INBK - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to the First Internet Bancorp Earnings Conference Call for the Third Quarter of 2021. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Larry Clark from Financial Profiles, Inc. Mr. ahead, go Please Clark.

Larry Clark

earnings Good discuss and results First of Company's issued third Chuck. it's afternoon, joining on available for you us quarter the its Company The to Internet XXXX. release day, you, yesterday thank and everyone, website. for the press Thank Bancorp's financial

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

slides also the website. access these on can You

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

to actual First Various cause by factors update from other information like of refer be remind future to Company's on call involve the the substitute to I'd quantitative call. during implied results statements that forward-looking and additionally, to like the However, discussed management directly well Company financial before uncertainties. be this the to call GAAP the I'd reconciliation over comparable are Internet And most risks disclaims or we contains the non-GAAP press as in turn and are and as website may any a this you discussed the available measures. begin, on financial Company's to David. time, made today condition available expressed future supplement, Bancorp statements. the At performance The with to that to are obligation of different release which results website. any contains measures, to not to non-GAAP the respect intended but measures. The factors which could filings, SEC conference forward-looking forward-looking any such materially These statements GAAP

David Becker

good and thanks for Larry, and afternoon, us today. everyone, you, joining Thank

are up $X.XX, this we which more net ago. We our from a $XX.X share earnings per of with income are XX% and both diluted year reported of as pleased quarter of results million than

X% of sub of or are Directors as of like pretax pursuit. Board and incurred value, would $XXX,XXX several income recorded Excluding $X.XX shareholder we that costs share. million ongoing highlight debt, $XX increasing of initiatives per The I diluted and management to adjusted million on intent net we in redeemed $XX.X

improved revenue net expanding have managing We profitability our margin, interest our by expenses. diversifying fee our and

of generated Our This an an earlier. a quarter generated average the adjusted of on straight excess have fourth quarter is assets performance third X.XX% advance return in we from X%. a the substantial marking in ROAA year

to pleased tenant single of growth the earnings We we the growing confident a great and in quarter, financing, about little were into the just over and with three ability in continue for a revenue remainder our in C&I months' balanced just In newest our time. franchise with finance, are -- the very year a third in XXXX. lease got I'll to million more $XX start off about lending talk area, moment, originations in and

XX% work our new Importantly, quarter heading loan into strong, fourth commercial through opportunities. the teams are diligent sourcing up pipeline

lending quarters business of us months to the be in ahead. small growth We in and key expect construction activity areas for

As XX% from up construction lines of across all unfunded of start September the year. business were $XXX the XX, commitments million,

fourth the an to over additional Our several by pipeline, team fund million typically XX These commercial opportunities our horizon. increase $XXX months to has new quarter. unfunded real estate in XX the we construction commitments projects and expect during

million we business us driver which the leading is a In The small strong. to $XXX second commitment made remained growth business lending, owners. for XXXX,

with class returns. capital our growth proven growth, fueling attractive funding leading industry in provider to in quarter. businesses, of and job we part up country. are deploying asset working franchisees that Capital, pledge, while the As we with teamed We various across risk-adjusted financing announced to in recently with to strong ApplePie third that the Together, began of ApplePie economic we segments loans have growth a an

I expect originations earlier, anticipate total of As funded fund noted loans $XXX up loans of and to in next funding time we end of in $XXX million to by up the just million XXXX. additional million during that over We to year. $XX

a experience with had that have several exploring We fintech And with very are ApplePie sheet also date. to would relationships other actively we companies. note positive I balance

we we SBA over the the end commitment have past the to few loan. small the business in years. the have $XXX course, lending for approvals cornerstone our of program secured SBA ended out X(a) million September of is platform XX, Of small business Through built year

as brought We well loans. updates new series year. SBA. a way as of I'm also the challenges agent, the to the the been this on of sale by PPP very of funded have by a XX% payments date, PPP transfer our $XX million relief changes, earlier the of to To X(a) operational of responded added rule move forgiven team of our proud program PPP loans SBA's complications to collection and the which loans

