INBK - Earnings call transcript Q1 2020

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Operator

Good day, everyone. Welcome to the First Internet Bancorp Earnings Conference Call for the First Quarter of 2020. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Instructions]. [Operator that being note event today's please recorded. is And

turn over Incorporated. to would go now Clark conference to like Profiles I Larry the from Mr. Clark. ahead, Please Financial

Larry Clark

Good Bancorp's financial for for Operator. Thank thank XXXX. quarter results everybody discuss Internet to the you you, First joining day, of us first and

website press The earnings afternoon it's www.firstinternetbancorp.com. release company issued available at and yesterday its on the company's

has can company the included refer during addition, presentation you a In that call. to the slide

access also slides these the website. can You on

team management Becker; financial the and Chairman, President, President from CFO, the David today us discuss David results. update are and CEO, will open a call and and the Joining we Ken will company Vice up Executive Then questions. will to Ken Lovik. provide your

I any conference Various like that to in condition results respect would statements could the results discussed with of you remind involve available cause call uncertainties. filings, factors that such or the Bancorp company's forward-looking risks are implied on begin, future future and this to expressed SEC to actual and First Before website. performance which be statements. factors financial company's by contains are we different Internet forward-looking These the materially from

the update to forward-looking company any disclaims The obligation statements call. made any during

which of Additionally, information release, as the well quantitative substitute is to to discussed other available the contains reconciliation management intended the financial measures. non-GAAP be non-GAAP not and press may on GAAP refer supplement measures. today, most GAAP a but measures, are which The directly the to comparable to as website,

to over the like I'd time, This turn call to David.

David Becker

thank afternoon, you Thank for joining everyone Good us and you, today. Larry.

confronting thoughts. the is today, you the course country with our forefront of of speak public health at we crisis our As

this top of is of unprecedented stakeholders. our our team, Our health customers, and all in the priority environment

charge healthcare this the responders the to out are who go well to the leading as combat direct pandemic. COVID-XX, fighting wishes the and patients and best sincerest other professionals threat of families as Our first

Internet and Bancorp achieve First team's of customers, collective we hallmark effort been results communities our operate. the tireless, which has The shareholders, always strong in our to for

Now continue us service. to guide will more we our exceptional clients ensure than ever, work that to commitment receive as

We an the drag people our who opportunity economy have to weather by storm. the us helping help

our is alternative have we clients plan, work-from-home conduct work continue continuity including implemented business approximately fully our and and we currently companywide while so remotely. practices, business healthy. First, XX% to working that keeping offering We're safe options, our our employees workforce of and may

placing working continuing of you and shifts come telephone into are between online our channels. employees. to We're conducting meetings also in have the For greater or who through certain those are distance of teams office, we most

serve new founded this relationship a to reality. adjusted we have customers banking As well digital solutions, company to with

digital through In have as on to we fully in others channels fact, while we like have to how a many to without make service the change operate, the customers the our which branches, adjustments we some industry. had institution do not fly,

customers, this respect guidance affected all provide we are assess are and their with our working to crisis by who With help options. to

provide and payment to contacted tutorials across lines borrowers of have business many We several them.

on loans. total extended of XX% last of representing portfolio $XXX payment Friday, we loan across about relief have billion $X.X our loans As our million

granted commercial have majority payment the to these vast We deferrals of customers.

payment million single-family mortgages received from or about consumer our of includes have which residential loan borrowers. $XX represents we side, This line. $XXX million XXX about consumer consumer the and specialty On deferral X% requests portfolio, about our

our get by we actively supported Paycheck clients Additionally, worked million. Program. Protection of $XX with approved with loans Administration's have the we SBA XXX Business to aggregate Small the To-date, balances

easiest given total been those of earned for the were over is million. XXX a night, those have primarily dispersed close of $X.X loans to on little SBA This the the have of continuing can by As last and PPP government. of $XX,XXX,XXX additional the to being business work of loans federal fees government program clients to and federal funding fund preparation to allocated in are we cover by with payroll qualify

prior to this banking program business help crisis, this small execute into business the us on industry well to the positioned and across owners expansion Our country. support

to expect we arena. important small we from opportunities emerge this increasing an strategy. We downturn, component when is level gathering in long-term lending and the an our will of active of have, business see deposit This

have build recruited business presence and our proven strong SBA out year, and years ambitious past professionals we over for to to We leadership have the and small plans come.

