NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns a subordinated debt rating of BBB- to the Subordinated Notes to be issued by First Internet Bancorp (NASDAQ: INBK, “the Company”), a bank holding Company headquartered in Fishers, Indiana. The Company intends to downstream most of the proceeds to the lead subsidiary, First Internet Bank of Indiana, as well as reinvest a portion in higher yielding securities. KBRA most recently affirmed the Company’s senior unsecured and subordinated debt ratings of BBB and BBB-, respectively, on September 19, 2018, with a Negative Outlook.
First Internet Bancorp’s ratings are underpinned by its history of solid asset quality, as well as a scalable business model that supports adaptability to new business lines. The ratings also reflect INBK’s experienced management team, with long tenure within the banking and fintech sectors. The ratings are constrained by INBK’s aggressive approach to capital management and below average earnings performance, as well as the Company’s rapid growth generated from new business lines, though the Company recently decelerated growth trends, as management continued to recalibrate the loan book for better yields. Secondary constraints to the ratings include a relatively elevated concentration of CRE lending, though the concentration risk remained partially mitigated by the significant presence of public finance loans in the portfolio. INBK’s ratings are also balanced by higher-than-average dependence on noncore funding, and comparatively high deposit costs.
KBRA’s most recent surveillance report for First Internet Bancorp can be found here.
The ratings are based on KBRA’s Global Bank and Bank Holding Company Rating Methodology published on February 19, 2016.
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KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.