loans million in to $XX sales to to ahead the installed X(a) that temporarily the secondary guarantee impacted mind XXXX, response range to is pandemic. government for in the million standard generate as guarantee year. be XX% the expected will on we X(a) XX% the reverted volume anticipate loans, SBA compared originating of sales which SBA Looking of to Keep $XXX in on revenue

our We recently services cash to more to banking experience provide their flows fintech modern are will business out manage with and empower also a a business effectively. of innovative owners small partnership to wider an them Finzly, serve the announced business that payment a solutions digital provider We building for customers. and small of hub our enhance range

service digital model, the COVID-XX have digital the customer-focused product banking to years, experience. expertise to away has delivery accelerated the transitioning instead to new branchless Over services. not for customers customer time branch the attract demand the pandemic enhance We lose last to our from were did X.X operations. leverage banking the Thanks our able and in we our and

our improvement growing believe our capabilities announce to few committed our the base expect To a our shareholders expand digital this within of and dedication conclude, customers in next additional serve in to to are for us results and puts upcoming weeks. and relationships to we nationwide, to we position the quarters. generate in great We invest strong continue relationships continuous

Before I important turn it over to to two like announcements. Ken, I'd call attention your to

I share of end through is First, Board our Directors authorization of authorized of million to the am XXXX. This $XX repurchase of pleased open common to up stock. that the our has

financial response earlier effects pandemic of initiative priorities also and for to the advancing governance ESG on inclusion. of our customers digital course, available around our and the the exclusively report With Additionally, and we discuss future our communities. this effectively existing firstinternetbancorp.com. at I'm responsible that, proud released to quarter. to encourage the our while commitments financial week. ourselves in risk COVID-XX call efforts the our accountable successes. team's I for report mindful of citizen, first like and the you to turn managing to including Company's facilitating financial format is, our ESG results chronicles hold I'd which The report, By Ken corporate read over

Ken Lovik

Thanks, David.

per to net was it income costs, increasing diluted million share, quarter $XX.X interest taking of $XX.X to of of quarter debt. After basis David XX.X%, the quarter. As earnings XX in and another of points earnings continued income diluted expense pretax the and an return $X.XX million million mentioned, into adjusted X.XX% and additional $XXX,XXX on increasing to account XX.XX%. average XX.X% basis adjusted with $X.XX, came of respectively, redemption related common XXX these of $XX assets adjusted to share second which equity second at points net included with an return per about representing subordinated strong average adjusted Profitability tangible from improve increases on and

September Slide and at modestly XX, the X. of Total the billion, were quarter the third X.X% $X.X end down XXXX. Looking quarter loans from second at down from

pleased finance with in net commercial as public lending $XX.X were As our David earlier, industrial these $XX.X largely new tenant single finance and our business and area. franchise The and quarter portfolios by finance of growth and in million early offset in balances respectively. are during the growth about we health lines payoffs mentioned million, care were and performance lease in financing excited the the were down

due new $XX.X Additionally, forgiveness, the loan to small quarter due second but were primarily Consumer by the down balances compared business PPP $XX production. loan partially of higher offset portfolio. to primarily million million, in lending balances mortgage to balances increased moderately residential

again Slide improvement saw deposits modestly Moving of we the on on second base. up our composition end were the the X. deposit Overall of and quarter, to in deposit balances from

first deposits on checking million experience to pricing expect non-maturity off. million of either for area around costs brokered much primarily X.X%, quarter basis. rate or million and during the liquidity deposit as in continues as to of fourth CDs and next continued basis combined our into cost accounts, This increased and interest-bearing we our in increases X lower During lowered and to a quarter, cost pay accounts money balances expect points balance and the in quarter, CDs. reduction the with realized funded the $XX.X we've small higher interest by realize by decreased full balances deposit sheet on deposits priced $XX.X CDs more maturities business year of attractively XXXX, expense million the current CD $XX nine months focus in based broker this deposits and year. savings or commercial the to on with replaced continue X.X% were Compared market to-date to $XX environment. and decline driven deposit or deposit

taxable to to $XX.X $XX.X X Slide second income to the fully respectively. or interest and million net Turning $XXX,XXX reported and decreased X. both income quarter, and X.X% net million, Compared interest equivalent

