Independent Bank Corporation (NASDAQ: IBCP) and Old Second Bancorp (NASDAQ:OSBC) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitabiliy, valuation, institutional ownership, analyst recommendations, earnings, risk and dividends.
This table compares Independent Bank Corporation and Old Second Bancorp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Independent Bank Corporation||18.47%||9.83%||0.97%|
|Old Second Bancorp||16.00%||9.73%||0.76%|
Earnings & Valuation
This table compares Independent Bank Corporation and Old Second Bancorp’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Independent Bank Corporation||$124.89 million||3.62||$24.53 million||$1.15||18.43|
|Old Second Bancorp||$94.50 million||3.76||N/A||N/A||N/A|
Independent Bank Corporation has higher revenue and earnings than Old Second Bancorp.
Volatility and Risk
Independent Bank Corporation has a beta of 0.29, indicating that its stock price is 71% less volatile than the S&P 500. Comparatively, Old Second Bancorp has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500.
Independent Bank Corporation pays an annual dividend of $0.40 per share and has a dividend yield of 1.9%. Old Second Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Independent Bank Corporation pays out 34.8% of its earnings in the form of a dividend.
This is a breakdown of recent recommendations and price targets for Independent Bank Corporation and Old Second Bancorp, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Independent Bank Corporation||0||1||0||0||2.00|
|Old Second Bancorp||0||1||0||0||2.00|
Independent Bank Corporation currently has a consensus price target of $17.50, indicating a potential downside of 17.45%. Old Second Bancorp has a consensus price target of $11.00, indicating a potential downside of 8.33%. Given Old Second Bancorp’s higher probable upside, analysts clearly believe Old Second Bancorp is more favorable than Independent Bank Corporation.
Institutional and Insider Ownership
81.4% of Independent Bank Corporation shares are held by institutional investors. Comparatively, 65.5% of Old Second Bancorp shares are held by institutional investors. 5.7% of Independent Bank Corporation shares are held by insiders. Comparatively, 3.6% of Old Second Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Independent Bank Corporation beats Old Second Bancorp on 7 of the 12 factors compared between the two stocks.
About Independent Bank Corporation
Independent Bank Corporation is a bank holding company. The Company owns all of the outstanding stock of Independent Bank (the Bank). The Bank focuses on commercial banking industry. The Bank offers a range of banking services to individuals and businesses, including checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending and safe deposit box services. The Company’s principal markets are the rural and suburban communities across lower Michigan. As of December 31, 2016, the Company’s markets were served by the Bank’s main office in Grand Rapids, Michigan, and a total of 62 branches, a drive-in facility and 12 loan production offices. The Bank’s branches provide lobby and drive-in services, as well as automatic teller machines (ATMs). Its Bank also offers title insurance services through a subsidiary, and investment and insurance services through a third party agreement with Cetera Investment Services LLC.
About Old Second Bancorp
Old Second Bancorp, Inc. is a bank holding company. The Company conducts a full service community banking and trust business through its subsidiaries, including Old Second National Bank (the Bank), Old Second Capital Trust I, Old Second Capital Trust II and Old Second Affordable Housing Fund, L.L.C. The Bank’s full service banking businesses include the customary consumer and commercial products and services that banking institutions provide, including demand, negotiable order of withdrawal, money market and individual retirement accounts; commercial, industrial, consumer and real estate lending, including installment loans, agricultural loans, lines of credit and overdraft checking; safe deposit operations, and a range of additional services tailored to the needs of individual customers, such as the acquisition of the United States Treasury notes and bonds, money orders, cashiers’ checks and foreign currency, direct deposit, debit cards, credit cards and other special services.
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