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Investing.com - Keefe, Bruyette & Woods (KBW) has reiterated its Market Perform rating and $27.00 price target on First Internet Bancorp (NASDAQ:INBK), citing benefits from the company’s balance sheet restructuring.
KBW views the series of transactions positively, noting that the restructuring provides significant benefits to the bank’s balance sheet, including a more neutral rate position, stronger capital, lower loan-deposit ratio, and a commercial real estate concentration ratio that has been nearly cut in half. However, InvestingPro data indicates the company’s overall financial health score remains weak at 1.55, with negative free cash flow in recent quarters.
The loans will be sold at a 5% discount due to rate marks on fixed-rate loans, resulting in approximately 10% dilution to tangible book value per share, according to KBW’s analysis.
Despite this dilution, KBW believes the benefits of the stronger balance sheet offset the one-time impact and has only modestly lowered its estimates due to the smaller balance sheet.
KBW foresees several ways this restructuring could become neutral or even accretive within a year or two, particularly if growth accelerates or First Internet Bancorp continues to monetize future origination volume.
In other recent news, First Internet Bancorp reported second-quarter results for 2025 that fell short of expectations. The company announced earnings per share of $0.02, significantly below the forecasted $0.29. Additionally, revenue was reported at $33.6 million, which did not meet the projected $35.99 million. These financial results have drawn attention from investors and analysts alike. The earnings miss and revenue shortfall highlight challenges the company is currently facing. Furthermore, the company’s stock experienced a notable drop in premarket trading following the announcement. Analysts and investors will likely be closely monitoring First Internet Bancorp for any future developments or strategic adjustments. These recent developments underscore the importance of meeting financial expectations in maintaining investor confidence.
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