The debt $XXX,XXX partially loan XX due to basis X.XX% on to X.X% of other balances the interest-earning costs interest decreased points and X.XX%, margin of average balance interest the from for quarter million. composition as well lower offset X to The equivalent compared quarter the increased loans quarter. net earning quarter $XX.X the subordinated average interest for increased $XX assets margin points points was higher fully the second from assets equivalent securities the or declined and debt, subordinated third million lower earning decreased to million X.XX% the net the down by of net income taxable for interest with of for quarter asset the basis interest to adjusted and quarter. assets. basis cost being second to as the margin the to X.XX% taxable average increased Excluding XX fully the for X.XX% interest-earning redemption net third equivalent associated Net X% second yield from taxable fees. of $XX.X in balances changes prior income with Fully

basis points. XX As the fees, basis partially lower of balances which a points. quarter as put was driven by balances net primarily loans continued Currently, costs, points. by have impact you X compared benefit decline basis end to in CD continued a already offset The was the X also deposit $XXX million cash can basis negatively third added This provided point see also securities X, decreases to by of loan a and cash on X Elevated of maturities. the decreased interest balances and retiring portfolio work to funding negative had of margin. by Slide which we average cash impact benefit about high-cost

held time, effect in point Federal not cash a interest as forward for basis had punitive Reserve have some balances excess the margin included on million margin. the roll of $XXX net been cash net Although interest X elevated balances at

expect fourth the assets from the to what we and on were increase in our they Looking quarter there second revert and to to then yield into XXXX, closer quarter ahead interest-earning XX%, quarter, growth in driven have SBA, grow second the to construction portfolio. primarily commercial loan opportunities. end Compared the increased we seen pipelines franchise by and finance we of loan the as

for Additionally, in further to we deposit future see continue opportunities downward periods. re-pricing

mature average next approximately Currently, cost is weighted the $XXX of of points. basis cost of to range million are the XXX Over scheduled in points. deposits these months, the of CDs XX replacement XX a with basis

$XX and re-pricing, growth income for deposit we be annual ahead $X to to our XXXX, expectations continued loan net downward and Looking interest million. between anticipate growth million with

loans Slide but by million, slightly Noninterest activities, on the up gain million increase the an from with X. of partially was to adjusted offset revenues banking of during second primarily the from income second noninterest X(a) income driven the lower sale We million which loans. quarter, guaranteed The Turning $X.X by in quarter. $XX quarter $X.X was was consistent mortgage on sold higher quarter. SBA was for

sales. However, experienced we those on lower premiums

the sale fourth heading expect revenue $X I mentioned be in end to the are range pipelines, on earlier, of our especially SBA up quarter, As loan in business, year. into strong gain the the SBA Therefore, probably of we in million.

XX. the basis to professional linked incurred loan expenses, in decline portfolio. on to decrease in driven expenses Slide a to The and on and due review of consulting by decrease costs quarter as fees nonperforming Turning fees a due mainly was third-party expenses. The was timing decrease loan our professional in performed in primarily was and noninterest prior on The consulting loans. reimbursement of to related periods work loan normal the shown

Slide financing turn quality during loans now relationship, previously Net quality quarter, down than let's on total charge-offs declined the of loans a basis XX represent XX as due quarter XX. basis been in XX the and average by to mainly during third quarter as to XXXX. asset last single $X.X less Credit net Now was were one the quarter nonperforming payoff nonaccrual. million, improved the and basis had which points from classified point. lease tenant Nonperforming of from points loans to points charge-offs $XXX,XXX loans, down of basis

loans, and from basis a as of and We to quarter. model points, net improved of at end. for prior bank. XX to that capital on to With Slide high as we levels loan which XX, quarter losses primarily the at at PPP capital, balances the shown consistent ratio in our for fact due compared healthy $XX The was continue loan qualitative the totaled $XX,XXX to XX quarter low. second to total are remained was the the third $XX,XXX decrease both remain with in benefit loans of $XX basis allowance million in quarter points were unchanged proud decrease of the a exhibit overall asset million quarter provision and that best. among respect and excluding allowance industry's losses remained factors the the the prior Company the Overall, The is in charge-offs the quality provision loan

