Some INBK pointers

Investment Analysis Clubs Saul’s Investing Discussions
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Hi all,

A few pointers on INBK, which I have been meaning to post for a while:

  1. The company’s 10K includes a qualitative and quantitative discussion on ‘interest rate’ risk. Essentially, like most lenders, increase in rates is generally net positive for them. See page 38 here:
    http://www.firstinternetbancorp.com/Cache/c29464051.html

  2. FY 2015 Annual Shareholder Meeting YouTube recording. It’s a short 11 minutes video. It gives a quick recap of the year:
    https://www.youtube.com/watch?v=eT0X2FUoxfg

  3. Per marketwatch.com, this stock is still only followed by two analysts. Both have buy rating on it. Next quarter’s earning estimate from these analysts: $0.36 and $0.43. As a reminder, last quarter’s earnings came in at $0.46.
    http://www.marketwatch.com/investing/stock/inbk/analystestim…

That’s all I had to share.

Anirban
Long INBK (and it’s also my largest position at 5%)

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Thanks anirban, the shareholder meeting YouTube recording was especially good.
Saul

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the shareholder meeting YouTube recording was especially good.

I agree Saul, this is a must watch for all INBK current and prospective shareholders. I love how these guys are going about the business of scaling and diversifying the bank. The profitability has soared and it was obscured by the 50% dilution following capital raise in 2013. Their cost of funds have come down and barring significant economic downturn I see them continuing to do well for a long long time.

I also like how they have a leader who’s vested in the company, management pay is well within acceptable dollar figures, and they are still so under-followed. Only two analysts following them.

Anirban

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Anirban,
I do not know anything about banks. What are the key metrics to watch when looking at a bank? Are they the same metrics for any financial company?

Andy

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Hi Andy,

One place to start would be the Q1 2015 review I wrote on this board. As Saul noted, it was one of the ‘TMF posts of the day’ in May. Here’s the link:
http://caps.fool.com/Blogs/inbk-q1-2015-earnings-analysis/10…

If you follow BOFI, then following INBK should be easy. Just remember that this is a micro-cap, so stock is somewhat illiquid … so use limit orders if you decide to buy.

As I have said before, this is my biggest position. At one point, the bank was selling for less than book value (which is a popular and well accepted measure for valuing banks). I liked what management was doing and I like how one could buy this bank for ‘cheap’. Since then, the earnings growth has been great, so my position has grown because of the corresponding price rise, but I did allocate more to it. This is one of my highest conviction stocks, and I 'm hoping to hold this for a LONG time.

Hope this helps.

Anirban

Long INBK

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Hope this helps.

Thanks Anirban that helps immensely. I haven’t really paid any attention to banks because I didn’t understand them. I need to broaden my horizons.

Andy

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I haven’t really paid any attention to banks because I didn’t understand them.

Andy, if you want to understand banks, I highly recommend reading through all of Fletch’s (BlazerMania’s) posts on the BOFI board in the Rule Breakers service. He not only provides an excellent crash course on banks, but also has answered myriad questions that are almost certainly as applicable to INBK (or will be as time goes on) as they are/were to BOFI. It’s really an excellent, info-packed board.

Neil
Long BOFI, INBK

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Thanks Neil I appreciate it.

Andy

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I agree with Neil, Andy. Fletch’s posts on the BOFI board helped me understand banking enough to give me the confidence to invest in BOFI. They are really extraordinarily informative and helpful. Some are also reposted on this board but they’d be harder to find here. (You should know by the way that Fletch has never felt confident enough about INBK to invest in it, as I remember).

Saul

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Thanks Saul,
I found them on the BOFI board and their is a lot of information to go through. They are easy to find due to all the recs.

Andy

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I agree with Neil, Andy. Fletch’s posts on the BOFI board helped me understand banking enough to give me the confidence to invest in BOFI. They are really extraordinarily informative and helpful. Some are also reposted on this board but they’d be harder to find here. (You should know by the way that Fletch has never felt confident enough about INBK to invest in it, as I remember).

Thanks Saul!

Regarding INBK, my recollection is that at the time I looked at it, I concluded that there were a number of areas in which I wanted to see improvement before I’d consider an investment in it. Also, it is such a small company that if it truly did become “the next BOFI” it could more than triple in size and still be smaller than BOFI was when Rule Breakers first recommended it. Meaning I’d rather wait for the company to prove itself because if it did there would still be plenty of upside left.

Given anirban’s recent posts, it sounds like the areas I wanted to see improvement in have in fact been improving. If I get some time over the next few months I may dig into it again for another look and refresh my notes.

BOFI is my sole bank stock. Other than some kind of special situation (which I believe BOFI is) I don’t like investing in bank stocks. So it takes a lot to get me interested in one of them.

Fletch

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