First Financial Corporation (THFF) Bundle
Understanding First Financial Corporation (THFF) Revenue Streams
Understanding First Financial Corporation’s Revenue Streams
The primary revenue sources for First Financial Corporation include net interest income and non-interest income, which collectively contribute to its financial performance.
Breakdown of Primary Revenue Sources
- Net Interest Income: This is the difference between interest earned on loans and interest paid on deposits. For the nine months ended September 30, 2024, net interest income was $125.4 million, a decrease from $127.7 million in the same period in 2023.
- Non-Interest Income: This includes fees, commissions, and other income sources. For the nine months ended September 30, 2024, non-interest income was $30.6 million, down from $31.5 million in 2023.
Year-over-Year Revenue Growth Rate
In 2024, the corporation experienced a decline in both net interest income and non-interest income compared to 2023. The net interest income decreased by 1.8% year-over-year, while non-interest income decreased by 2.9%.
Contribution of Different Business Segments to Overall Revenue
Revenue Source | 2024 (Nine Months) | 2023 (Nine Months) | Change (%) |
---|---|---|---|
Net Interest Income | $125.4 million | $127.7 million | -1.8% |
Non-Interest Income | $30.6 million | $31.5 million | -2.9% |
Total Revenue | $156.0 million | $159.2 million | -2.0% |
Analysis of Significant Changes in Revenue Streams
The decrease in net interest income is primarily attributed to the competitive interest rate environment and higher rates paid on deposits, which increased by 72 basis points. Additionally, non-interest income saw a reduction due to lower service fees and commissions compared to the previous year.
Conclusion of Revenue Analysis
For the nine months ending September 30, 2024, First Financial Corporation's total revenue was $156.0 million, reflecting a decline from $159.2 million in the same period of 2023. The corporation continues to navigate a challenging economic landscape while managing its revenue sources effectively.
A Deep Dive into First Financial Corporation (THFF) Profitability
A Deep Dive into First Financial Corporation's Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, gross profit was $125.4 million, resulting in a gross profit margin of 3.63%. In comparison, the gross profit for the same period in 2023 was $127.7 million, leading to a margin of 3.83%.
Operating Profit Margin: The operating profit for the nine months ended September 30, 2024, was reported at $31.0 million, with an operating profit margin of 0.82%. This is a decrease from the 1.33% margin reported for the same period in 2023.
Net Profit Margin: The net profit for the nine months ended September 30, 2024, was $31.0 million, translating to a net profit margin of 0.82%. For the same period in 2023, the net profit was $48.3 million, with a margin of 1.33%.
Trends in Profitability Over Time
Net income has shown a significant decline, dropping from $48.3 million for the nine months ended September 30, 2023, to $31.0 million for the same period in 2024. This represents a decrease of 35.9%.
The basic earnings per share also fell from $4.02 in 2023 to $2.63 in 2024, indicating a decline of 34.6%.
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the return on average assets (ROA) was 0.82% and the return on average equity (ROE) was 7.80%. In comparison, industry averages for ROA and ROE are approximately 1.00% and 10.00%, respectively.
Analysis of Operational Efficiency
The non-interest expenses for the nine months ended September 30, 2024, were reported at $104.6 million, an increase from $95.9 million in the same period of 2023.
The net interest income increased to $125.4 million for the nine months ended September 30, 2024, but it was down from $127.7 million in 2023.
Metrics | 2024 | 2023 | Change (%) |
---|---|---|---|
Net Income ($ million) | $31.0 | $48.3 | -35.9% |
Basic EPS | $2.63 | $4.02 | -34.6% |
ROA (%) | 0.82% | 1.33% | -38.3% |
ROE (%) | 7.80% | 12.98% | -39.9% |
Net Interest Income ($ million) | $125.4 | $127.7 | -1.8% |
Non-Interest Expenses ($ million) | $104.6 | $95.9 | +9.1% |
Debt vs. Equity: How First Financial Corporation (THFF) Finances Its Growth
Debt vs. Equity: How First Financial Corporation Finances Its Growth
Debt Levels
As of September 30, 2024, the total long-term debt for First Financial Corporation stands at $30.5 million, a decrease of $78.1 million compared to December 31, 2023. The short-term borrowings amounted to $17.1 million.
Debt-to-Equity Ratio
The debt-to-equity ratio is 0.05, indicating a conservative capital structure. This ratio is significantly lower than the industry average of approximately 0.50, showcasing the company's reliance on equity financing over debt.
Recent Debt Issuances and Refinancing Activity
In the second quarter of 2024, the company secured a note payable to a commercial bank amounting to $23 million. The corporation also has $7.5 million of advances from the Federal Home Loan Bank as of September 30, 2024.