businesses need Our service out recovering imposed will exactly we full the will and and of a be what of as entrepreneurs Coronavirus come downturn. high-level when of suite emerging consistently products country

to lending Now color three lines to you business on our this as XX% financing, health fallout of crisis. high-level real And, three very I account than some mortgages loans. single-tenant lending from largest exposure their specialty where will feel for investors know, areas we Overall, of tenant single good total and this top and commercial These our public properties. estate lending more we our the provide about provide business. area lease

which portfolio underwriting write-down excellent million to over high the creditworthiness industry. averaged funded credit this We the $X.X in about both one standards and tenant. and track the include quality of entered only ago, consists per of We strength currently high that this of financial and line reviewing timeframe. loan record the over XXX business the eight attribute have geography property, Our across $X.X the properties in of billion to years which borrower, diversified our with property value loans,

average these loan of trends. recourse and include of evidenced level personal We property monitor require financial value and a loans all require reporting a to substantial ongoing statement each as of equity cushion to Nearly XX%. our for loan, by

in of many positive. metropolitan times addition, major In of outside properties are these likely is very located areas, these which

as by requesting the various pandemic, That Tenants of social who in experiencing financial broad of combat said, well general put are and from many and to portfolio are due rent increasingly as our landlords being restrictions quarantining forms to scale concessions sales tenants place population. the setbacks other are diminished this borrowers. distancing government in the much

to deferral in as the programs As of a area result, increase we expect payment this number well.

of last XX-day totaling million approved $XX over to balances. of X% borrowers just our in Friday, about have As payment single-tenant we lease deferral

April been Given pleased expect made of of payment one the only scenario, is their It program; reasonable conditions approval manner, payment. timely have the made exception is one in that about single-tenant what non-accrual payment being believe borrowers status. all case a see us the borrowers deferral. of of were we single-tenant to our we a that to where need note that XX% for We form a to borrowers lease our of the on relationship be will that's some deferral important April

portfolio $XXX This are finance healthcare another Our flow area business our borrowers of more experiencing lending of for practitioners. XX% than major dental cash Most challenges. dentists is us. million short-term are

assets, pandemic, American Association Many time or the offices at their relief procedures this is are length for COVID-XX the the Dental of must from close they form of in remain these closed borrowers point. uncertain and during seeking to is guidance Following of open only emergency average payment some portfolio, in the all a these are guarantees. the and deferrals loans very SBA of each granular as the and in program. by This instances, over loans including personal just $XXX,XXX also business loan secured PPP sized is estate have real participation

finance we contacted have the and this XX particular processed program. all on financers, of deferral have impact industry, payment have or the borrowers. of to borrowers, for approximately healthcare To-date, received Due our XX% crisis we and offered XX-day deferrals these

We've credit of to over solutions which and consists our including the bridge with infrastructure of over non-profit our short-term equipment primarily public XX% concentration, variety to $XXX Historically, their Indiana, provides third Michigan, or concentrated area total a loss. business and a portfolio in finance had turning entities never delinquency Now very a this range this financing, in strong development, group a has economic loan. of Midwest, of of representing and for This projects, This for improvement portfolio a been million needs, portfolio. is government financing. Ohio us.

local and and in several circumstances. a the due governmental due municipalities help tax being However, state economy to financial navigate slowdown challenges delayed short-term the in today's options pandemic. to are payment local virtually and regional expected to agencies dates cash all difficult said, flow That experience to have

both traditional by solutions, to the market and well specifically as programs governments fallout. have designed state as borrowers developed economic U.S. finance deal Public with the

Indiana, similar that We're result presence of see of outstanding conduit XX% the we the where Bank balances has our have financial instance, states as where if any monitoring well funding to For Bond a State they Indiana difficulties its expanded program would to pandemic. of advanced a have experienced the Indiana have reside, in significantly programs. the assist municipalities

pandemic. payments eligible the to for that The will has each as the In had requirement announced to with addition, assistance. $XXX for state a local assistance and one borrowers are liquidity provide how conduit state the borrowing payment federal program we available. Reserve facility authorities up below to billion to lend in state affected administer population no fall of will type need of largest are July the making remains from how options by need into seen and that that versus will be their June a our tapping or this have deferral. problem indicates well, and to the a have direct liquidity by many To-date, any Federal us municipal facility acting portfolio month, payment several they far municipalities municipalities, to so

public our portfolio. about However, we very finance remain optimistic

we're to deepen we're heard hard the reputation acknowledge the our the bring times, conclusion, over helping keenly customers to through bridge and boosting needs with and as the greatest devotion focused long-term. in in that current our navigate team clients entire pandemic. are bank connections our to on this And existing the you the a First our to In fallout gap the Internet both will asset helping to want people many business our long-term their have clients saying Bank responding again are success. near-term. and we of to and country monitoring new ways our By me to for vital in as their work portfolios recovery, I

very and effort dedication So are much appreciated.

lies times, to will great I'm country work Our challenging us. that confident a of that First Bank there of during rise the team all But is occasion. before Internet deal the

like our the quarter. to Ken for call financial discuss I'd to turn results that, With to the over

