3/8/25
First Savings Financial Group, Inc. (NASDAQ: FSFG) is a regional bank that serves communities across Indiana. While it may not have the name recognition of the big players, it has quietly built a solid reputation in the banking industry. FSFG focuses on commercial lending, mortgage banking, and traditional banking services, offering a well-rounded financial foundation.
For investors who prioritize dividends, this small-cap bank has some intriguing characteristics. Despite its size, FSFG has delivered consistent profitability and has a history of rewarding shareholders with dividends. The real question is whether it can keep that momentum going and continue to be a reliable dividend stock for long-term investors.
Key Dividend Metrics
📈 Dividend Yield: 2.60%
💰 Annual Dividend: $0.64 per share
📊 Payout Ratio: 21.90%
📅 Ex-Dividend Date: March 14, 2025
💵 Next Dividend Payment Date: March 31, 2025
📊 5-Year Average Dividend Yield: 2.21%
🔄 Dividend Growth: Steady but slow
Dividend Overview
At a yield of 2.60%, FSFG offers a modest but respectable return for income-focused investors. Compared to its five-year average yield of 2.21%, it’s slightly higher, suggesting that the stock may be offering a better-than-usual dividend opportunity right now.
What makes FSFG particularly interesting is its payout ratio. At just 21.90%, the bank is keeping plenty of earnings in-house to reinvest and strengthen its financial position. A low payout ratio like this is a strong indicator that the dividend is sustainable, even in tougher economic conditions.
However, one thing investors should note is that while FSFG has been consistent with its dividend, it hasn’t been aggressive in growing it. Unlike some of the bigger banks that hike their dividends regularly, FSFG takes a more conservative approach.
Dividend Growth and Safety
From a safety perspective, FSFG’s dividend is about as secure as it gets. A 21.90% payout ratio means there’s a lot of flexibility if earnings were to take a hit. Even in an economic downturn, the company would likely be able to maintain its dividend without much concern.
That being said, investors who prioritize dividend growth might find FSFG a bit underwhelming. While it has maintained a steady payout, it hasn’t demonstrated the kind of rapid dividend increases seen in some of its larger peers.
Still, the company’s earnings have been impressive. With a trailing P/E ratio of 9.00, FSFG appears undervalued compared to many financial stocks. A return on equity (ROE) of 11.10% is another strong indicator that the company is managing its capital effectively. The biggest question mark surrounding future dividend increases is how well FSFG can navigate interest rate changes and economic cycles.
Chart Analysis
Price Action and Moving Averages
The stock has seen a strong rally over the past several months, with a clear uptrend that accelerated in the latter half of last year. The price climbed steadily, reaching a peak above 30 before pulling back. Recently, it has been consolidating in the mid-20s, hovering near its 50-day moving average (blue line), which is starting to slope downward.
The 200-day moving average (dark blue line) is still rising, suggesting that the longer-term trend remains bullish. However, the stock is now caught between these two moving averages, with the 50-day acting as resistance and the 200-day providing support. If the stock can hold above the 200-day and start pushing higher, it could signal a continuation of the uptrend. But if it breaks below, it may suggest a deeper correction.
Volume and Market Participation
Volume has been relatively moderate, with occasional spikes in buying and selling activity. The biggest surge in volume happened around the peak, likely indicating profit-taking. Since then, volume has declined, suggesting that traders are waiting for clearer direction before making bigger moves.
The current volume levels don’t show strong conviction in either direction. A pickup in buying volume would be a bullish sign, while a spike in selling pressure could indicate more downside ahead.
Relative Strength Index (RSI) and Momentum
The RSI (Relative Strength Index) dropped sharply after reaching overbought conditions during the stock’s peak. It has since stabilized around the middle range, meaning the stock isn’t overbought or oversold at this point.
The RSI shows that momentum has cooled off from the strong uptrend, but it’s not weak enough to suggest an imminent selloff. If RSI starts trending higher again, it could signal renewed strength. If it dips further, the stock may need more time to consolidate before finding support.
Analyst Ratings
📈 Recent Upgrades
In recent months, First Savings Financial Group (FSFG) has caught the attention of analysts with a mix of optimism and caution. 🔹 A leading analyst at Maxim Group maintained a “Buy” rating but adjusted the price target to $28, down from $32. This revision followed the company’s first-quarter earnings report, which missed expectations due to higher operating expenses and a temporary loss in Small Business Administration (SBA) banking revenue.
Despite this shortfall, there’s confidence in the company’s future. Analysts believe SBA banking results will turn positive in the latter half of the year, providing a much-needed boost to earnings. 📊 Additionally, FSFG’s strong credit quality was highlighted, with net charge-offs remaining at a minimal 0.02% of average loans, showcasing solid risk management.
📉 Recent Downgrades
On the other side, FSFG recently saw a rating adjustment from StockNews.com, which downgraded its rating from “strong-buy” to “buy.” This shift signals a slightly more cautious stance on the stock. While the downgrade didn’t point to any major red flags, it reflects a tempered view of growth potential in the near term.
FSFG’s financials remain solid, but analysts may be accounting for near-term uncertainties, including fluctuating loan demand and margin pressures. Such downgrades are often precautionary rather than indicative of a fundamental issue.
🎯 Consensus Price Target
The average price target among analysts currently sits at $27.33, suggesting an upside of about 10.08% from the current trading price of $24.83. While not an aggressive growth call, this consensus reflects a balanced outlook—acknowledging FSFG’s strong credit quality while recognizing some short-term challenges in the current market environment.
