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First Internet Bank to buy First Colorado National's SBA division

Fishers, Ind.-based First Internet Bank of Indiana entered into a loan and purchase agreement to acquire Paonia, Colo.-based First Colorado National Bank's small business lending, or SBA, division.

The total consideration for the deal will be paid in cash through a combination of cash on hand and proceeds from loan sales planned for the second quarter.

The portfolio to be acquired consists primarily of adjustable-rate loans and has a current weighted average coupon of 7.30%.

As of March 31, the balance of loans outstanding to be acquired was about $39.0 million, comprised primarily of SBA 7(a) loans. First Internet Bank will also acquire a servicing portfolio consisting of guaranteed SBA 7(a) loans sold in the secondary market, which has a balance of about $112.0 million.

The deal is expected to close early in the third quarter.

First Internet Bancorp, the parent company of First Internet Bank, expects to sell the guaranteed portion of new loans originated by the SBA division in the secondary market.

Hovde Group LLC served as First Internet's financial adviser, while Faegre Baker Daniels served as the company's legal adviser. The Capital Corporation served as financial and legal adviser to First Colorado, which is a unit of First Colorado Financial Corp.