Business Context and Reporting Period
This Form 8-K Current Report was filed by First Internet Bancorp on June 12, 2019. The filing documents the entry into a material definitive agreement regarding the issuance of subordinated notes.
Key Financial Metrics and Transaction Details
- Instrument Issued: $35.0 million aggregate principal amount of 6.0% Fixed-to-Floating Rate Subordinated Notes due 2029.
- Offering Price: 100% of par value.
- Net Proceeds: Approximately $33.5 million (after deducting 3.15% underwriting discounts and estimated expenses).
- Interest Rate Structure:
- Fixed at 6.0% per annum from June 12, 2019, to June 30, 2024.
- Floating rate from June 30, 2024, to maturity, resetting quarterly to three-month LIBOR plus 4.114%.
- Payment Schedule: Interest payable quarterly in arrears, beginning September 30, 2019.
- Redemption: Callable at the Company's option beginning June 30, 2024, at 100% of principal plus accrued interest.
Material Changes and Debt Structure
The issuance represents a new addition to the Company's capital structure. The Notes are unsecured subordinated obligations of First Internet Bancorp only. They are subordinated in right of payment to existing and future senior indebtedness and are structurally subordinated to all indebtedness of the Company's subsidiaries. The filing does not provide comparative financial metrics (revenue, profit, cash flow) as this is a transaction-specific report rather than a periodic financial statement.
Management Commentary, Risks, and Contingencies
Management announced the issuance via a press release incorporated by reference. Key structural risks and terms include:
- Subordination Risk: The Notes are not obligations of, nor guaranteed by, any subsidiaries.
- Interest Rate Risk: Post-2024 interest payments will fluctuate based on the three-month LIBOR benchmark.
- Call Risk: The Company has the option to redeem the notes starting in 2024, which may impact long-term capital planning.
Investor Verification Checklist
- Verify the final net proceeds received against the estimated $33.5 million in subsequent financial statements.
- Confirm the impact of the new debt on the Company's regulatory capital ratios.
- Review the full text of the Second Supplemental Indenture (Exhibit 4.2) for specific covenants and default provisions.
- Monitor future LIBOR rates to assess the variable interest expense after June 30, 2024.