First Internet Bancorp (Nasdaq: INBK) is set to sell up to $869 million of performing single tenant lease financing loans to Blackstone Real Estate Debt Strategies.
The proposed transaction aims to strengthen the company's capital position and enhance its net interest margin.
Upon closing the transaction, approximately $550 million of deposit balances will be moved off-balance sheet, leading to a modest increase in the tangible common equity ratio.
Strategic Priority Advancement
The transaction aligns with key strategic priorities such as improving capital position and accelerating operating performance towards a 1.00% return on average assets.
Balance Sheet Flexibility
Reducing exposure to fixed rate, lower-coupon loans will optimize the earning asset base and provide balance sheet flexibility.
Capital Generation
The reduction in risk-weighted assets resulting from the loan sale will increase the Company's regulatory capital ratios.
Deposit Balances Movement
Approximately $550 million of deposit balances will be moved off-balance sheet, contributing to a tangible common equity ratio increase.
Future Growth Opportunities
Enhanced capital generation capabilities and balance sheet capacity position First Internet Bancorp to capitalize on future growth opportunities.
- The sale of $869 million of loans is expected to have a positive impact on the company's capital position and net interest margin.
- Moving $550 million of deposit balances off-balance sheet will lead to a slight increase in the tangible common equity ratio.
- Reduction in risk-weighted assets due to the loan sale will result in higher regulatory capital ratios for the Company.
The agreement between First Internet Bancorp and Blackstone marks a significant step towards optimizing the company's earning asset base and strengthening its capital position. The transaction reflects a strategic move to enhance balance sheet flexibility and seek future growth opportunities.