our tangible to earnings tangible ratio the With assets points strong quarter, basis increased performance from up the to X.XX%, this common quarter. equity XX second

increased up ago. than per over book second higher share and from quarter one tangible to value in year Additionally, $XX.XX, the $XX.XX XX%

call, a price repurchase the earlier program to Board purchase stock have of an David our As mentioned that on run up through end Directors new with $XX of authorized XXXX. will the million aggregate of

rate due during subordinated offering million in X.XX% fixed completed also quarter. We of to $XX a floating XXXX notes the

to at or of greater regulatory so the $XX to redeem turn portion questions. a that, While flexibility to the quarter, will we million of cash the With of proceeds the callable opportunities strategic the take subordinated were your further back debt end used towards share the offer it strengthened repurchases. deploy provides capital can operator evaluate I and

Operator

ahead. with And begin Instructions] from now will session. go will We the first [Operator Rodis John the question come Janney. Please question-and-answer

John Rodis

is to tangible So book. me obviously, I stock guess that I buyback. but up let trading still the questions. some see few this on got The guess, Great first a I announcement. stock is off, start morning, just below

guess, how you to purposes, this be How buyback? plan model it? I guys modeling should aggressive, do we with For

Ken Lovik

I obviously, blackout right a period in think, we're now.

I today. it tangible your -- year. end yes, to see book. think we we're And the price But still we up have in was below to next nice it point, place John, through of the as pop

we think to But So have with I us opportunities think, we we weigh can in I of front the both. need buyback. strategic obviously, do

So really issue. I it's a think timing

timing front like strategic a but through that just of end do, we have may evaluating. good the able due buyback, not if should to I to of think we're other the ideally, portion, opportunities in that feel we us all, impact we I XXXX, pretty of be think, just

John Rodis

Ken. Okay,

So -- okay.

of It's will just a out it more more two? rephrase or of be guess, to it something So next like process. in you'd a, look million the to not $XX I do drawn whole quarter sounds the

Ken Lovik

Correct.

David Becker

Yes.

As advantage get it. some come market we reason, if we're position opportunities John, for we've and to and look we the other Ken buyback line blazing the there's guns of taking on doesn't then with at, said, And take finish got in the think over like that a both. do we'll something a

we easily think we next enough and a but -- earnings we're in can increase do definitely both, So position with in over We very year. the have easily capital

John Rodis

Okay. like you was expenses. gears linked some were Ken, OREO sale quarter, it I some And switching on said looks the but down looked They some noise, and then had guess, there you gain reimbursement of like expenses.

we So think how should going expenses operating forward? about

Ken Lovik

were expenses. to pleased but obviously parts there we're just they I in, in Yes, offsets there other came moving they that timing benefit mean, were, how were of some and with

call or where probably obviously estimate of forward, delayed I good looking as it of then we're SBA think, a million timing a the over probably the some run close continued a, line. into platform we originations that terms add quarter, due to at, both to of and we for rate, there, and continued the our back build fourth that And we've kind to the add get out the look if in million that's go XX.X headcount year in bank. or we've course to of that of was XX

So, XX.X forward year's probably you rate year next XX headcount expenses, take we're a to into full next closer of looking to year. to run and

John Rodis

one spread drivers X near-term guess, the in sort your, just XX of income more question. increase Maybe million. I million of Ken, to

debt without off that of XX year, -- does income? spread and curious, the does this XXX,XXX that Just of of sub with expense or

Kenneth Lovik

That without. would be

John Rodis

the so Okay, reported number?

Kenneth Lovik

Yes.

