Analyzing Independent Bank (NASDAQ:IBCP) & First Financial Corporation Indiana (NASDAQ:THFF)

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

Risk and Volatility

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

Analyst Recommendations

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

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

First Financial Corporation Indiana presently has a consensus price target of $70.00, indicating a potential downside of 10.44%. Independent Bank has a consensus price target of $38.33, indicating a potential upside of 1.55%. Given Independent Bank’s higher possible upside, analysts clearly believe Independent Bank is more favorable than First Financial Corporation Indiana.

Insider and Institutional Ownership

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

Profitability

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

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

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Financial Corporation Indiana	$347.56 million	2.67	$79.21 million	$6.80	11.49
Independent Bank	$315.38 million	2.47	$68.54 million	$3.35	11.27

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.

Dividends

First Financial Corporation Indiana pays an annual dividend of $2.24 per share and has a dividend yield of 2.9%. Independent Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.0%. First Financial Corporation Indiana pays out 32.9% of its earnings in the form of a dividend. Independent Bank pays out 33.4% 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. First Financial Corporation Indiana has raised its dividend for 2 consecutive years and Independent Bank has raised its dividend for 11 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

First Financial Corporation Indiana beats Independent Bank on 9 of the 17 factors compared between the two stocks.

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.

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.