Core Insights - First Internet Bancorp plans to sell nearly $900 million in single tenant commercial real estate loans to Blackstone, addressing credit quality issues and aiming to enhance lending capabilities [1][2][10] Group 1: Transaction Details - The loan sale is valued at approximately $869 million, representing the largest individual loan sale in the company's history [10] - The bank is selling the portfolio at a slight discount, about 95% of par value, with expectations to reinvest proceeds into higher-yielding assets [2][4] - The transaction is expected to close on September 18, 2025 [2] Group 2: Financial Implications - The sale will generate cash that First Internet plans to use to shift higher-cost deposits off its balance sheet and fund near-term growth opportunities [4] - The average yield of the loans being sold is 5.04%, with an average maturity of about 4.4 years [6] - The deal is projected to improve the common equity tier 1 capital ratio by 110 basis points, increasing it to 10% [8] Group 3: Company Performance and Strategy - First Internet has reported net income of $6 million during the first half of 2025, despite experiencing an uptick in problem loans [5][6] - The company has increased its loan loss reserves due to challenges in its Small Business Administration and franchise finance portfolios [5] - Management views the transaction as a means to optimize the earning asset base and enhance balance sheet flexibility [3][7] Group 4: Market Position and Future Outlook - First Internet remains committed to the single tenant market and plans to continue lending in this asset class despite the sale [10] - The company ranks among the largest Small Business Administration 7(a) lenders, indicating a strong market presence [11] - Analysts have expressed positive sentiments regarding the loan sale, highlighting its potential to enhance profitability and capital levels [6][7][8]