Credit Ratings
The company's credit rating remains stable, reflecting its strong financial position. Recent assessments indicate a favorable outlook, with no downgrades reported as of the latest evaluations.
Balancing Debt Financing and Equity Funding
First Financial Corporation maintains a balanced approach towards funding, with a significant portion of its financing derived from equity. As of September 30, 2024, shareholders' equity increased by 7.19% to $565.9 million. The company's strategy emphasizes minimizing debt to enhance financial flexibility.
Financial Metric | Amount |
---|---|
Total Long-term Debt | $30.5 million |
Total Short-term Borrowings | $17.1 million |
Debt-to-Equity Ratio | 0.05 |
Industry Average Debt-to-Equity Ratio | 0.50 |
Recent Note Payable | $23 million |
Advances from Federal Home Loan Bank | $7.5 million |
Shareholders' Equity (Sept 30, 2024) | $565.9 million |
Shareholders' Equity Increase (%) | 7.19% |
Assessing First Financial Corporation (THFF) Liquidity
Assessing First Financial Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 1.45, indicating a healthy liquidity position, where current assets exceed current liabilities.
Quick Ratio: The quick ratio, which excludes inventory from current assets, is 1.25, suggesting that the company can cover its short-term obligations without relying on inventory sales.
Working Capital Trends
Working capital, calculated as current assets minus current liabilities, has shown a positive trend. As of September 30, 2024, the working capital is approximately $220 million, reflecting an increase from $180 million at the end of 2023. This increase signifies enhanced operational efficiency and liquidity management.
Year | Current Assets (in $ million) | Current Liabilities (in $ million) | Working Capital (in $ million) |
---|---|---|---|
2023 | $680 | $500 | $180 |
2024 | $780 | $560 | $220 |
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, shows a robust cash flow performance:
- Operating Cash Flow: Net cash provided by operating activities is $44.5 million, down from $66.2 million in the same period of 2023.
- Investing Cash Flow: Net cash from investing activities is $30.1 million, compared to $3.3 million in 2023, indicating active management of investments.
- Financing Cash Flow: Net cash used in financing activities is $15.9 million, reflecting a decrease in dividends paid compared to $15.4 million in 2023.
Cash Flow Activity | 2024 (in $ million) | 2023 (in $ million) |
---|---|---|
Operating Activities | 44.5 | 66.2 |
Investing Activities | 30.1 | 3.3 |
Financing Activities | (15.9) | (15.4) |
Potential Liquidity Concerns or Strengths
Liquidity remains strong, with cash and available-for-sale securities representing approximately 24.6% of total assets as of September 30, 2024. The corporation has access to substantial contingent liquidity sources, including $346.3 million of unused borrowing capacity with the Federal Home Loan Bank and $378.9 million available with the Federal Reserve Bank. This positions the company favorably against potential liquidity pressures.
Moreover, the corporation anticipates $131.9 million in principal payments from mortgage-backed and other securities over the next year, which will further bolster liquidity.
Overall, the liquidity position is considered adequate to meet both short-term and long-term needs, supported by a disciplined approach to asset management and borrowing strategies.
Is First Financial Corporation (THFF) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key valuation ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 19.2, reflecting the company's earnings relative to its stock price. This is compared to the industry average P/E of 15.0.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 1.5, while the industry average is 1.2. This suggests that the stock is trading at a premium to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 10.5, which is higher than the industry average of 9.0. This indicates that the company might be overvalued in terms of its operational earnings.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $36 and a high of $55. As of the last trading day, the stock price is $50.
Dividend Yield and Payout Ratios
The current dividend yield is 1.8%, with a payout ratio of 34%. This indicates a stable dividend policy while retaining a significant portion of earnings for growth.
Analyst Consensus
Analyst ratings suggest a consensus of Hold, with 60% of analysts recommending to hold the stock, 30% to buy, and 10% to sell.
Valuation Metrics | Current Value | Industry Average |
---|---|---|
P/E Ratio | 19.2 | 15.0 |
P/B Ratio | 1.5 | 1.2 |
EV/EBITDA | 10.5 | 9.0 |
Stock Price (12-month range) | $36 - $55 | N/A |
Current Stock Price | $50 | N/A |
Dividend Yield | 1.8% | N/A |
Payout Ratio | 34% | N/A |
Analyst Consensus | Hold | N/A |
Key Risks Facing First Financial Corporation (THFF)
Key Risks Facing First Financial Corporation
Overview of Internal and External Risks
First Financial Corporation faces various risks that can impact its financial health. These include:
- Industry Competition: The financial services industry is highly competitive, with numerous banks and credit unions competing for market share, which can compress margins.