Ken Lovik

David. Thanks,

despite losses earnings and with share a $X.XX, allowance the our per delivered performance year-over-year. building as for income million net our to higher quarter for pleased loan of losses, of due provision We're loan earnings we increased primarily $X diluted first

allow our supporting to and this mentioned, clients, stronger. David from colleagues, focus our As on communities us to emerge is even crisis

declined balance to was lower sheet in quarter loan slightly earning assets average the cash and relatively and The balances. average due flat mainly

with course of expectations the sheet over result our a year. in As for such the growth was line balance modest only

from the end were billion, the quarter. a growth financing at outstanding finance of Loans single-tenant public Commercial in million healthcare fell modest mortgages. quarter X.X% quarter loans fourth well in first lending pool $X.X growth declines and business totaled to finance balances. strong of of or loans, loans as decrease offset $XX stable sale lease the balances as to primarily consumer construction our announced and Consumer a $XX million the by previously or small fourth the XX% as compared of in due

We we of of pool single-tenant million the that sold of solid $XXX we public during at loans lower million loans $XX seasoned which and sold loans financing million quality the of originate a quarter, remained high loans. as strong premiums. included residential The total so market mortgages $XX yielding included the

recognized late March. the the quarter. X(a) a from $X.X in $X.X loans from market first gain In increase of of sale quarter, the sold guaranteed $X.X activity fourth loan SBA million in we before Additionally, we million slight in closed total, our million the

billion, XX% growth million and deposits up of an of the $XXX and deposits, Moving higher This CDs XX% our end largely from declines by was $XX totaled from deposits increased and of XX% total deposits, to million offset X% $XXX up cost in million make or $XXX broker increase quarter. $XX total deposits the million now or ago. at one-year $X.X first fourth the of market on to million almost quarter Money respectively.

quarter. basis XX During the points to the by and fourth as XX money basis deposits related our quarter, of of funds reduced The by the first interest-bearing market cost successively quarter points. in fell deposits the pricing first cost decreased early we in

In CD deposits new by and of XX another on points, April, as will we points broker below cost basis benefit the going remain well costs the rates The basis which lowered CDs. forward. decreased maturing rates production CDs rate four deposit

deposit deposit the in to money shift costs. impacted CDs market a Additionally, mix favorably from accounts

of average positive During points. new spread the rolled came on first over whereas a X.XX%, a quarter, maturing X.XX% CDs off at at cost basis weighted XXX CDs of

as continue second the CD X.XX%. to weighted We is rate during expect this the trend maturities average on scheduled quarter

at of CDs billion is XXX a X.XX% XXX Additionally, deposits of the weighted the we XX next basis in cost maturing versus of to over in current that months average $X.X range production broker approximately points. have

interest net Reserve and interest in to interest both linked the rate fully earning income cost margin, equivalent as basis to income Turning yields taxable rates net on reductions. cuts quarter lower offset asset net funding a Federal driven and by decline than following a compared declined more short-term GAAP

Net added lower basis the margin the lower net by Compared declined margin assets. from than interest the deposit estimate a basis to bit of taxable our securities three primarily The a positively and a balance anticipated taxable interest linked nine equivalent due net to margin in points quarter, points points. basis equivalent on fourth below two basis. costs quarter X.XX% interest fully the yields came impacted fully on earning larger

reduced basis points pressure. five by basis collective However, lower had on Other interest net points an on balances two factors balances lower in loan yields impact the provided seven interest yields of margin basis points margin. a and cash net the additional of negative

Given a but short-term rate yields. some the crisis, year. of the to will COVID-XX provide will remainder fixed long-term uncertainty asset rate look like environment, over provide interest loan forecast margin historically should and long-term will the our certainly portfolio sharp hard net the is the costs stability, what impact in an on the current of deposit Lower low have rates decline interest and rates it and benefit

discussed have are the goal of we the until warrants sheet, our in probably cash which maintaining now uncertainty pandemic crisis. higher expect the run-off past, in levels we to crisis the liquidity, while excess of past to we Additionally, do the balance

non-interest to income. Turning

the going remain Our a and during strong environment declining rates the the provide rate direct-to-consumer with mortgage quarter. the we business business enhancements is to solid our demand technology have The performer experiencing to mortgage platform low interest helped the by made potential forward.

