First Internet Bancorp Sells $20.5M Subordinated Notes

What Happened First Internet Bancorp announced on September 10, 2026 that it sold and issued $20.5 million aggregate principal of 8.0% Fixed-to-Floating Rate Subordinated Notes due September 15, 2036 in a private placement to institutional accredited investors. The notes pay a fixed 8.0% interest from issuance (Sept 10, 2026) through Sept 15, 2031, then convert to a quarterly floating rate equal to three‑month term SOFR plus 3.735% (or a specified replacement rate). The company entered into a Subordinated Note Purchase Agreement and a Registration Rights Agreement providing for an exchange offer to register the notes under the Securities Act.

Key Details

• Amount: $20.5 million in aggregate principal issued on Sept 10, 2026.
• Interest & term: 8.0% fixed until Sept 15, 2031; thereafter quarterly floating at 3‑month term SOFR + 3.735%; maturity Sept 15, 2036.
• Redemption & rank: Redeemable by the company (in whole or part) on/after Sept 15, 2031; unsecured and subordinated—rank junior to senior debt; intended to qualify as Tier 2 regulatory capital.
• Use of proceeds & registration: Net proceeds for general corporate purposes, including potentially redeeming higher‑rate debt; notes sold in a private placement (Section 4(a)(2)/Rule 506(b)) with registration rights and an exchange offer to register the notes for resale.

Why It Matters This transaction raises $20.5M of subordinated debt, which increases the company’s liabilities but is intended to count as Tier 2 capital—potentially strengthening regulatory capital ratios. If proceeds are used to refinance higher‑cost borrowings, the issuance could lower interest expense; conversely, it increases overall indebtedness and ranks behind senior creditors in insolvency. The Registration Rights Agreement means the notes will likely be registered for resale later, and the company could owe additional interest if it fails to meet those registration obligations.