Critical Comparison: MainStreet Bank (NASDAQ:MNSB) and First Internet Bancorp (NASDAQ:INBK)

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

Profitability

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

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

Risk & Volatility

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

Earnings and Valuation

This table compares First Internet Bancorp and MainStreet Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Internet Bancorp	$109.81 million	1.57	-$35.17 million	($4.03)	-4.89
MainStreet Bank	$73.30 million	2.21	$13.46 million	$1.76	11.93

MainStreet Bank has lower revenue, but higher earnings 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.

Institutional & Insider Ownership

65.5% of First Internet Bancorp shares are owned by institutional investors. Comparatively, 52.3% of MainStreet Bank shares are owned by institutional investors. 8.0% of First Internet Bancorp shares are owned by insiders. Comparatively, 9.3% of MainStreet Bank 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 Ratings

This is a breakdown of recent ratings and target prices for First Internet Bancorp and MainStreet Bank, as provided by MarketBeat.com.

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

First Internet Bancorp currently has a consensus price target of $25.17, indicating a potential upside of 27.62%. Given First Internet Bancorp’s stronger consensus rating and higher probable upside, equities research analysts plainly believe First Internet Bancorp is more favorable than MainStreet Bank.

Dividends

First Internet Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.2%. MainStreet Bank pays an annual dividend of $0.40 per share and has a dividend yield of 1.9%. First Internet Bancorp pays out -6.0% of its earnings in the form of a dividend. MainStreet Bank pays out 22.7% 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.

Summary

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

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.

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.