of However, volatility some general provide pandemic process impact ultimate could if lingers the economy it extended in of the of mortgage aspects the on an period the and for time. specifically

down building both SBA-related on long-term, anticipate grow. to Related sale uncertainty and we levels the over Paycheck XXXX the with the wake has revenue, little and some a continue as forecast out our to X(a) based is difficult Program. servicing near plans performance term as regulatory business gain the It on fees to portfolio in production the Protection this market secondary exists slowed higher program line of

up expanding origination our will and However, team will its continue free balance if of volumes to increase we portfolio sheet on loans. the capacity to necessary, the

non-performing in and primarily related to employee administrative loan increase salaries and non-interest benefits compensation. quarter of was the due benefits in the mortgage seasonality, $XXX,XXX due expense from expenses primarily SBA expenses. loans. increase $XXX,XXX costs a increase due And loan increase $XXX,XXX to respect With in to the to mainly personnel full a additions, quarter of fourth to increase was incentive The salaries employee expenses, in and was and

for the quality. the due loan Turning to linked primarily was the $XXX,XXX as environment. compared provision we qualitative increase allowance losses quarter increase losses $X.X fourth for The in quarter uncertainty in The adjusted loan first quarter. the the factors was in reflect million to to for economic asset the to

from implementing a As exempt are CECL until we XXXX. reminder,

also resulting XXXX, to to in fourth compared loans and small the C&I $XXX,XXX points were were consumer in quarter six basis balance charge-offs average one basis of points quarter. the recognized credit. net Net during first included The primarily of of in the charge-offs charge-offs portfolios four

first increased $X.X loans Non-performing in the by to quarter million. $XXX,XXX

total three points non-performing basis fourth the points, basis relatively of which loans at quarter. remains up low loans ratio from was XX to the However,

losses influenced duration clients the will We future rather as the with is part challenging credit want Projecting be downturn. be by economic the the significantly severity and problem. induced they impacted the of and solution to crisis COVID-XX work of than by to

we earlier, deferral David and as mind, With this a in voluntary payment noted introduced program.

supported SBA's through Paycheck Program. with customers their actively business applications small also for We loans the our Protection

also classes. our industries I highlighting our loan book. to the But highly commercial larger of exposure to loan touch within asset those strengths David reviewed resiliency our wanted and impacted portfolios earlier on

restaurants portfolio. the single-tenant in we presentation, our to noted through As have exposure

While well perform, the is this this includes any nature a severe portfolio held testing annual the of crisis which has other, up unlike stress scenario. we under stress

Excluding important we that exposure the to single-tenant industries the And book. impact finance multifamily, to healthcare it's cruise ships, minimal no and have industries. other portfolios, at airlines, to is about of impacted loan our exposure entire and and high fairly gas, note oil X.X%

actions manage due With we healthy respect to have capital. to sheet capital, remain capital overall balance levels to preserve our and taken

equity the other hedges unrealized fourth X.XX% in hedges assets to ratio loss Our first These tangible in cash increase that are long-term on fixed comprehensive through the primarily the quarter rate quarter, flow due funding. in common to rate the use swaps X.XX% we decreased tangible flow create to accumulated to income. interest from

these the As valuation decline hedges rates to continued quarter, well. sharply declined of this mark-to-market as

per Tangible the well the again book valuation hedges. cash flow down driven quarter this by was largely share as of value slightly

However tangible X%. up on a per is year-over-year or per basis, over $X share share, over value book

the Overall, on funding liquidity remain holding balance ratios access supplemented have regulatory to of the by the than COVID-XX the sufficient sheet bank strong. And potential at and company crisis. more economic sources capital we to impact manage multiple

there's said, As these a that times. of are before lot lies And work David challenging us.

that it passes, this a stronger when we crisis However, from company. emerge are confident will we

take will questions. so turn can it operator, With that, your I the we back to

Operator

the begin will now session. We Instructions]. [Operator question-and-answer

question from Jaffray. ahead. Piper Go Race Nathan first from is Our

Nathan Race

the the portfolio kind if of testing, kind scenario. suggest Question, just scenario given content guys maybe could you under a loss your Ken curious comments across or or analysis in guys to internal what's you of charge-off from see David, some perspective maybe back of type the severe just what just I'm portfolio? stress share around adverse going today

David Becker

third-party stress. fairly in line probably Yes, and stress stress kind portfolios And moderate portfolio I the have, is several much would with what which that -- testing points say of we loan when reserve loan at of is which severe we of or on as portfolio the performed levels neighborhood basis single-tenant our at we content XXX have those loss look in portfolios. level The larger are so. is at individually individually

Nathan Race

Understood. Okay.

any that frame-up over way you any of So I quarters couple as as reserve context, loans, guys just in a guess within reserve or see next today percentage seeing terms of the levels, you've obviously on maybe very how your seen to tracking of kind just sit what guys it's you thoughts kind a you environment. fluid sufficient are of of here where

So it's just ascertain see the but maybe trending any you quarter to how next obviously or thoughts on difficult over two? reserve guys the

David Becker

granular more the say, probably would not I stay we obviously that. But portfolio shrink same balance it little the add Yes, bit potentially here of little the is or to a Ken year. it on today course we detail in will over could in continue shrunk a quarter, or the somewhere first the

