First Internet Bancorp is creating a new division to offer traditional commercial and industrial lending to businesses in Indiana.

The $570 million-asset parent of First Internet Bank of Indiana said Monday that the bank will offer lending to manufacturers, distributors, small businesses and nonprofit and service organizations. The bank already does lending for commercial real estate.

Connie J. Shepherd, who joined the Indianapolis bank in November as a senior vice president in commercial and industrial lending, said that the expansion into C&I was "a natural evolution for the bank as it decided to grow."

Community banks have fought to make inroads into C&I lending as this is one of the few loan areas that has potential for growth. Banks have poached teams of loan officers away from other banks and focused on borrowers too small to appeal to larger institutions. A Raymond James report in November noted that small banks had seen a 1.5% quarter-to-date growth in C&I lending, surpassing the 1% growth rate posted in that area for the fourth quarter of 2010.

The 13-year-old bank operates via the Internet and has customers in all 50 states. However, Shepherd said that the C&I division will operate like a traditional loan production office in meeting with clients to develop relationships.

The bank is in the final stages of developing policies for the division but will begin reaching out for sales and marketing this year. Christina Smith, vice president and relationship manager, and Susan Sottong, operations manager, also joined the bank's C&I division in November.