3/8/25
First Financial Corporation (THFF) is a regional bank rooted in Indiana, serving communities with traditional banking services like loans, deposits, and wealth management. As a smaller financial institution, it doesn’t have the same national reach as larger banks, but that’s part of its appeal. It focuses on stability and consistent financial management, making it a stock worth considering for investors looking for steady dividend income.
For those who prioritize dividends, THFF offers an interesting case. The company has maintained a steady dividend payout while keeping its balance sheet strong. But does it have long-term staying power as a reliable income investment? Let’s take a deeper dive.
Key Dividend Metrics
📈 Dividend Yield: 4.15% (Forward)
💵 Annual Dividend: $2.04 per share
📊 Payout Ratio: 46.5% (Sustainable)
📅 Ex-Dividend Date: January 3, 2025
📆 Last Dividend Payment: January 15, 2025
📊 5-Year Average Yield: 2.82%
🔄 Dividend Growth Streak: Modest but consistent
Now, let’s break down what these numbers really mean for investors.
Dividend Overview
THFF’s dividend yield of 4.15% is noticeably higher than its five-year average of 2.82%. This suggests that the stock might be undervalued or that it has seen price fluctuations that have pushed the yield higher. Either way, it presents an appealing return for those looking for steady income.
The payout ratio of 46.5% indicates a balanced approach. The company is distributing less than half of its earnings as dividends, allowing it to reinvest the rest back into operations. For a bank, this is a comfortable level, ensuring that it can maintain payouts even if economic conditions become more challenging.
THFF has a track record of paying dividends consistently, with the most recent payout at $2.04 per share annually. This stock also has relatively low volatility, with a beta of just 0.49, meaning it tends to be less affected by broad market swings than many other financial stocks.
Dividend Growth and Safety
THFF isn’t the type of stock that rapidly increases its dividend every year, but it has been reliable. The company has maintained a steady payout history, favoring financial strength over aggressive dividend hikes.
Dividend Safety
✔ A payout ratio of 46.5% keeps dividends sustainable.
✔ EPS of $4.00 (TTM) supports continued payments.
✔ Revenue grew 23.7% year over year, signaling a strong operating environment.
✔ $97.41 million in cash provides a financial cushion.
With these factors in mind, THFF’s dividend appears safe for the foreseeable future. The company’s profitability and balance sheet indicate it has the ability to continue rewarding shareholders without putting strain on its finances.
Chart Analysis
Price Trend and Moving Averages
The price action for THFF has been in an upward trend over the past year, with notable breakouts along the way. The stock is currently trading near its recent highs, around $49.15, after a strong rally from its lows earlier in the year.
The 50-day simple moving average (SMA) is trending above the 200-day SMA, a classic sign of a bullish trend. This “golden cross” that occurred earlier in the year marked the shift from consolidation to an uptrend. The price has been respecting the 50-day SMA as a support level, bouncing off it multiple times before pushing higher.
Recently, the stock has pulled back slightly from its high near $50, but it remains above both the 50-day and 200-day SMAs. This suggests that the broader trend is still intact, though short-term resistance is forming near current levels.
Volume and Buying Activity
Volume has been relatively steady, with occasional spikes in trading activity. Notably, there were large green volume bars during the October and February rallies, signaling strong buying interest at those points. These volume surges aligned with price breakouts, reinforcing the bullish momentum.
More recently, volume has tapered off slightly, suggesting a period of consolidation. While this is not necessarily bearish, it does indicate that traders may be waiting for a new catalyst before pushing the stock higher. If volume picks up again, another breakout could be on the horizon.
Relative Strength Index (RSI) and Momentum
The RSI indicator shows that THFF reached overbought territory during its previous run-ups but has since cooled off. Currently, RSI is in the neutral range, meaning the stock is neither overbought nor oversold. This leaves room for potential upward movement if buying pressure resumes.
When RSI was higher, the stock experienced temporary pullbacks, but each time it found support and moved higher. If RSI trends downward, it could signal weakening momentum, while a bounce higher would indicate renewed strength in the stock.
Support and Resistance Levels
THFF has established key support near the 50-day moving average, which has held firm on multiple occasions. The stock also has historical support near $45, where buying interest previously stepped in to prevent further declines.
On the resistance side, the recent high near $50 has proven to be a short-term barrier. The stock attempted to break through but faced selling pressure, leading to the current consolidation. A strong push above $50 with increased volume would likely signal the next leg higher, while failure to break out could lead to further consolidation or a slight retracement.
Analyst Ratings
📈 Upgrades
🔹 On February 24, an analyst from Janney Montgomery Scott raised their rating on THFF from Neutral to Buy. This decision was driven by the company’s strong financial performance, particularly its impressive earnings growth and healthy profit margins. The analyst also pointed to the bank’s strategic focus on expanding its loan portfolio and enhancing digital banking services as key drivers for future growth. These initiatives are expected to strengthen the company’s market position and improve long-term profitability.
📉 Downgrades
🔻 On July 7, Raymond James revised its rating on THFF from Outperform to Market Perform. The downgrade was primarily due to concerns over the bank’s exposure to shifting interest rates, which could put pressure on its net interest margin. Additionally, the analyst highlighted growing competition within the regional banking sector, which may affect First Financial’s ability to sustain its market share and profitability.
🎯 Consensus Price Target
💰 The latest consensus price target for THFF stands at $55.67, reflecting a potential upside of around 7.66% from the recent price of $51.71. Analyst projections vary, with price targets ranging between $54.00 and $58.00. This spread suggests a moderate level of confidence in the stock’s future performance, with some analysts seeing room for further gains while others remain cautious about near-term headwinds.