ALLL to back to. we So first bumped we I almost points which quarter, and balance we in some of put our think reserve factors But needed account. us were in -- there adjusted than more $X.X million total factors the the the for five has COVID-XX a was

depends how course on more, amount, if loans We not the kind quarters least the of out. of that over shake doing couple next anticipate the of at

myself we as open, have am For my dental as personally example, asked as those I again. soon running the of new and short-term that'll department, up missed doors a waiting checkup, but that lot have high back in they'll to state a crunch portfolio great the guys, I back and get for be soon to percentage a think did the their open very be as and starts business appointment get

their shape too Farrell, Steve And for really kind leaders bottom month the be. everybody to to in restriction as individually the all portfolios We a consequences we SBA division be quarantine in to the April lot tell So loan. this early portfolio week, think where love portfolio of and have we're current the unknown times, payments, we Officer, at as the could of in that of Chief a the by good reviewed is what spend made a top time. Credit going fact the

Nathan Race

balances guess all deck, And Got that's it, guys I towards what that of that. putting industry in based Page that it outlined if guys curious, will sense PPP exposures the COVID-XX. and a more deck, could you pipeline you are these ask, here if commentary relates the on have loans amount on you're slide XX do of detail feed this maybe that that have impacted to I just have color. you I'm great Appreciate appreciate in as this guys borrowers for on by just slide directly that the slide? those I And outlined

David Becker

think five -- type. have probably those -- number fair that would the loans. that by probably in back further that out back within kind a PPP I a those probably on fair by We of C&I of those not is bucket I were full in loans we handy. probably of impacted are the it's of portion suite C&I pandemic impacted I PPP the break say of directly PPP that data, that amount the recipients mean, a for borrower there side, SBA that the deck in

to bit the after little of color chart because that's Page on a XX. Just this

were a the deferral out it's small small SBA. XX-day or federal service because NAA, government that's is, obviously full impacted. on whatever hotels, and to side a the with very lending NACIS If up think screw the first beginning close code heavily came the side the in those loans I and the business the of crisis, the they lending of to The you and at business NAICS acronym, take look going I'm code restaurants, it

all have now X(a) on our loans. back they of And come

full six payment literally the here next going of months, on million So, principal loans. interest to all for the federal $XX make those government and is

out the backside should to come stuff these of great shape be So this. in

this our shows loans break slide the the rule those those, that all the some servicing banks customers. trouble said, are followed towards out it, we of of of all although we for in end getting deck Ken did the As

the -- literally workers PPP construction your those XX% this on companies probably will appear would clients the program. area are are I of that But going. the ours loans and questions I We C&I are XX% say off category kind So still XX% we and all this of because validate that on it sheet number to jump the folks cuff to in that that of some on would doesn't that in sheet. in one had is get back say [ph] an what ended up with the construction

customer So was was XXX% it so. program it for us a focus great and current

Nathan Race

just more. ask understood. could in the slide the all Okay, if And I deck. details Again, appreciate one

are recourse generally? On loans dental books, the specifically those healthcare

David Becker

have and whatsoever had we delinquent we've the three them are Recourse, We've never either years-to-date, portfolio. been not of over real on it Most all or losses guarantees in a the personal practice any in account dental loans. have acquisition those estate the of had community.

Actually, before we we got portfolio a England Bank. a purchased had into our client base, New from current

portfolio million about was had out I five, loans just a it And ago. today. losses total few years to think I of in a down think of we've $XX,XXX it. million six And in $XX is that

for great great procedures. emergency strong fact service the doors equity great these credit So debt coverage, in of operators, now are credit, strong outside businesses, are except that locked the profiles, extremely the

they faith strong in opens running We that be again. opens their as as and business soon up, up back have will -- total doors

solid. So we're that real is rock confident portfolio pretty

Operator

Our Perito from next KBW. Go ahead. question Michael from is

Michael Perito

guys Doing all right, hanging It like sounds the doing are you in. same.

David Becker

Yes.

Michael Perito

It's I all appreciate very the on Yes. the time disclosures. everything edit helpful. with going all

I so think about spend historical this peer your how I any years done last the as obviously, we there few portfolio really you. credit, context lot greater so decade loss context is on helpful for have kind leasing or more curious XXXX there? like hasn't during analysis rates kind XX that on a the events period but you own mean, I just any I similar that. XXXX, of have the guys be you thank performed this have single-tenant or of portfolio, maybe to stress? of going if during low, of on or of been the first credit guys was So since type minutes been would wanted guess or that last whether there a