Earnings Report Summary
First Savings Financial Group (FSFG) just posted its latest quarterly earnings, and there’s a lot to unpack. The bank reported a major improvement in net income, hitting $6.2 million, or $0.89 per share, compared to just $920,000 in the same quarter last year. That’s a huge leap, and a big part of it comes down to smarter lending decisions and higher interest income.
Stronger Interest Income
The bank saw a nice boost in net interest income, which climbed 9.6 percent to $15.5 million for the quarter. A jump in interest income helped drive that growth, though higher interest expenses did take a small bite out of it. Even so, the bank’s net interest margin edged up to 2.75 percent, showing that FSFG is getting more out of the money it lends.
A Big Boost in Noninterest Income
One of the biggest wins this quarter was a $3.3 million jump in noninterest income. The bank saw a $2.5 million gain on loan sales, plus another $403,000 in equity gains. That’s a welcome change from last year when these categories weren’t pulling their weight. On top of that, operating expenses dropped by $1.1 million, mainly because FSFG wound down its national mortgage banking business, which had been a drag on costs.
Loan Portfolio and Asset Quality
FSFG also cleaned up its loan book, selling off about $87.2 million worth of home equity lines of credit. That move helped lower the bank’s nonperforming loans to $16.6 million, which is a step in the right direction. The bank even recorded a $490,000 reversal in credit loss provisions, meaning it needed to set aside less money for potential loan defaults.
A Slightly Smaller Balance Sheet
Total assets dropped $61.6 million this quarter, landing at $2.39 billion. That shrinkage mostly came from the big loan sale, along with a $48.1 million decline in total deposits. A lot of that was in brokered deposits, which the bank has been intentionally cutting back on.
Capital Position Stays Strong
Despite the changes, FSFG’s capital position remains solid. Total equity dipped slightly by $1.1 million, mostly because of shifts in unrealized losses, but the bank’s overall health is still strong. Regulators still classify FSFG as well-capitalized, meaning there’s no major concern from a risk standpoint.
What’s Next?
CEO Larry W. Myers sounded optimistic, pointing to the bank’s focus on improving asset quality, managing liquidity, and finding smart loan growth opportunities. If FSFG continues this trend, it could set itself up for another strong year ahead.
Financial Health and Stability
Financially, FSFG is in solid shape.
- Profit Margin: 25.67%
- Operating Margin: 34.89%
- Quarterly Revenue Growth: 33.60% year-over-year
- Quarterly Earnings Growth: 576.60% year-over-year
Revenue growth of over 33% is an excellent sign for a bank of this size. The standout number, though, is the 576.60% earnings growth from the previous year. That’s an eye-catching jump, but it’s important to consider whether it’s sustainable or if it was driven by one-time factors.
One potential concern is FSFG’s balance sheet. The company has $76.71 million in cash, which is solid, but it also carries $343.64 million in debt. That’s a fairly high debt load for a small-cap bank, though it isn’t necessarily alarming if the company continues generating strong earnings.
With a book value per share of $25.65 and a stock price of $24.66, FSFG is trading right around its intrinsic value. The price-to-book ratio of 0.97 suggests the stock isn’t overpriced, which could make it an attractive option for value investors.
Valuation and Stock Performance
FSFG’s valuation metrics point to a stock that’s trading at a fair, if not slightly undervalued, level.
- Trailing P/E: 9.00
- Price-to-Book: 0.97
- 52-Week Range: $14.55 – $30.94
- Current Price: $24.66
- 50-Day Moving Average: $25.12
- 200-Day Moving Average: $23.47
With a 52-week gain of 46.96%, FSFG has staged an impressive recovery from its lows. However, it’s still well below its 52-week high of $30.94, which could indicate further room for growth if market conditions remain favorable.
The stock’s beta of 0.76 suggests it’s less volatile than the broader market, which is a positive for conservative investors looking for a stable dividend stock. One thing to keep in mind, though, is its low trading volume (about 10.85k shares per day). This means it might not be as liquid as some larger stocks, which could make large trades more difficult.
Risks and Considerations
While FSFG has a lot going for it, there are a few risks investors should be aware of.
🚨 Interest Rate Sensitivity – As a regional bank, FSFG is heavily influenced by interest rate changes. If rates drop, the bank’s profitability could take a hit.
📉 Slow Dividend Growth – While the dividend is stable, it hasn’t grown significantly. Investors looking for dividend growth may want to consider other options.
💸 High Debt – FSFG’s debt of $343.64 million is notable. While it appears manageable for now, it’s something to watch if earnings slow down.
📊 Low Liquidity – With a relatively low share float and trading volume, large buy or sell orders can impact the stock price more than in larger banks.
🏛️ Regulatory Risk – As with all financial institutions, FSFG is subject to banking regulations that could impact profitability in the future.
Final Thoughts
First Savings Financial Group is a small but well-managed bank that offers a steady dividend with a solid financial foundation. The 2.60% dividend yield combined with a low 21.90% payout ratio makes it an appealing choice for investors who value dividend security over aggressive growth.
While the stock’s valuation suggests it may be undervalued, FSFG’s slow dividend growth and relatively low liquidity could be drawbacks for some investors. However, for those seeking a stable, income-generating stock with potential for upside, FSFG is worth considering.
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