First Internet Bancorp completed a private placement of $20.5 million in 8.0% fixed-to-floating rate subordinated notes due 2036, according to a September 10, 2026 announcement via Business Wire. Structured to qualify as Tier 2 capital, the transaction was advised by Faegre Drinker Biddle & Reath LLP, with Piper Sandler & Co. acting as placement agent.
Debt Structure and Interest Rate Mechanics
The newly issued subordinated notes carry an 8.0% fixed interest rate per annum, payable semi-annually in arrears, starting from September 10, 2026, through September 15, 2031. After this initial five-year window, the financial instrument transitions into a floating-rate structure. From September 15, 2031, until the stated maturity date in 2036 or an earlier redemption event, the interest rate resets quarterly. According to financial disclosures, the new rate will equal the three-month term Secured Overnight Financing Rate (SOFR) plus 373.5 basis points, with interest payable quarterly in arrears.
First Internet Bancorp retains the option to redeem the notes, in whole or in part, on or after September 15, 2031, or at any time upon the occurrence of specific regulatory or tax events. These instruments are intentionally structured to qualify as Tier 2 regulatory capital for the holding company. Crucially, the debt is not a deposit and lacks Federal Deposit Insurance Corporation (FDIC) protection.
Corporate Use of Proceeds and Advisory Counsel
With total assets of $5.6 billion as of June 30, 2026, the parent company of First Internet Bank intends to deploy the net proceeds for general corporate purposes. Management pointed toward the potential redemption or retirement of existing indebtedness that currently accrues interest at higher market rates.
Faegre Drinker Biddle & Reath LLP served as counsel to First Internet Bancorp, while Kilpatrick Townsend & Stockton LLP acted as counsel to Piper Sandler & Co., which managed the transaction as the sole placement agent. Because the notes were issued through a private placement, they remain unregistered under the Securities Act of 1933 or any state securities laws, restricting public resale without prior registration or an applicable exemption.
Market Position and Regulatory Context
First Internet Bank launched operations in 1999 as an early pioneer in branchless, digital-first banking infrastructure. Today, the institution provides consumer and small business deposits, commercial real estate and construction financing, SBA lending, public finance, consumer loans, and specialty finance nationwide, alongside commercial and industrial loans on a regional basis. Its common stock trades on the Nasdaq Global Select Market under the ticker symbol INBK and sits as a component of the Russell 2000 Index.