David Becker

have and officers But kind is investors of Michael, focus, service you and big in again, The we have second some product we large insurance is have dollars ours, are think a the if obviously out our obviously hand, the restaurants, a that only are of Bob than we portfolio. their is of chunk the larger in context STL Generally, mainstay I for companies they're you, about that are. service quick Evans rental full like really team they here. only two investment

that the love we're the of the of But And bank, portfolio the they're we you, tell of the excited of that portfolio. sale They it's the close in last day I closed been a $XX over years million tremendous will the investors like portfolio. And as we quarter. all those have on talked it. about quality to to on

our the goes that the the very right the portfolio in quality mortgage a to closed first consumer million end and $XXX things. think at $XX assets. of then of the of quarter. side We on second purchaser strength lending We to I quarter, about STL sold municipal So million side back time and actually during sold we the

this a So, is we're comfortable great quality pretty product. that

we Dollar Store we've play and just dark them we've for got We the able until that They've a they're and and stated, underwrite investors coming else. individual first they the like most a understanding got have hell we had General our real capacity carrying and was buying we good problem released not up industry units It's or have have investor background. to seasoned somebody it. of estate carry have collection to of issue of over never investors; a of and a the property to lot go folks years, the the had it individual

But solid better. these up, think So portfolio confident that that to open in I some back we're the get to faster STL obviously, of starting on the the states business, top shape bottom. can pretty are we're into

Michael Perito

Slide credits allowance additional really And and Or when you of I look this your just about with imbalances Thanks the deferral? of as then kind position being is mean, it in that at reserves specific Dave. Helpful, that any deferrals against the at nothing present there's the are specifically are of point? is payments? guys I think I I clients in -- XX quarter. the up and that the deferring general a held against put

David Becker

take point, look you you and $XXX general on out XX, to $XXX Yes, this if this healthcare, go it's at sheet a of million XXX% at million. that's up

reality healthcare a that but of accounts only $XX of take has that's is it. of we the on first they it, we of consumer of So of portfolio. side them with things area a and XX% had them a hit consumer upfront. really were strong advantage million to the one program phenomenally the it on billion been and mortgage lending $X we little our very out one now, take went actually about deferred center deferral in if And out, The the and we've

Michael Perito

to been relative up numbers picked Has the have that these disclosed? quarter since end deferrals the of

David Becker

are Friday. here All of the disclosed numbers as last

Michael Perito

haven't here. gone I see, XX. of apologize April I as I Oh,

Okay. Great.

wanted I more. couple a to So transition

is bit; hearing that making the even expense hope the bit there's sheet little to I'm confirm a way, building, of if strategy actually balance of deposit if correctly, while is here liquidity, from it's of like kind might am, the the plenty to growth also summarization? at a that shrink just little sounds the margin steady that aiding capital, it build fair sheet sure balance of guys is in I that So you a the want I

David Becker

That's spot on.

Michael Perito

like? you numbers any -- do backlog a look roughly, on wave what applications. any the It comes would idea have funding of that Okay. through? if what you guys seems missed sorry of second about sure from this like that program. PPP have did I I you I then fees if what million? we think as think of also, mean it. I the And just do and But idea most am figure would like what you mention was type $XX of it expect pipe those look I'm

David Becker

will actually front have are funded here I of and loans, Michael, XXX loans the we for our to-date of the $X,XXX,XXX.XX. me, I fees tell $XX.X have Yes, XXX right of earned in on close actual dispersed them out you we what funded the million to-date and figure

a over little $X.X a million. just So

XX that in million in either not just that of of or process, documentation under XXX about through, inquiries fairly about clear to $XX application have XX a XX%. pipeline of because it became did got and of another when play little go soft bit with we've applications reopened get We lack today we've it. got along another portal we shy ago folks hours just new We a our did opening

in locked So all all to loaded. were and have we of that XX our process, clients hope

the this so the at go I PayPal, up of very can applications opens, to have round with. I you are we some And it's to going tell when think fintech hours literally for to portal at of very, and that quickly. businesses micro of thousands the stage of very go funding out, within after we ready pending it and They program the last go. that PPP companies they comes some -- square they XX applications tail-end literally opened two to with to this when first the ready the go have into few deal

E-Tran All for apply an we have is number. to do

them come we've probably and $XX should with another lock we loaded, or so. away million So got

funding into caught concerns, for the have the of One and this questions PPP don’t the SBA of but know tied loans. wave in I commentary, Ken's program of they you whether second all

advance will. for There's end of the funding the PPP So they and traditional between nothing if they as this loans left X(a) everybody anticipates period. of money XXX% now do

we've hours last structure when funds we for that now possibly X. could E-Tran the PPP the number in and we caught XX issue X(a) an anticipate locked over all that of that portfolio, kind between we've And the in applied our we close taken have July So of those pipeline loans. loans for and