These mixed ratings indicate a balance of optimism and caution, making it important for investors to weigh both the bank’s strong fundamentals and external economic factors when considering THFF.
Earning Report Summary
First Financial Corporation (THFF) recently shared its latest earnings report, and there’s a lot to unpack. The numbers paint a picture of a bank that’s growing in key areas while also facing some challenges along the way.
Fourth Quarter 2024 Highlights
THFF had a solid fourth quarter, reporting $16.2 million in net income, which is a strong jump from the $12.4 million it posted in the same quarter last year. That’s a 30.6% increase in earnings, showing the bank had a strong finish to the year.
Earnings per share (EPS) came in at $1.37, up from $1.06 a year ago, which means the bank was more profitable on a per-share basis. A big contributor to this was net interest income, which climbed 25.29% year-over-year to hit $49.6 million. With higher interest rates working in the bank’s favor, the net interest margin improved to 3.94%, up from 3.63% in the prior year.
Loan growth was another bright spot, with total loans reaching $3.84 billion by the end of the year. This represents a 21.13% increase, largely fueled by THFF’s acquisition of SimplyBank in July. The deal added $467 million in loans and $622 million in deposits, giving the bank an even bigger footprint.
There’s also good news on the asset quality front. Nonperforming loans dropped to $13.3 million, or 0.35% of total loans, improving significantly from last year’s 0.78%. Lower nonperforming loans mean fewer defaults and a healthier loan portfolio overall.
Full Year 2024 Highlights
For the full year, THFF’s net income totaled $47.3 million, which is down from $60.7 million in 2023. The drop was mainly due to setting aside more money for potential credit losses. EPS for the year also declined to $4.00, compared to $5.08 the previous year.
The bank’s return on assets (ROA) dipped to 0.92%, down from 1.26%, showing that while THFF remains profitable, it wasn’t as efficient at generating income from its assets as it was in the previous year. The bank also took a more cautious approach by increasing provisions for credit losses to $16.2 million, up from $7.3 million in 2023.
On the upside, cost management improved, with the efficiency ratio dropping to 62.98% from 65.62%, meaning the bank is getting better at controlling expenses relative to its revenue.
Looking Ahead
A major highlight of the year was the SimplyBank acquisition, which helped fuel THFF’s growth and gave it a stronger presence in Tennessee and Georgia. While net income was lower for the year, the fourth-quarter numbers suggest some positive momentum heading into 2025. With improving loan quality, strong net interest income, and steady loan growth, the bank seems to be positioning itself well despite a challenging economic landscape.
Financial Health and Stability
Dividends are only as reliable as the financial health of the company paying them. A closer look at THFF’s fundamentals shows a company that is well-managed and positioned for stability.
- Revenue growth came in at 23.7% year over year, a strong sign for a bank of its size.
- The profit margin of 23.45% suggests solid efficiency in operations.
- Return on equity (ROE) is 8.78%, a respectable figure but not particularly high for a bank.
- Total debt stands at $226 million, but with nearly $100 million in cash reserves, the company has a reasonable financial buffer.
There’s nothing alarming here—THFF operates with a conservative balance sheet and is in a good position to maintain its dividend policy.
Valuation and Stock Performance
THFF is trading at $49.15 per share, with a trailing P/E ratio of 12.29 and a forward P/E of 8.94. These numbers suggest that the stock is fairly valued or even slightly undervalued compared to its historical trading range. The price-to-book ratio of 1.06 also indicates that the stock is priced close to its tangible book value, reinforcing the idea that it’s not overpriced.
Over the past year, THFF has moved within a 52-week range of $34.58 to $53.60. That means it has gained significant ground from last year’s lows, with a 29.31% increase over the past year, far outpacing the S&P 500’s 12.74% gain.
From a valuation standpoint, THFF looks reasonably priced. Given its solid dividend yield and steady financials, it appears to offer a fair balance between income generation and potential price appreciation.
Risks and Considerations
No stock is without risks, and THFF is no exception. While it has a solid dividend profile, there are a few things investors should keep in mind.
- Interest Rate Sensitivity – As a bank, THFF’s earnings depend on interest rates. If rates fall, it could put pressure on its net interest margin, reducing profitability.
- Regional Exposure – THFF operates in a relatively small geographic area. If local economic conditions weaken, it could impact loan growth and asset quality.
- Dividend Growth is Slow – While the company consistently pays dividends, the growth rate is relatively modest. Investors looking for rapid dividend increases may be disappointed.
- Stock Liquidity – With an average trading volume of about 54,600 shares per day, THFF isn’t the most actively traded stock. Investors making large trades may experience some price movement.
These factors don’t necessarily make THFF a bad investment, but they’re worth considering when weighing the stock’s long-term potential.
Final Thoughts
THFF is the kind of stock that doesn’t make headlines, but that’s not necessarily a bad thing for dividend investors. It offers a reliable yield, a solid balance sheet, and a valuation that looks reasonable. The stock isn’t going to deliver huge dividend growth, but it provides a stable income stream with relatively low volatility.
For investors seeking dependable dividends from a well-managed regional bank, THFF is worth a look. However, those looking for aggressive dividend growth or broader geographic diversification might find better options elsewhere.
At the end of the day, this is a company that prioritizes stability. In a volatile market, sometimes that’s exactly what investors need.
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