John Rodis

guys. Okay. sense. Thanks Make

Operator

go Michael ahead. will question KBW. next Please come Perito The from with

Michael Perito

holding the is? what partnership. the you more there's beyond a color to And involved more on bit just the give how David, partnership? sourced? the color little nature guys partnership of there, of those Are and a you us loans Just don't I if maybe guys sheet? are that I bit the Are can something loans kind balance them more mind. to you originating within ApplePie in start you are underwriting, if then, want the on they if little wondering, was on

David Becker

identical they a four instead healthcare or have banking Michael. like where been existing the with franchise $X whole Sure, of three COVID or over the years actually over what has partnership during all of over and last around is of to kind And continue long-term would we think almost pulled increase. billion originated franchise about relationships the to to They with loans. endeavor provide the were existence world ApplePie is The years. XX the I doing crisis, in franchisees a expanding. as thought ratings country it's little because the franchisees X

on nice growth in curve they're So, great year, us. the and the was timing themselves a which half second of for

credit like created they're loans and fit our We did credit you a underwriters with with ecstatic And provide have I tell we sorts from box what today. that seen internal box. of they and we've folks that can

we I maybe had the think the all we only one we the -- discussion of out as or even far as some file. a processed, two loans of in about information

comes it books, it on full doing from servicing. take find we're our to the So, They space there. but we origination, do us, a we

program, it's we're for excited great very XXXX. looks strong So really be going a and like been about to it's the kickoff it

Michael Perito

it Is there to that a those along these anything funding like lines partnership? or lending any or relationship is customers pick-up else opportunity with just purely really overtime

David Becker

the No. but of A And about are as new the talked the brand nice servicing. to well. look we Michael. things individuals the enough. I funding folks industry franchisees. them one doing it, purchased long of deposit the kind are there, these been not opportunity at They have in loan, lot they've with about side of giving misspoke We They the and these

the three, So, multi number They're number the franchise store store or guy franchise. four. coming back was

businesses we've operator. of it's the good, our opposite [FCL] facility the the not kind program. and of Historically, strong financed strong So credit,

there the it's relationship yes, estate, is just been program for interesting the deposit look to a get us as So, at working real we're on is a with an definitely the time -- it credits. program where hopefully But this well. not

Michael Perito

they of the is type the indicator there in alluding type are And that are could the guys would that that mostly of arrangement? and Are fall of partnerships this more some is that that things kind this to of at Or of the term? that, into pipeline? are near looking incremental come an things you in diversity you guys

David Becker

our the the diversity, just a actually of small lot announced other products. that's during business third technology we here Finzly, quarter partnership A with which complements

lending other have it's a opportunity. where We folks

two firms opportunity. fintech where deposit have here out We a three or it's

So at our facets, we're have fintech companies that existing other make looking all better. work systems have obviously we just and technology

So, and at I I we've announcements two got think actively the services we're different got in and early calls talking more have, about that said to one hopefully, fourth year. probably should or back. and next looking -- We've quarter several here

Michael Perito

rates what kind are loans ApplePie the these And of on roughly?

David Becker

a is and little care a them term averaging, ApplePie think, a loans X-year about XX. little I the than is lower term net health on over versus were X%, the

bump So, well as up it's in as nice yield a the term. shorter

Michael Perito

run year-to-date we Got I to would is the is way $XX high of And something rate of line the range, about like clarify Or XXXX. are think annualized in mean difference, the million that the guide, it? that basing all? wanted an that million to at a you it. there right or clarify kind just in like $X Helpful. on $XX off growth to I top million

Ken Lovik

FTE No, that's an on. Mike. spot you're basis, exactly On it,

Michael Perito

the the Okay. could then, within the fourth the expected minute SBA the Just like you in you spend the guys than than margin in quarter. And quarter? the with dynamics quarter? is larger more contracted there And for about then was B revenue you out? the pipeline just Was and fourth of wondering, now just Part it pipeline that. It expected curious pickup lastly, if really on a the was just -- I sounds pushed dynamics was

little guys Is the next bit more revenue year, Just a for target? add to team? behind more the current if more the a little color there, provide can continuing you about that you don't Just love mind? Is wondering the scenes salespeople? bit that if would insights pipeline

Ken Lovik

during September, the firm slowdown at Guidehouse cares the for think has over the complications created with transfer that secondary month as made agents, Colson, switched as well beginning of I government from a Footprint SBA end used of the the quarter time. being and you, a called to getting their that sales the payments were of market. the by the new as They third lot of to Yes.