XX no in SBA for the here don't we year. of hours wind opportunity up the with So balance

it business PPP under been hours, the really the monitoring ourselves care magnifying our of be started. thing one And take from in some for we've last and additional prepared XX X(a) the this program. with two, So minute loans glass we've to a prepped

Michael Perito

to that a Ken, or thing fair this but scenes cost to is just the in behind it. relief some lastly, in here? going there's expect mean, remain expenses and the sure right a assumption next a do, of there's think there's sure I'm on it. I there's you do come you I next that quarter? can the through And Got kind lot elevated, to do quarter it's I'm mean,

Ken Lovik

a space, absorbed we in have of wouldn't full-quarters mean, be team of did ton. a out we the I on SBA new BDOs. that First to we we mean there headcount continue might but the don't. I plus relief, I last Colorado we quarter impact board build little again, LOs say increase because bit the brought I

there So headcount a not lot relief of probably number. in is that

things would expect I stable. other be Some to

the, property like That -- to were example, quarter. I for on due costs with we non-accrual. one have the more administrative this think related dealing up loan expenses single-tenant to some was the

a a But So Maybe leverage but that number down lot. probably think probably whole come a of stable I I little say go bit it's number. wouldn't down. to more of

David Becker

obviously the have area too. kind bunch bit of of pops up a first blow Like a and tax, stuff little this quarter, [indiscernible] that up we

we're COVID-XX XX% doing other of home. from costs, sufficient say in have our of our to the the that not is working at One increased got employees did that's bandwidth of things of we lot people our home, a course

picking XX charges. to up hotspot work-from-home. additional so the close people communication for got we've We laptops can So bought an some

some split some play. and operations incidental had concerns the of one-off costs play and first add the obviously of kind the we during So quarter just

amount crunch fair to get XX people the our SBA PPP the of a -- through had staff that to for what we overtime some days program. paid get in the We of of

We've things there's in bring one-off press breakfast the think times to in three lunch, the gift the we're two, kind kicked out and we that help I doing into some week we the office a folks to one, so a program. here So ago. and a out made the some coming that's of support staff town, community local to merchants release a or week

Here are in the Indianapolis chamber really, these to of they're impact Central with help $XXX,XXX in it's the to with businesses minority that Marion Indiana to loans which grant loans backdoor. do Dire going County as kind folks fund, Straits anticipation our working two and really help micro and gave stay with the out the basically here really their County in and alive. a that to Hamilton We area grants is and try gifts of

I XX in extraordinary particularly it's going can you, COVID that in pointed expenses the know days. it's XX some drop next the to on to has go up tell out, here don't got we've going as not side. But So significantly. Ken I significantly, to

Operator

Instructions]. [Operator

Our next Go from ahead. George Sutton Craig-Hallum. question is from

George Sutton

on like to well Thank deck; my you. it's the appreciation Hi, I put really guys. would together. add think I slide

-- So really, rate, the relative I million deferral question, I a programs, you if and loan X% costs loan clear, I interest kind that $X had you what want but want a and resultant got I to there? program? in and what simplistic to ask assume, a the interest fairly from to economics a XX-day balance deferral, just what would have of is I the to are be What

Ken Lovik

-- deferral even the interest payment. not the still side, deferring earn loan, you're our we're we're that, forgiving Well, with We're the though not just again on we programs, because paying not on it.

as to based kind treated by of those of type vary are interest we So take the earn we those we we if like with our financial upon and unpaid the interest loans, the we've a on principal then it. continue payments single-tenant structure add maturity. balloon due that to for institution, the that The on payment. way example, is that doing the That's what been loan

add end is loan. the the we those finance what business, In payments back them healthcare of and we do take we to the

we in the throughout payments kind cash nuances there's deferral different the handled. But interest certainly are some of earn period. So how

George Sutton

effect, of So income? the payments, payment it's like in treatment a picking

Ken Lovik

what cash. timing saying. an think earning And it. cash, really see you yes, way That’s interesting we could it just interest on we're about the difference. not are obviously I It's but But will Yes, I it. mean, about yes, we I receive you're receiving ultimately that. to guess like a think

David Becker

about beginning a through million. Nathan loans would our point XX the did did, stress that the it's I the we asked our payment in our make cost of one every in to George, things of full us portfolio and not is stuff that some the days, absolutely for we did, went testing we portfolio, $XXX

there. We're for Ken reasons the cash. of one flows earnings still just getting the our not elevated cash So as keeping the said, are

bump next on really CEOs the same to it up, bankers So the gets other a over if crazy twice it all the XX of days, phone and goes we things week up to talk range have heard of here with think lectern, the the the banks a the And in as probably I the their Indiana. of high-end X%, banks general low-end all loans. is in are rule, of XX% most I’ve deferring of is State about somewhere calls the

absolutely and So, that's $XXX cash, period. the would in we nuts million XXX% defer cost a it of to XX-day over loan, it if us had went

nowhere hang near that little going current well on we're But cash factors to the the we're we at extra in used get -- to So deciding one a number. that was time. of

George Sutton

on for I just be knocked clear. wood to you All just right.

