Analyzing United Bancorp (NASDAQ:UBCP) and Old Second Bancorp (NASDAQ:OSBC)

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

Insider & Institutional Ownership

15.4% of United Bancorp shares are owned by institutional investors. Comparatively, 67.8% of Old Second Bancorp shares are owned by institutional investors. 12.9% of United Bancorp shares are owned by company insiders. Comparatively, 3.8% of Old Second Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for United Bancorp and Old Second Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Bancorp	0	0	0	0	0.00
Old Second Bancorp	0	1	3	1	3.00

Old Second Bancorp has a consensus target price of $21.38, suggesting a potential upside of 22.07%. Given Old Second Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Old Second Bancorp is more favorable than United Bancorp.

Dividends

United Bancorp pays an annual dividend of $0.75 per share and has a dividend yield of 5.5%. Old Second Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.4%. United Bancorp pays out 59.1% of its earnings in the form of a dividend. Old Second Bancorp pays out 13.1% 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. United Bancorp has increased its dividend for 13 consecutive years and Old Second Bancorp has increased its dividend for 1 consecutive years. United Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Bancorp	$43.98 million	1.78	$7.40 million	$1.27	10.65
Old Second Bancorp	$341.72 million	2.70	$85.26 million	$1.83	9.57

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
United Bancorp	16.44%	11.96%	0.90%
Old Second Bancorp	24.38%	12.53%	1.51%

Risk & Volatility

United Bancorp has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500. Comparatively, Old Second Bancorp has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.

Summary

Old Second Bancorp beats United Bancorp on 14 of the 18 factors compared between the two stocks.

About United Bancorp

United Bancorp, Inc. operates as the bank holding company for Unified Bank that provides commercial and retail banking services in Ohio. The company provides range of banking and financial services, which includes accepting demand, savings, and time deposits. It also offers commercial, real estate and consumer loans. United Bancorp, Inc. was founded in 1902 and is headquartered in Martins Ferry, Ohio.

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.