Head-To-Head Comparison: First Financial Corporation Indiana (NASDAQ:THFF) vs. Independent Bank (NASDAQ:IBCP)

Independent Bank (NASDAQ:IBCP) and First Financial Corporation Indiana (NASDAQ:THFF) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, dividends, valuation, analyst recommendations, institutional ownership, risk and profitability.

Dividends

Independent Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.2%. First Financial Corporation Indiana pays an annual dividend of $2.24 per share and has a dividend yield of 3.0%. Independent Bank pays out 33.4% of its earnings in the form of a dividend. First Financial Corporation Indiana pays out 32.9% 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. Independent Bank has raised its dividend for 11 consecutive years and First Financial Corporation Indiana has raised its dividend for 2 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

79.4% of Independent Bank shares are held by institutional investors. Comparatively, 72.7% of First Financial Corporation Indiana shares are held by institutional investors. 5.9% of Independent Bank shares are held by insiders. Comparatively, 5.0% of First Financial Corporation Indiana shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Independent Bank and First Financial Corporation Indiana”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Independent Bank	$315.38 million	2.32	$68.54 million	$3.35	10.60
First Financial Corporation Indiana	$347.56 million	2.58	$79.21 million	$6.80	11.10

First Financial Corporation Indiana has higher revenue and earnings than Independent Bank. Independent Bank is trading at a lower price-to-earnings ratio than First Financial Corporation Indiana, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations for Independent Bank and First Financial Corporation Indiana, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independent Bank	0	2	1	0	2.33
First Financial Corporation Indiana	0	3	0	1	2.50

Independent Bank currently has a consensus price target of $37.00, suggesting a potential upside of 4.23%. First Financial Corporation Indiana has a consensus price target of $70.00, suggesting a potential downside of 7.22%. Given Independent Bank’s higher possible upside, research analysts clearly believe Independent Bank is more favorable than First Financial Corporation Indiana.

Profitability

This table compares Independent Bank and First Financial Corporation Indiana’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Independent Bank	22.02%	14.15%	1.27%
First Financial Corporation Indiana	22.82%	12.81%	1.39%

Volatility & Risk

Independent Bank has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500. Comparatively, First Financial Corporation Indiana has a beta of 0.42, indicating that its share price is 58% less volatile than the S&P 500.

Summary

First Financial Corporation Indiana beats Independent Bank on 10 of the 18 factors compared between the two stocks.

About Independent Bank

Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based in Grand Rapids, Michigan.

About First Financial Corporation Indiana

First Financial Corporation, through its subsidiaries, provides various financial services. The company offers non-interest-bearing demand, interest-bearing demand, savings, time, and other time deposits. It also provides commercial loans primarily to expand a business or finance asset purchases; residential real estate and residential real estate construction loans; and home equity loans and lines, secured loans, and cash/CD secured and unsecured loans. In addition, the company offers lease financing, trust account, depositor, and insurance services. The company was founded in 1834 and is headquartered in Terre Haute, Indiana.