First Internet Bancorp Is Very Different, And Quite Possibly Meaningfully Undervalued

Indiana’s First Internet Bancorp (INBK) is definitely taking the road less traveled. With no deposit-gathering branch offices, First Internet lives up to its name as a bank that provides its services through the internet. While that hasn’t stopped the company from posting strong lending growth, with a clear focus on niche categories that larger banks don’t serve well, it has proved to be a challenging way to grow attractively-priced deposits and access to affordable funding remains a challenge and growth-limiting issue.

Valuation for First Internet is quite curious, in that it seems quite undervalued relative to its growth. I realize it’s not a particularly well-covered bank, nor very large, and the risks here are certainly above-average, but even so the shares look curiously-priced next to other small, fast-growing banks.

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First Internet Bancorp Is Very Different, And Quite Possibly Meaningfully Undervalued