KBRA Assigns BBB- Rating to First Internet Bancorp Subordinated Notes

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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About KBRA and KBRA Europe

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.

Contacts

Analytical Contacts:
Amina
Ouattara, Associate
(301) 969-3187
aouattara@kbra.com

Vincent Arscott, Senior Director
(646) 731-2473
varscott@kbra.com

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