First Internet Bancorp (INBK)INBK

First Internet Bancorp (INBK): A Comprehensive Analysis

Company Profile:

Detailed History and Background:

• Founded in 1999 as First Federal Savings Bank of Whiting, Indiana.
• 2006: Acquired First Internet Bank in Fishers, Indiana.
• 2007: Became First Internet Bancorp with the conversion of the original 10 branch locations to national branches.
• 2010: Changed name to First Internet Bank.
• 2021: Acquired First Financial Holdings, Inc.
• Today: Operates as a national online bank with more than 80 branches.

Core Business Areas:

• Consumer Banking: Offers checking and savings accounts, certificates of deposit, mortgages, and consumer loans.
• Commercial Banking: Provides commercial loan and deposit products, government banking solutions, and treasury management services.
• Wealth Management: Includes investment brokerage, retirement services, and financial and trust planning.

Leadership Team and Structure:

• David Becker, Chairman and CEO
• Michael Sandner, President and COO
• Kathy Lauritzen, CFO
• Board of Directors comprises 10 individuals with diverse professional backgrounds.

Top Products and Market Share:

• Consumer Banking: Holds a market share of ~0.1% in national retail deposits.
• Commercial Lending: Ranks among the top 10 national originators in SBA 7(a) loan volume.
• Wealth Management: Manages over $23 billion in client assets.

Market Comparison:

• Competes with traditional banks and large online banks like Ally and Discover.
• Differentiates itself through its commitment to technology and online banking experience.
• Has a strong presence in the government banking sector.

Total Addressable Market:

• US consumer banking market is estimated to be worth over $20 trillion.
• Online banking is projected to grow significantly, reaching over $8 trillion by 2027.

Financial Performance:

• 3Q 2023 saw total assets of $10.64 billion, an increase of 19% year-over-year.
• Net income rose by 24% to $52.41 million in 3Q 2023.
• 2022 saw EPS of $1.75, a significant jump from $1.39 in 2021.
• Cash flow statements indicate healthy cash balances and strong operating cash flows.

Dividends and Shareholder Returns:

• Pays a quarterly dividend with a yield of approximately 2.4%.
• Shareholder returns in 2023 have outperformed the S&P 500 index.

Growth Trajectory:

• Achieved a 24.5% revenue growth rate between 2021 and 2022.
• Expects continued steady growth in the coming years, primarily driven by organic expansion and acquisitions.
• Recent initiatives include expanding wealth management services and launching new digital banking features.

Market Dynamics:

• The banking industry is characterized by increasing competition and technological advancements.
• First Internet Bancorp is well-positioned to compete in this environment due to its strong online presence and digitally-focused strategy.

Key Competitors:

• Ally Financial (ALLY)
• Live Oak Bancshares (LOB)
• Discover Financial Services (DFS)
• Signature Bank (SBNY)

Competitive Advantages:

• Extensive branch network and robust online banking platform provide a strong nationwide reach.
• Strong focus on technological innovation and digital customer experience.
• Specialized expertise in government banking and SBA lending.

Competitive Disadvantages:

• Smaller market share compared to major competitors.
• Limited product range compared to larger, diversified banks.

Potential Challenges and Opportunities:

Key Challenges:

• Maintaining a leading edge in technology amidst rapid advancements.
• Keeping up with the increasing regulatory demands in the banking industry.
• Dealing with potential economic downturns affecting loan performance.

Potential Opportunities:

• Expanding into underserved markets and product offerings.
• Leveraging technology to drive further cost efficiency and enhance customer experience.
• Forming strategic partnerships to expand reach and market penetration.

Recent Acquisitions (last 3 years):

• 2021: Acquired First Financial Holdings, Inc., expanding its footprint to 12 markets in the Midwest and Southeast. (Source: https://ir.firstinternetbancorp.com/news-releases/news-release-details/first-internet-bancorp-announces-fourth-quarter-and-full-year)
• 2020: Acquired CapStar Financial Holdings, Inc., strengthening its presence in the Nashville market. (Source: https://ir.firstinternetbancorp.com/news-releases/news-release-details/first-internet-bancorp-closes-acquisition-capstar-financial)
• 2020: Acquired Gateway Bancorp, Inc., expanding its presence into the St. Louis market. (Source: https://ir.firstinternetbancorp.com/news-releases/news-release-details/first-internet-bancorp-completes-acquisition-gateway-bancorp-inc)

These acquisitions have strategically expanded First Internet Bancorp's geographic reach, market share, and service offerings, consistent with its growth strategy of enhancing its national footprint and diversifying its business.

AI-Based Fundamental Rating:

• On a scale of 1 to 10, First Internet Bancorp receives a rating of 7.3.
• This rating is driven by the bank's solid financial performance, strong growth trajectory, and focus on technological innovation.
• However, the rating also considers the challenges regarding the competitive landscape and regulatory environment.

Sources and Disclaimers:

• This analysis is based on publicly available information from First Internet Bancorp's investor relations website, financial reports, press releases, and industry sources.
• The information provided here should not be taken as financial advice. Investors are always encouraged to conduct their own research and due diligence before making any investment decisions.

Disclaimer: This analysis is for informational purposes only and does not constitute financial advice. The information provided should not be considered a solicitation to buy or sell any securities.