Analyzing First Financial Corporation Indiana (NASDAQ:THFF) and Old Second Bancorp (NASDAQ:OSBC)

First Financial Corporation Indiana (NASDAQ:THFF) and Old Second Bancorp (NASDAQ:OSBC) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, institutional ownership, risk, earnings, profitability, analyst recommendations and valuation.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for First Financial Corporation Indiana and Old Second Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Financial Corporation Indiana	0	3	0	1	2.50
Old Second Bancorp	0	1	4	0	2.80

First Financial Corporation Indiana currently has a consensus target price of $70.00, indicating a potential upside of 5.56%. Old Second Bancorp has a consensus target price of $23.50, indicating a potential upside of 12.74%. Given Old Second Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe Old Second Bancorp is more favorable than First Financial Corporation Indiana.

Volatility and Risk

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

Dividends

First Financial Corporation Indiana pays an annual dividend of $2.24 per share and has a dividend yield of 3.4%. Old Second Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.3%. First Financial Corporation Indiana pays out 32.9% of its earnings in the form of a dividend. Old Second Bancorp pays out 16.7% 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 Old Second Bancorp has raised its dividend for 1 consecutive years. First Financial Corporation Indiana is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

72.7% of First Financial Corporation Indiana shares are owned by institutional investors. Comparatively, 67.8% of Old Second Bancorp shares are owned by institutional investors. 5.0% of First Financial Corporation Indiana shares are owned by company insiders. Comparatively, 3.6% of Old Second Bancorp shares are owned by company 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 First Financial Corporation Indiana and Old Second Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Financial Corporation Indiana	$347.56 million	2.27	$79.21 million	$6.80	9.75
Old Second Bancorp	$401.54 million	2.67	$80.31 million	$1.68	12.41

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

Profitability

This table compares First Financial Corporation Indiana and Old Second Bancorp’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%
Old Second Bancorp	20.07%	12.67%	1.62%

Summary

Old Second Bancorp beats First Financial Corporation Indiana on 10 of the 18 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 Old Second Bancorp

Old Second Bancorp, Inc. operates as the bank holding company for Old Second National Bank that provides community banking services. It offers demand, NOW, money market, savings, time deposit, individual retirement, and checking accounts, as well as certificates of deposit accounts. The company also provides commercial loans; lease financing receivables; commercial real estate loans; construction loans; residential real estate loans, such as residential first mortgage and second mortgage loans; home equity line of credit; consumer loans, including motor vehicle, home improvement, and signature loans; installment and agricultural loans; residential mortgages; and overdraft checking. In addition, it offers safe deposit services; trust and wealth management services; and money orders, cashier’s checks, foreign currency, direct deposits, discount brokerage, debit and credit cards, and other services, as well as acquires the U.S. treasury notes and bonds. Further, the company provides online and mobile banking; corporate cash management products, including remote and mobile deposits capture, investment sweep accounts, zero balance accounts, automated tax payments, automatic teller machines access, telephone banking, lockbox accounts, automated clearing house transactions, account reconciliation, controlled disbursement, detail and general information reporting, foreign and domestic wire transfers, and vault services for currency and coin; and investment, agency, and custodial services for individual, corporate, and not-for-profit clients. Old Second Bancorp, Inc. was incorporated in 1981 and is headquartered in Aurora, Illinois.