Analyzing Eagle Bancorp Montana (NASDAQ:EBMT) and Old Second Bancorp (NASDAQ:OSBC)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Old Second Bancorp	18.89%	12.34%	1.51%
Eagle Bancorp Montana	10.76%	7.53%	0.64%

Institutional & Insider Ownership

67.8% of Old Second Bancorp shares are owned by institutional investors. Comparatively, 35.7% of Eagle Bancorp Montana shares are owned by institutional investors. 3.8% of Old Second Bancorp shares are owned by company insiders. Comparatively, 6.1% of Eagle Bancorp Montana shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Old Second Bancorp has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, Eagle Bancorp Montana has a beta of 0.34, meaning that its share price is 66% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Old Second Bancorp and Eagle Bancorp Montana, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Old Second Bancorp	0	1	4	1	3.00
Eagle Bancorp Montana	0	0	1	0	3.00

Old Second Bancorp presently has a consensus price target of $21.63, indicating a potential upside of 10.22%. Given Old Second Bancorp’s higher probable upside, analysts clearly believe Old Second Bancorp is more favorable than Eagle Bancorp Montana.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Old Second Bancorp	$341.72 million	3.02	$85.26 million	$1.51	12.99
Eagle Bancorp Montana	$121.99 million	1.16	$9.78 million	$1.72	10.34

Old Second Bancorp has higher revenue and earnings than Eagle Bancorp Montana. Eagle Bancorp Montana 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 1.4%. Eagle Bancorp Montana pays an annual dividend of $0.58 per share and has a dividend yield of 3.3%. Old Second Bancorp pays out 18.5% of its earnings in the form of a dividend. Eagle Bancorp Montana pays out 33.7% 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 Eagle Bancorp Montana has raised its dividend for 14 consecutive years. Eagle Bancorp Montana is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Old Second Bancorp beats Eagle Bancorp Montana on 13 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 Eagle Bancorp Montana

Eagle Bancorp Montana, Inc. operates as the bank holding company for Opportunity Bank of Montana that provides various retail banking products and services to small businesses and individuals in Montana. It accepts various deposit products, such as checking, savings, money market, and individual retirement accounts, as well as certificates of deposit accounts. The company also provides 1-4 family residential mortgage loans, such as residential mortgages and construction of residential properties; commercial real estate loans, including multi-family dwellings, nonresidential property, commercial construction and development, and farmland loans; and second mortgage/home equity loans. In addition, it offers consumer loans, such as loans secured by collateral other than real estate, such as automobiles, recreational vehicles, and boats; personal loans and lines of credit; commercial business loans consisting of business loans and lines of credit on a secured and unsecured basis; construction loans; agricultural loans; and mortgage loan services. The company operates full-service branches and automated teller machines. Eagle Bancorp Montana, Inc. was founded in 1922 and is headquartered in Helena, Montana.