First Internet Bancorp has a strong management team. David Becker has been Chairman and CEO of the company since its inception. He is known for being a widely successful entrepreneur. Other than First Internet Bancorp, he has founded several companies, such as Member Data Services, AmeriCard Services, VIFI, OMIF, Inception, and DyKnow. His entrepreneurial ventures have been so successful that he was recognized as the Ernst & Young Entrepreneur of the Year in 2001. While staying involved in his past entrepreneurial ventures, Mr. Becker still finds time to serve the Indianapolis community, especially in the field of education. As the first in his family to make it through college, he feels he owes a lot to the system. Between himself and his children’s trust, Mr. Becker owns 10% of the company.
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Kay Whitaker has been the CFO and senior vice president since January of 2013. Before joining INBK, Ms. Whitaker was the CFO for Central Indiana Community Foundation (CICF). While there, she won the Indianapolis Business Journal’s award for CFO of the Year in the non-profit sector. Even though she is no longer at CICF, she still remains highly involved in the non-profit sector. Currently, she serves on the advisory board for Grameen America Indianapolis, which established a micro-finance model to help alleviate poverty. She is also the Treasurer of the Indianapolis Neighborhood Housing Partnership Initiative. Prior to joining CICF, Ms. Whitaker served as the CFO and Treasurer at Citizens Energy. The third member of the executive management team is Charles Perfetti, Senior Vice President. Mr. Perfetti served as President and CEO of Landmark from 1989 until its acquisition by INBK in 2007. He also once served as the chief investment manager for the State of Indiana before his tenure at Landmark.
As part of our due diligence effort, CUSH engages the management teams of the companies in which we invest. Speaking with Mr. Becker and Ms. Whitaker certainly ranked near the top of the hundreds of conversations we have held with management teams over the years. They were more than generous with their time, giving insightful, thoughtful, and thorough answers to all of our questions. From our conversation, the two seem to have a strong grasp on how to effectively utilize the runway ahead of them. They know how to deal with a wide array of investors. For example, we were curious as to why INBK pays a dividend. It seemed unusual to be distributing capital and raising capital in the same timeframe. They answered that they do it to force the market to realize the underlining value of their shares. We like management teams that are shareholder-friendly. They also know exactly what kind of corporate culture to establish. In an article in the Indianapolis Star about Mr. Becker’s serial entrepreneurship practices, he is quoted as saying, “No matter how much time and effort you put into an idea, you’re going to miss something.” We asked him what he “missed” with INBK:
“I hired traditional bankers because the regulatory world was scared to death. I’m from a technology basis… They were just completely blown away by the growth and everything about the bank… They didn’t really trust anybody with the IT savvy in the market… So we literally, out of the block, stumbled on the everyday blocking and tackling of running the bank.”
They needed more creative, adaptive personalities in a company with such entrepreneurial spirit. He feels like he has that now, especially with the addition of Ms. Whitaker.
Mr. Becker’s entrepreneurial experiences and successes give us great confidence regarding the future of this business. The fact that he has steered this company through a tumultuous time in banking, which included two market corrections, also makes us more confident in his leadership abilities. That, combined with Ms. Whitaker’s financial knowledge as a long-time CFO, gives us a strong sense of confidence in this management team overall. Moreover, recent insider buying indicates a management team with a high degree of confidence in their own abilities and the company’s future prospects.
The Market Realist Take
CEO Becker said in 3Q 2013 that the company is committed to growing the First Internet Bank brand, which continues to be well received by a growing base of satisfied consumer and commercial customers. Its focus on asset quality has been enhanced by investment in expanding its credit, compliance, and risk management capabilities. The company reiterated its commitment to building its value to customers and shareholders.