Old Second Bancorp (NASDAQ:OSBC) versus Lakeland Financial (NASDAQ:LKFN) Head-To-Head Review

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

Profitability

This table compares Lakeland Financial and Old Second Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lakeland Financial	23.23%	13.77%	1.43%
Old Second Bancorp	18.89%	12.34%	1.51%

Insider and Institutional Ownership

81.2% of Lakeland Financial shares are held by institutional investors. Comparatively, 67.8% of Old Second Bancorp shares are held by institutional investors. 3.0% of Lakeland Financial shares are held by insiders. Comparatively, 3.8% 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 is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings for Lakeland Financial and Old Second Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lakeland Financial	0	2	2	0	2.50
Old Second Bancorp	0	1	4	1	3.00

Lakeland Financial currently has a consensus target price of $68.67, indicating a potential upside of 14.56%. Old Second Bancorp has a consensus target price of $21.63, indicating a potential upside of 4.77%. Given Lakeland Financial’s higher probable upside, analysts plainly believe Lakeland Financial is more favorable than Old Second Bancorp.

Earnings and Valuation

This table compares Lakeland Financial and Old Second Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lakeland Financial	$430.00 million	3.56	$93.48 million	$3.79	15.82
Old Second Bancorp	$341.72 million	3.18	$85.26 million	$1.51	13.67

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

Risk and Volatility

Lakeland Financial has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Old Second Bancorp has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500.

Dividends

Lakeland Financial pays an annual dividend of $2.00 per share and has a dividend yield of 3.3%. Old Second Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. Lakeland Financial pays out 52.8% of its earnings in the form of a dividend. Old Second Bancorp pays out 18.5% 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. Lakeland Financial has raised its dividend for 14 consecutive years and Old Second Bancorp has raised its dividend for 1 consecutive years. Lakeland Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Lakeland Financial beats Old Second Bancorp on 11 of the 18 factors compared between the two stocks.

About Lakeland Financial

Lakeland Financial Corporation operates as the bank holding company for Lake City Bank that provides various banking products and services in the United States. The company accepts various deposit products, such as noninterest bearing, interest-bearing checking, savings, money market, NOW, and demand deposits. Its loan products include commercial and industrial, commercial real estate and multi-family residential, construction, agri-business and agricultural, consumer 1-4 family mortgage, and other commercial and consumer loans. The company also provides retail and merchant credit card services; corporate treasury management, wealth advisory, and trust services; retail brokerage services, including various financial and investment products, such as annuities and life insurance; and mobile business banking and on-line treasury management services. It serves commercial real estate, manufacturing, agriculture, construction, retail, wholesale, finance and insurance, accommodation and food services, and health care industries. The company was founded in 1872 and is headquartered in Warsaw, 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.