First Internet Bancorp

Good day, everyone, and welcome to the first Internet Bancorp earnings conference call for the fourth quarter and full year 2020. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Larry Clark from Financial Profiles, Inc. Please go ahead, Mr. Clark.

Thank you, Operator. Good day, everyone, and thank you for joining us to discuss First Internet Bank Corp.' 's financial results for the fourth quarter and full year 2020. The company issued its earnings press release yesterday afternoon, and it's available on the company's website at www.firstinternetbankcorp.com. In addition, the company has included a slide presentation that you can refer to during the call. You can also access these slides on the website. Joining us today from the management team are Chairman, President, and CEO David Becker, and Executive Vice President and CFO Ken Lovick. David will provide a company update, and Ken will discuss the financial results. Then we'll open up the call to your questions. Before we begin, I'd like to remind you that this conference call contains forward-looking statements. with respect to the future performance and financial condition of First Internet Bank Corp. that involve risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. The company disclaims any obligation to update any forward-looking statements made during the call. Additionally... Management may refer to non-GAAP measures, which are intended to supplement but not substitute the most directly comparable GAAP measures. The press release, available on the website, contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures. At this time, I'd like to turn the call over to David.

Thank you, Larry, and good afternoon, and thank you for everyone for joining us today. We are very pleased with the fourth quarter and full year results. The pandemic created some substantial challenges during the year, as you all know, but we adapted to the conditions, helped our customers navigate the impact of the pandemic, and continued to identify and capitalize on growth opportunities. We delivered record net income and record earnings per share in both the fourth quarter and for the calendar year. Driven by very strong revenue growth, higher net interest income, robust mortgage banking revenue, and increased SBA loan sales. Our significant earnings growth throughout a historically low interest rate environment and uneven economy demonstrated the power of our business model and our increasingly diverse revenue streams. Over the course of the year, we drove down our interest costs through favorable deposit repricing opportunities that lifted profitability as our fourth quarter fully taxable equivalent net interest margin expanded 24 basis points from a year earlier. Additionally, we maintained strong credit quality, even as we took extraordinary steps in the form of loan deferrals to help our clients weather the public health crisis. Nearly all of our borrowers who needed payment relief resumed payments well before the year ended. As of January 15th, we had only $8.3 million of loan balances remaining on deferrals, or well under 1% of the total portfolio, down from a peak of almost $647 million in late May, which was about 22% of the portfolio. We deepensize with our clients through this experience and remain optimistic in our customers' collective ability to fully bounce back and succeed in the year ahead. Our credit metrics remain among the best in the industry because of our strong credit culture and disciplined approach to underwriting. We also focus on certain specialty lending lines that are target lower-risk asset classes, such as our public finance, single-tenant lease financing, and healthcare finance business. During the quarter and for the full year, non-performing loans and net charge-offs remain low. We also continue to build reserves, conservatively positioning the bank to begin 2021. Finally, we delivered on a key strategic priority by strengthening earnings generated capital throughout the course of the year. Our team delivered annual net income of $29.5 million and fourth quarter net income of $11.1 million. Each company records as we boosted profitability throughout 2020. Revenue in the first quarter of 2020 increased 52% from a year earlier to $31.5 million. driven by continued strength in our direct-to-consumer mortgage business. Our bankers met the surge in demand brought on by low interest rates, winning business with a demonstrated commitment to excellent customer service. Our mortgage pipeline is strong heading into 2021, and we expect this business line to remain an important component of our profitability as interest rates remain low and both the purchase and refinance markets continue to experience high demand all across the country. Our small business lending area was another vital contributor to our growth. We built more momentum during the fourth quarter as the accelerated build out of our national platform in 2020 resulted in increased loan production and a higher gain on sale revenue. There is tremendous potential in this business unit with attractive opportunities on both sides of our balance sheet. We brought on talent and expertise in 2020 that will help drive further growth in originations in 2021. We are forecasting originations of around $225 million this year, the majority of which are SBA 7A loans that are expected to produce gain-on-sale revenue of between $14 to $15 million for the full year. SBA lending is an important element of our long-term strategy, and we are proud to play a leading role in providing financing for the entrepreneurs and small businesses that drive job creation across our country. As I noted, our asset quality remains strong, and we are cautiously optimistic about 2021. To be sure, the pandemic continues to present substantial difficulties for many Americans. We are monitoring our loan portfolio closely and working with our clients to help them bridge from this challenging environment to what we anticipate will be a strong economic rebound once we as a country achieve widespread virus inoculations. As we look ahead, we are confident in the strength of our franchise and our growth potential. Despite the pandemic, our digital business model enables us to serve our customers without interruption and allows our team to focus on our core lines of business and earnings growth. As always, I would like to thank the entire First Internet Bank team for their hard work and dedication to excellent customer service. Their collective effort and teamwork are ultimately the reasons for our record performance in 2020 and our optimistic outlook for the year ahead. Our employees are at the heart of our strong workplace culture. They are the reason First Internet was recognized for the seventh consecutive year on the Indianapolis Star's Top Workplaces in Central Indiana list. With that, I'd like to turn the call over to Ken to discuss our financial results for the quarter.