First Internet Bancorp announced an agreement to sell up to $869 million of performing single tenant lease financing loans to vehicles affiliated with Blackstone Real Estate Debt Strategies. The transaction is expected to close on or around September 18, 2025, subject to market conditions and customary closing requirements. The bank will retain customer-facing servicing responsibilities for all loans sold.
This proposed transaction is a decisive step to advance key strategic priorities, including strengthening the company's capital position and accelerating operating performance towards a near-term target of 1.00% return on average assets. The sale is also expected to significantly enhance the net interest margin by reducing exposure to fixed-rate, lower-coupon loans, thereby optimizing the earning asset base and providing balance sheet flexibility.
The loans are expected to be sold at approximately 95% of the unpaid principal balance, inclusive of transaction costs. The reduction in loan balances and risk-weighted assets is anticipated to more than offset the impact of the reduction in shareholders’ equity, leading to increases in the Company’s and Bank’s regulatory capital ratios. Approximately $550 million of deposit balances are expected to move off-balance sheet, aiming for a modest increase to the tangible common equity ratio, with remaining proceeds funding near-term loan growth opportunities.
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