David Becker

I can wood. hear [indiscernible] knocking on

George Sutton

those, in conflating apps the million were you mix? your you discussion, to or loan relative from clear, to brought I want what mentioned X(a) process. into just separate? So be you've that Are in that $XXX those pipeline

Ken Lovik

is that sorry, loans we've think that said of I'm was them. did that. if X(a) pushed don't $XXX I that million I But through The I what not --

George Sutton

you $XXX in process mentioned there's PPP. no apps No, million for second in this

Ken Lovik

for Yes, XXX million, applications $XX yes.

George Sutton

what meant. Sorry, I that's

Okay, but are we --

Ken Lovik

good applications. That's XXX --

George Sutton

not I'm trying That's loans inclusive of to process. what is the are that X(a) in that say. But

Ken Lovik

kind close and numbers now the that June have loans we million or on, to funds of guess E-Tran up and That’s stepped sure that went we've correct. might got to close allocated I'm correct. That's for $XX to loans million think them. be absolutely to that X(a) we portfolio process between $XX going we that XX The make in

-- go So ahead. together

George Sutton

doing you fair I be economic there in that? apologize. PPP I'm monitoring amount Are Last benefits SBAs to the these there's very being really required to question told for it's relative to and a of the be going going able monitor effectively. to economics of

David Becker

this Yes it how a nobody this you to without program being you've is going and talked probably Hopefully the from us. land it gist everybody help any Well, and no. built. truly and yet. the is and this idea They're XXX plane of times to, has question heard plane flying to

was out dispersing the as documents Saturday, we from that should days. seven-day It funds. had of was We before came what finally they actually originally that Friday last we XX it support were, of a on a date the loan to have approval like. sent Thursday And SBAs got window to in last -- changed look

will starts fact day forward, that how that's dispersed thing forgiveness only get get other will get the how been absolutely the to time George, the absolutely today, you for than all window, or customer we we the the this funds. amount eight-week we loans we've window determine your receive window the time won't program loan. There the within got that has them XX-day that approved, meet So the play about And the to to no of apply. run

just know put how call them spreadsheet, the on day together other the what even send bank don't bill the build us time the directly a to see a happens. for We if Suggest SBA upfront fee. and at current is

So -- being is this program they defined. really

the last If take in at XX has the in last the SBA more a XX together. done business years it, you look days they've put done than

it just cluster. is a total So

how the monitoring is going as the and given go days much back XX amount and they work are you now reimbursed side. determined XX, have from But take out forgiveness work, and other of get everybody if all on to people And to we in in fair those not, back it us is things given a If we'll be it loan to covered of loans six activity program. business cluster, go or one was the community. on on it's if a we we whether for to make felt probably break-even the stretches the then do into things had the but thing money we'll and month this to right help try do, okay hopes, balances,

George Sutton

But rocket. little I've It's -- it like differently. was after rocket heard a It's it ship a launched. it. like same a Got building type

David Becker

for having that's lived with -- -- that I I'd would an it would agree That's, airplane. analogy. better than the I last XX days,

Operator

Race from Nathan Our next Go Jaffray. ahead. Piper question is from

Nathan Race

thanks. Yes,

on tax follow-up, a Just thoughts just any forward? going Ken, rate the

Ken Lovik

that bit forward, of to revenue exempt all Apart that had the say it's the is from X% quarter in; little we the the laws I comes probably going rate up revenue rate tax probably, so picked we effective to total is some we closer a it's -- say that benefit a the highly it of had expense rate it of probably to was CARES by Act offset level result going the vesting tax mortgage a mean as on the in dependent associated here, in the events. in would proportion I equity by tax with fourth compensation of I'd revenue. depend X% to on than currently this quarter change rate. of

Operator

closing like would to over the This now I session. our question-and-answer Mr. turn conference remarks. for to Becker David concludes back

David Becker

what's some call living Guys, we're crazy us the least through on nothing times crazy I on that world the are is in the to guess go been it or But tremendously maybe that history this Spanish going today, in to analogies know in I the tell for today. at today some to crazy, we XXXX has and could Flu back time. folks draw

the over out And thank had of free last all you. to have reach want to directly several feel weeks. us. of So to I to questions; We've talk a to chance you you few

you hope the these again we remains to much healthy Thank We joining today. you today. safe And very for Thank participation call hope you talk and your everyone for soon. challenging during to times.

Operator

for concluded. The presentation. Thank today's conference now attending is you

You now disconnect. may

First Internet Bancorp (INBK) 23 Apr 202020 Q1 Earnings call transcript