fourth the bump-up of writers. get the just was the here that and to for is massive push XX, volume which is of stuff through quarter obviously, part So with. also we September begin couldn't year-end, end pipeline, physical the It just the them insurance the XX%

a So agent fourth is SBA up just flooded hindsight. XXXX. hope up and to going time a so We add we've their back a was office the a XX is budget. realistic of good poor that plotting the as in opportunity team. with bump definitely a SBA volume good bit staff solid meeting growth. or But to some We're the -- for financing XXX the number with team more got ago, But change transfer little and two. they're quarter We had the carryover into to another support hours pretty BDO adding us. But comfortable

PPP getting getting of and everybody. obviously, up way SBA the been up. out has So kind cleaned for of is

a really again making it's growing little team, to year. great think we But a competitive. we've look and program great So more it forward got significantly next

Operator

Group. Brett Please with will question ahead. Rabatin Hovde come from next go The

Brett Rabatin

I about the the loan ask, to David, when portfolio fourth first growth we wanted think quarter. in

some like due it as thoughts continue about might the the winds have guess think origination maybe down the XXXX, we items And competition? do curious, payoffs, that as that segments looking I quarter rate be had to health care that grower be fourth of I have line are versus you I'm expect you looks to on Looking here, some PPP at the like of payoffs a atrophy what some you mean, and double-digit your could core at? individual net

David Becker

Yes.

forecasted may care But and pipelines year feel a year, with we short fourth work there. and kind robust. grow ApplePie downs -- longer find is area remains an slowed health in do competitive rates the was it's we're pay that the we to to obviously, for there. team pretty the pretty class earlier asset there quarter also when in the I here. decline has But with bottom. the I the be finances, portfolio. more And like, curve, bit growth on that up good we continued But some activity which new run areas of the in think about the love prepayment obviously, in bump single for track, that example, at right it is tenant, a on our the in a than is XX-year was in pricing seeing into

of pipeline strong, kind a across mean, what think the the our I -- on in of I some selling So probably origination SBA board still and as handful SBA of well. that areas and retain we the we're our is at volume guarantee. XX%

to very I loan going good board like growth we think of look think several potential the that feel overall a as a net So here area in a that or the year. We've little as I the for companies on growth. only across kind quarter Brett, at sale fourth would been they've are in about C&I here quarter. the in be today second in quarter, -- the the large teams But loans or a got feel all there's environment. books for or place soft fourth that's C&I just we about the couple running opportunities of of in retaining much normalized fourth me, the of as we're not areas kind different it excuse we

the adding on looks million the particularly from compensated, pumped any have that ApplePie $XXX have up. there C&I. So loss else yield care. some Ken pretty Obviously, with were we're we But could stable said, as impact everything more on health it, than and that and growing,

excited pretty numbers. fourth about we're quarter So

Brett Rabatin

other thinking I was Okay. about about curious And then the was the deposits. thing just

think cost less base? from Can starting you're the down other perspective, deposits of think some it's we kind or go liquidity the have about managing about to you deposit maybe of to are industries I Most But come higher a and the the a side talk rates? the management of guys' know of managed the fairly late 'XX had we rates, at about nicely. as them of how the people possibility? And when just if 'XX stable. CD You've costs think been deposit obviously about don't the then deposit eventuality but rates coin on you thinking

Ken Lovik

money -- the the continued than CDs In looking can't deposits of CDs will of the there it et a accounts, business environment just about the of in we've obviously, point call when whereas having see different just in well, have CDs I'll of to But look growing 'XX we the we the growth continue maturities marketing go happen my maturity had shift markets, thrown in And side. Yes. the those as other the of balances. the CD small like in we've mean, it the sheet. effort cetera. they the they Eventually, were think it. of And replace behind maturities CD growth the time -- XX% really terms position in markets checking margin. I your non-maturity Last kind mean, the overall, that XXX%, those XXXX, we've eventually checking, in door coming excess to an rate many I where space, were composition on that pace I from that think And from of of time as we to forward as really other lot luxury was and and I the continued to betas had in in lower and seen see to banks environments. alluded the down. on gets again, deposit products, -- rate what the maturities into closer happen. especially think But just too, environment, dollars kind we a growth, come into -- We pricing probably on may in up in on we money had that. -- money in we're industry market alluded and also liquidity were the were balance comments to XX% I the XXX% CDs. But rate at suffered to on, we is off. we than

much, occurs, an think deposit I And we like up said, environment, think that not So, I we're into about done. base. of rate composition the I going when better much feel the

to beyond. continue into foresee and this We well 'XX continual shift

David Becker

doing, somewhere probably things, do to in something rate. on we're Brett, that One to obviously, of 'XX have the going

made flushed comment that You is everybody the with cash.

