Craig-Hallum Capital Group LLC analyst George Sutton initiated coverage of Fishers, Ind.-based First Internet Bancorp with a "buy" rating.

Low interest rates provide an opportunity for the bank to lower its funding costs, and the "improved regulatory backdrop" is also a positive for the bank, the analyst wrote in a note.

"We like the combination of focused growth, tremendous scale and the new tailwind created by the lower funding environment," Sutton wrote.

Sutton estimated that funding costs will be lowered by $8 million based on current CD rates, and he expects net interest margin to grow. The bank's large scale and Small Business Administration loan portfolio, which the bank purchased from Paonia, Colo.-based First Colorado National Bank, will provide opportunities for the bank to expand.

The analyst set a price target of $33, with estimated EPS of $2.38 for 2019, $2.65 for 2020 and $3.42 for 2021.