Comparing Meridian Bank (NASDAQ:MRBK) & First Internet Bancorp (NASDAQ:INBK)

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

Volatility and Risk

First Internet Bancorp has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, Meridian Bank has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Internet Bancorp	-9.60%	-1.14%	-0.07%
Meridian Bank	11.68%	12.61%	0.95%

Analyst Recommendations

This is a breakdown of recent ratings for First Internet Bancorp and Meridian Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Internet Bancorp	1	3	1	0	2.00
Meridian Bank	1	0	3	0	2.50

First Internet Bancorp presently has a consensus target price of $25.67, indicating a potential downside of 0.44%. Meridian Bank has a consensus target price of $22.00, indicating a potential upside of 14.29%. Given Meridian Bank’s stronger consensus rating and higher possible upside, analysts clearly believe Meridian Bank is more favorable than First Internet Bancorp.

Institutional and Insider Ownership

65.5% of First Internet Bancorp shares are held by institutional investors. Comparatively, 58.6% of Meridian Bank shares are held by institutional investors. 6.2% of First Internet Bancorp shares are held by insiders. Comparatively, 14.1% of Meridian Bank shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

First Internet Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. Meridian Bank pays an annual dividend of $0.56 per share and has a dividend yield of 2.9%. First Internet Bancorp pays out -6.2% of its earnings in the form of a dividend. Meridian Bank pays out 27.1% 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.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Internet Bancorp	$322.87 million	0.70	-$35.17 million	($3.85)	-6.70
Meridian Bank	$130.00 million	1.76	$21.84 million	$2.07	9.30

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

Summary

Meridian Bank beats First Internet Bancorp on 12 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 Meridian Bank

Meridian Corporation operates as the holding company for Meridian Bank that provides commercial banking products and services in Pennsylvania, New Jersey, Delaware, Florida, and Maryland. The company offers various deposit products, such as demand non-interest bearing, demand interest bearing, savings accounts, money market accounts, and time deposits. It also provides commercial and industrial loans comprising business lines of credit, term loans, small business lending, lease financing, shared national credits, and other financing; commercial real estate, and land development and construction loans for residential and commercial projects; and consumer and home equity lending, private banking, merchant, and title and land settlement services. In addition, the company operates and originates mortgage loans for 1-4 family dwellings; and offers real estate holding, investment advisory, and equipment leasing services, as well as financial planning and wealth management services. Meridian Corporation was incorporated in 2004 and is headquartered in Malvern, Pennsylvania.