compared to Q3 [30] Company Strategy and Development Direction - The company announced a transformational acquisition of First Century Bancorp, which will add four scalable business lines and diversify funding sources [14] - The company plans to invest in fintech partnerships to enhance digital service delivery capabilities and expand its market presence [16][17] - The company aims to position itself as a leading provider in the banking as a service space, leveraging its experience and partnerships [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving loan growth of 10% to 12% for 2022, driven by franchise financing and construction lending [50][54] - The integration of First Century is expected to provide a stable deposit base and enhance overall balance sheet sensitivity to interest rate changes [55][56] - Management anticipates that the upcoming rate hikes will not negatively impact net interest margin due to the changes in the balance sheet and the addition of First Century [73] Other Important Information - The company repurchased 100,000 shares of common stock at an average price of $44.36 as part of its stock repurchase program [46] - The company published its inaugural ESG report in 2021, highlighting its commitments to governance, environmental management, and social responsibility [21] Q&A Session Summary Question: Loan growth outlook - Management forecasts loan growth in the range of 10% to 12% for the year, with franchise financing as a key driver [50][54] Question: Interest rate sensitivity and balance sheet - The integration of First Century is expected to provide a stable deposit base, allowing for better management of interest rate sensitivity [55][56] Question: Expense growth and First Century impact - Management expects a 15% to 17% increase in expenses for 2022, with First Century's costs on top of that [59][62] Question: Homeowners Association (HOA) business outlook - The HOA business is seen as a stable opportunity, with potential for growth through additional integrations and partnerships [80] Question: Non-interest revenue impact from fintech partnerships - Non-interest income is expected to increase through partnerships in banking as a service and enhanced offerings [86]