So start the the time rates as won't Ken XX the to Fed moving as XX institutions, feeding 'XX where hopefully, had climb, last frenzy move to be get commercial money, that we of insurance the it with we're as CD one in we're other three-, doing now, are some can we the companies, things basis under But that opportunities five-year up lock four-, range points. cetera, right et said. XXX in

pick a bit So, a we still but a up stuff, see big three- term little things, to window. some costly, more to little longer obviously, in we're next the adjusted -- of trying five-year very pricing little in for scheme the

Brett Rabatin

maybe And then just could, just capital. if around Okay. one, one last I

you with going equity about Or capital these -- really we about to and additional capital. some $XX curious million of to entire could they partnerships I'm some considering? wouldn't deployed do obviously other it have you're issues these these You with require you're be any be investments partnerships, firms? thinking that should are or not that thinking how of still the

David Becker

tell of working opportunities. obviously, the that's with we're I in companies opportunities, that some and to fintech going Acquisition dollars. a involve will you couple

of some to cetera. as stake other, as and There's if Company to in or a a possible. making We are in equity company participate B, providing that each we cases, Series in an et round, services the by customers also taking capital products signing an we're only are Series investments hopefully, opportunity them A but are on C percentage. not in lot

in strong to capital. that but would the pretty heavily for look least acquisitions my about background Bank there's we very us. the not ground some really capital technology, at things a to obviously XX But pretty cash said, Ken we've not here opportunities, dollars. as really, some But I but continue beneficial hit the bit opportunities was heavily, earliest great floor unique very on TCE, out Silicon good opportunity in the here, that's position closing been and We're So guess days playing in a in right We're to could from be Valley I is -- us long since at massive years little the that the X% happening on highest kind generated bank. term, the of get a for think now. the we've it's with probably we're of

got a So we've opportunity here. a lot of lot of flexibility and

Operator

The next question will ahead. come from George Sutton with Craig-Hallum. Please go

George Sutton

if heard that demand of because market pipeline address, in is of commercial I increased a I David, haven't commercial wanted out dynamic much the much detail. there. to little could, we How more

strength and opportunities? versus creating So execution go-to-market market I'm your that's the wondering, of these your really just

David Becker

in an We're position, George. of kind enviable

with think now this Indianapolis, into There's expansion Amazon Indianapolis around up suck space in Memphis, here we the there called of the to square hub trying firm had distribution. warehouses base and that's Tennessee, FedEx and home actually the last I little are larger up. for in in every than we're

over the a it's So -- having right And time worked some are just team. we've opportunity a great a the it's now. right folks in with just with that we're tremendous years that

close they're XX in the next marketplace. XX I in feet to up the warehouse square think to here going of XX months space Indianapolis million

ventured it have into not commercial basket firms. bit real Indianapolis showing of of Obviously, takes outside with We estate is these in one the on all marketplace here Amazon a Indianapolis. little some

a of long-term some been So us opportunity advantage it's for take taking and market. to connections nice the

George Sutton

operation and it perspective. that Got Indianapolis was impressive. week, saw in talking Actually, you're that ironically, Amazon That's quite about, I is you. helpful I last

operations. FedEx -- So sorry, I'm Yes. or

private you've just C So equity additional deals opportunities, were relative you mentioned that to contemplating, this and the incremental made the through Series to to B funds, you're referring to B is be investments clear? deals, you

David Becker

Yes.

and equity still companies them direct of some the funds So with into private some going the are were ourselves. working

we're what sub companies take there ground than lot on be the to crazy I fact, We're not first going calling floor. and or the are coming ID venture today get that really to -- now to here right just us it, out a good opportunity with in going on nature In up working of of but advantage go mean, we're of would something that.

