Comparing Old Second Bancorp (NASDAQ:OSBC) & Civista Bancshares (NASDAQ:CIVB)

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

Institutional and Insider Ownership

67.8% of Old Second Bancorp shares are held by institutional investors. Comparatively, 52.1% of Civista Bancshares shares are held by institutional investors. 3.8% of Old Second Bancorp shares are held by company insiders. Comparatively, 2.6% of Civista Bancshares shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations for Old Second Bancorp and Civista Bancshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Old Second Bancorp	0	1	4	0	2.80
Civista Bancshares	1	3	3	0	2.29

Old Second Bancorp presently has a consensus price target of $22.63, indicating a potential upside of 7.18%. Civista Bancshares has a consensus price target of $26.00, indicating a potential upside of 4.54%. Given Old Second Bancorp’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Old Second Bancorp is more favorable than Civista Bancshares.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Old Second Bancorp	20.00%	13.36%	1.65%
Civista Bancshares	18.12%	11.14%	1.16%

Earnings & Valuation

This table compares Old Second Bancorp and Civista Bancshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Old Second Bancorp	$401.54 million	2.77	$80.31 million	$1.63	12.95
Civista Bancshares	$254.95 million	1.88	$46.21 million	$2.66	9.35

Old Second Bancorp has higher revenue and earnings than Civista Bancshares. Civista 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.

Dividends

Old Second Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.3%. Civista Bancshares pays an annual dividend of $0.68 per share and has a dividend yield of 2.7%. Old Second Bancorp pays out 17.2% of its earnings in the form of a dividend. Civista Bancshares pays out 25.6% 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. Old Second Bancorp has raised its dividend for 1 consecutive years and Civista Bancshares has raised its dividend for 4 consecutive years. Civista Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Old Second Bancorp has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500. Comparatively, Civista Bancshares has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.

Summary

Old Second Bancorp beats Civista Bancshares on 14 of the 17 factors compared between the two stocks.

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.

About Civista Bancshares

Civista Bancshares, Inc. operates as the financial holding company for Civista Bank that provides community banking services. It collects a range of customer deposits; and offers commercial and agriculture, commercial and residential real estate, farm real estate, real estate construction, consumer, and other loans, as well as letters of credit. The company also holds and manages securities portfolio; leases general equipment; and provides captive insurance products. It operates in North Central, West Central, South Western Ohio, South Eastern Indiana, and Northern Kentucky. The company was formerly known as First Citizens Banc Corp and changed its name to Civista Bancshares, Inc. in May 2015. Civista Bancshares, Inc. was founded in 1884 and is headquartered in Sandusky, Ohio.