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

Risk & Volatility

Independent Bank Corp. has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, Old Second Bancorp has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500.

Dividends

Independent Bank Corp. pays an annual dividend of $1.28 per share and has a dividend yield of 1.8%. Old Second Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Independent Bank Corp. pays out 43.7% of its earnings in the form of a dividend. Old Second Bancorp pays out 6.5% 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.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Independent Bank Corp. and Old Second Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Independent Bank Corp. 0 3 1 0 2.25
Old Second Bancorp 0 2 0 0 2.00

Independent Bank Corp. presently has a consensus target price of $68.67, suggesting a potential downside of 5.03%. Old Second Bancorp has a consensus target price of $12.25, suggesting a potential downside of 2.00%. Given Old Second Bancorp’s higher probable upside, analysts clearly believe Old Second Bancorp is more favorable than Independent Bank Corp..

Insider and Institutional Ownership

76.5% of Independent Bank Corp. shares are held by institutional investors. Comparatively, 65.6% of Old Second Bancorp shares are held by institutional investors. 2.7% of Independent Bank Corp. shares are held by insiders. Comparatively, 3.6% of Old Second Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Independent Bank Corp. and Old Second Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Independent Bank Corp. 23.17% 9.70% 1.09%
Old Second Bancorp 16.82% 10.30% 0.82%

Earnings & Valuation

This table compares Independent Bank Corp. and Old Second Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Independent Bank Corp. $316.23 million 6.27 $80.39 million $2.93 24.68
Old Second Bancorp $97.41 million 3.80 $18.37 million $0.62 20.16

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

Summary

Independent Bank Corp. beats Old Second Bancorp on 11 of the 16 factors compared between the two stocks.

About Independent Bank Corp.

Independent Bank Corp. is a bank holding company. The Company operates through its subsidiary, Rockland Trust Company (the Bank). The Bank is a community-oriented commercial bank. Its community banking business provides a range of banking services, including lending activities, acceptance of demand, savings, and time deposits, and investment management. As of December 31, 2016, the bank had operated 80 full service and three limited service retail branches, 11 commercial banking centers, five investment management offices and one mortgage lending center, all of which located in Eastern Massachusetts. The Bank classifies loans as commercial loans, consumer real estate loans, or other consumer loans. Commercial loans consist of commercial and industrial loans, commercial real estate loans, commercial construction loans, and small business loans. The Bank offers a range of demand deposits, interest checking, money market accounts, savings accounts and time certificates of deposit.

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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