George Sutton

that just no finally, way, that could diminishment valuation or of then And I shape is Is That so are are at. appreciate related opportunities reasonable considering result solution? you fully really that to you buyback the in any form pursue? you opportunity that a the a that is Okay. see of looking M&A

David Becker

hit on nail You buyback for been I've second. grow the the head, George, right. that's exactly always

still market the we're So extremely acquisition looking heavily. at

Operator

[Operator Instructions] question Sandler. from Piper Nathan Our come with Race next will

Nathan Race

your imagine. the acquisition to I'd with Obviously, tangible the to back currency, it's book, below Going still trading difficult use stock discussion.

not I per periods how that earn-back solution within should tangible and consider you So guys thinking se? guess, as we so context, complete and about forth potential just partnerships on and forth so acquisitions

David Becker

an cash ones, we're looking the situation. not are It Nate, at, current deals. time, at The equity is

really to of be trading book. in deal, anything the if the That's XX% So We're to cash. as currency I guess, closer we're at, but with. -- only obviously would where know goodwill coming we're good buy don't any I not we're there's yesterday, dilution exactly it's still -- David of out

So we're cash opportunities. looking at

Nathan Race

tangible term? going years? be associated earn-back potential just period Or you three how think deals the value on those near to south the book acquisitions about with of are And guys would

David Becker

focused shorter of kind a as But month play two we're doesn't excited. month in a a two or return. three-year the on using yes, really longer, or the we're Yes, three-year

Nathan Race

changing Okay, thinking in kind the you support of -- balance of kind steady great. over NIM? the just and have coming balances it shrink hold does should a couple expanding end book. over about the the as on quarters. securities board? thinking pipeline, here between been some securities' maybe the outlook average the of the of book gears on Does size next last size then about we book and the quarters? few and particularly securities strong loan be also portfolio pretty fluctuations How of with sheet securities guys ApplePie There's And quarterly the Or Can period to

Ken Lovik

Yes.

probably on think as first. that to numerous Obviously, have really the said the take support really, fund our And front think that. of of I kind we in on is pipelines feel us. at and great way secondary about we look we cash loans to a I times, want we've

put on loan would lot that probably sometimes always into securities say and cash control -- you we of at the balances did in just course, Of if down of there -- we drift a where securities it's in than on $XXX with expectation wouldn't take the let average, We you earlier remember from June, But the year today. balance growth. expect north can't I were balances the our in did you to portfolio timing. a would that to much million, put well cash and need lot cash of over

-- them money down, the don't or expect down securities drift loan, here and to But we expect I over to next the may put cash securities portfolio. wouldn't balances loan timing, depending would from I months. So, on expect some as I drift into up away XX said, go

sometimes, purposes. minimum. And over six for in see you would area the But all really that next we activity buy CRA the probably mortgage that's months backs

David Becker

Yes.

his it mortgage-backed portfolio. comments the things, said over on on some the A quarter today, the of is books in as of too, the in past the David, lot One product payback. three as down also one yield Ken the those some that securities help refi on that's marketplace, and we that's quite we've this securities happening repayments going obviously, picked points things time, slow slow on to down, and and had boost slowdown portfolio up

So that it solid year-over-year off as rates think run as been like quite if there kind little particularly won't real it has bit. fast a basis. a up is and are of Refis, Fed bump down over on the I XX% indication

of kind because helps slows securities impact which the has us, it that but we write it of have paybacks the our really those hurts other down premiums side, us that some the on and mortgage down. on on So side, to

balance pretty the year in sword, into So but of be the it should double-edge XXXX. and

Operator

like conference I the session. closing go Please to for This back concludes would over remarks. any to turn question-and-answer Becker sir. ahead, our David

David Becker

like a and much. day you, you thank We're very it us today. quarter. We Thank with Thank We you. tremendous continued for had I'd of hope Chuck, have joining you happy a all great and success. you to share to

Operator

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

disconnect. now may You

First Internet Bancorp (INBK) 21 Oct 212021 Q3 Earnings call transcript