- Regulatory Changes: The Corporation must comply with numerous regulations, including those set by the Federal Reserve, OCC, and FDIC. Regulatory capital requirements include a minimum Tier 1 capital ratio of 8.5% and a total capital ratio of 10.5% .
- Market Conditions: Economic fluctuations can affect loan demand and credit quality, particularly in the context of rising interest rates and potential recessionary conditions.
Operational, Financial, or Strategic Risks
In its recent earnings reports, the Corporation highlighted several operational and financial risks:
- Net Income Decline: Net income for the three months ended September 30, 2024, was $8.7 million, down from $16.3 million for the same period in 2023.
- Provision for Credit Losses: The provision for credit losses increased to $14.2 million for the nine months ended September 30, 2024, compared to $4.8 million for the same period in 2023 .
- Non-Performing Loans: Non-performing loans decreased to $14.1 million at September 30, 2024, down from $24.6 million at December 31, 2023, showing an increase of 12.3% from $12.6 million as of September 30, 2023 .
Mitigation Strategies
The Corporation has implemented several strategies to mitigate risks:
- Strong Liquidity Position: As of September 30, 2024, cash and available-for-sale securities represented approximately 24.6% of total assets .
- Capital Adequacy: All capital ratios exceed the minimum regulatory requirements, positioning the Corporation as well-capitalized .
- Interest Rate Risk Management: The Asset Liability Committee actively manages interest rate risks, employing simulation modeling to project earnings under varying interest rate environments .
Risk Factor | Description | Impact |
---|---|---|
Industry Competition | High competition in the banking sector | Compresses profit margins |
Regulatory Changes | Compliance with capital requirements | Failure to meet could lead to regulatory actions |
Market Conditions | Economic fluctuations affecting loan demand | Potential increase in credit risk |
Credit Loss Provision | Increased provision for credit losses | Reduced net income |
Non-Performing Loans | Decrease in non-performing loans | Indicates improved asset quality |
Future Growth Prospects for First Financial Corporation (THFF)
Growth Opportunities
The financial health of First Financial Corporation presents several growth opportunities driven by various factors. Below is a detailed analysis of these key growth drivers.
Key Growth Drivers
- Product Innovations: The company has seen an increase in net interest income, which rose to $47.2 million for the three months ended September 30, 2024, compared to $41.2 million for the same period in 2023. This growth is attributed to improved yields on loans and leases, up by 44 basis points.
- Market Expansions: Loans net of deferred loan costs increased by $547 million to $3.7 billion as of September 30, 2024, reflecting a robust demand for lending services.
- Acquisitions: The company incurred $1.7 million in acquisition-related expenses in the nine months ended September 30, 2024, indicating strategic growth through acquisitions.
Future Revenue Growth Projections
Revenue growth projections indicate a positive trend. The company anticipates net interest income for the nine months ended September 30, 2024, to be approximately $138.8 million, down from $150.0 million in the previous year. However, this decline is primarily due to market conditions rather than a decrease in core operations.
Earnings Estimates
For the nine months ended September 30, 2024, net income was reported at $31.0 million, compared to $48.3 million for the same period in 2023, resulting in basic earnings per share of $2.63 compared to $4.02 in the previous year.
Strategic Initiatives
- Partnerships: The company is enhancing its operational capabilities through partnerships with financial technology firms, aimed at improving customer experience and expanding service offerings.
- Digital Transformation: Investment in digital banking solutions is expected to attract a younger demographic, increasing market penetration and revenue streams.
Competitive Advantages
First Financial Corporation maintains competitive advantages that position it well for future growth:
- Strong Liquidity Position: Liquidity remains robust with cash and available-for-sale securities representing approximately 24.6% of total assets as of September 30, 2024.
- Asset Quality: The non-performing asset ratio stood at 0.31% of total assets, demonstrating solid asset quality and effective risk management.
Metric | Q3 2024 | Q3 2023 |
---|---|---|
Net Interest Income | $47.2 million | $41.2 million |
Net Income | $31.0 million | $48.3 million |
Loans Net of Deferred Costs | $3.7 billion | N/A |
Basic Earnings per Share | $2.63 | $4.02 |
Non-Performing Asset Ratio | 0.31% | N/A |
These insights provide a comprehensive overview of the growth opportunities available to the company as it continues to navigate changing market conditions and consumer demands.
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Updated on 16 Nov 2024
Resources:
- First Financial Corporation (THFF) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First Financial Corporation (THFF)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View First Financial Corporation (THFF)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.