First Community Bancshares (NASDAQ: FCBC) and Old Second Bancorp (NASDAQ:OSBC) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, profitability, risk and earnings.

Analyst Ratings

This is a summary of recent ratings and target prices for First Community Bancshares and Old Second Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Community Bancshares 0 2 0 0 2.00
Old Second Bancorp 0 2 0 0 2.00

First Community Bancshares currently has a consensus price target of $23.50, indicating a potential downside of 19.49%. Old Second Bancorp has a consensus price target of $12.25, indicating a potential downside of 9.93%. Given Old Second Bancorp’s higher possible upside, analysts plainly believe Old Second Bancorp is more favorable than First Community Bancshares.

Dividends

First Community Bancshares pays an annual dividend of $0.72 per share and has a dividend yield of 2.5%. Old Second Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. First Community Bancshares pays out 45.9% 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.

Institutional and Insider Ownership

40.3% of First Community Bancshares shares are held by institutional investors. Comparatively, 65.0% of Old Second Bancorp shares are held by institutional investors. 3.3% of First Community Bancshares 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 stock will outperform the market over the long term.

Profitability

This table compares First Community Bancshares and Old Second Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Community Bancshares 22.32% 7.72% 1.11%
Old Second Bancorp 16.82% 10.30% 0.82%

Volatility and Risk

First Community Bancshares has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Old Second Bancorp has a beta of 1.34, meaning that its share price is 34% more volatile than the S&P 500.

Earnings and Valuation

This table compares First Community Bancshares and Old Second Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
First Community Bancshares $121.79 million 4.07 $25.12 million $1.57 18.59
Old Second Bancorp $101.95 million 3.95 $15.68 million $0.62 21.94

First Community Bancshares has higher revenue and earnings than Old Second Bancorp. First Community Bancshares 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.

About First Community Bancshares

First Community Bancshares, Inc. is a financial holding company. The Company provides commercial banking products and services through its subsidiary First Community Bank (the Bank). The Bank operates as First Community Bank in Virginia, West Virginia, and North Carolina and People’s Community Bank, a Division of First Community Bank, in Tennessee. It provides insurance services through its subsidiary First Community Insurance Services, and offers wealth management and investment advice through its Trust Division and subsidiary First Community Wealth Management. Its products include demand deposit accounts, savings and money market accounts, certificates of deposit, and individual retirement arrangements; commercial, consumer, and real estate mortgage loans and lines of credit; various credit card, debit card, and automated teller machine card services; corporate and personal trust services; investment management services, and life, health, and property and casualty insurance products.

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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