Analyzing MainStreet Bank (NASDAQ:MNSB) & First Internet Bancorp (NASDAQ:INBK)

MainStreet Bank (NASDAQ:MNSB) and First Internet Bancorp (NASDAQ:INBK) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, risk, dividends, earnings, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

52.3% of MainStreet Bank shares are owned by institutional investors. Comparatively, 65.5% of First Internet Bancorp shares are owned by institutional investors. 9.3% of MainStreet Bank shares are owned by insiders. Comparatively, 8.0% of First Internet Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for MainStreet Bank and First Internet Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MainStreet Bank	1	1	0	0	1.50
First Internet Bancorp	2	2	1	0	1.80

First Internet Bancorp has a consensus target price of $25.17, indicating a potential upside of 27.42%. Given First Internet Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe First Internet Bancorp is more favorable than MainStreet Bank.

Valuation and Earnings

This table compares MainStreet Bank and First Internet Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MainStreet Bank	$135.62 million	1.21	$13.46 million	$1.76	12.03
First Internet Bancorp	$322.87 million	0.53	-$35.17 million	($4.03)	-4.90

MainStreet Bank has higher earnings, but lower revenue than First Internet Bancorp. First Internet Bancorp is trading at a lower price-to-earnings ratio than MainStreet Bank, indicating that it is currently the more affordable of the two stocks.

Dividends

MainStreet Bank pays an annual dividend of $0.40 per share and has a dividend yield of 1.9%. First Internet Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.2%. MainStreet Bank pays out 22.7% of its earnings in the form of a dividend. First Internet Bancorp pays out -6.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Risk & Volatility

MainStreet Bank has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, First Internet Bancorp has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500.

Profitability

This table compares MainStreet Bank and First Internet Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MainStreet Bank	11.51%	8.32%	0.72%
First Internet Bancorp	-10.05%	-1.54%	-0.10%

Summary

MainStreet Bank beats First Internet Bancorp on 9 of the 16 factors compared between the two stocks.

About MainStreet Bank

MainStreet Bancshares, Inc. operates as the bank holding company for MainStreet Bank that provides various banking products and services for individuals, small to medium-sized businesses, and professional service organizations. The company offers demand, NOW, money market, savings, and sweep accounts, as well as certificates of deposit; business and consumer checking, interest-bearing checking, business account analysis, and other depository services; and cash management, wire transfer, check imaging, bill pay, remote deposit capture, and courier services. It also provides commercial loans, include government contract receivables, plant and equipment, general working capital, contract administration, and acquisition loans; commercial real estate, real estate construction, and residential real estate loans; and consumer loans comprising term loans and overdraft protection, as well as debit and credit cards. In addition, the company offers deposit insurance solutions; remote deposit of checks; and internet bill payment, online cash management, and online and mobile banking services. It operates in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington D.C., as well as automated teller machines. The company was incorporated in 2003 and is headquartered in Fairfax, Virginia.

About First Internet Bancorp

First Internet Bancorp operates as the bank holding company for First Internet Bank of Indiana that provides commercial, small business, consumer, and municipal banking products and services to individuals and commercial customers in the United States. The company accepts non-interest bearing and interest-bearing demand deposit, commercial deposit, savings, money market, and Banking-as-a-Service brokered deposit accounts, as well as certificates of deposit. It also offers commercial and industrial, owner-occupied and investor commercial real estate, construction, residential mortgage, home equity, line of credit and home improvement, small installment, term, and other consumer loans, as well as single tenant lease financing, and public and healthcare finance; franchise finance; and small business lending. In addition, the company is involved in the purchase, manage, service, and safekeeping of municipal securities; and provision of public and municipal lending and leasing products to government entities. Further, the company offers corporate credit card and treasury management services. First Internet Bancorp was founded in 1998 and is headquartered in Fishers, Indiana.