National Bankshares (NASDAQ:NKSH) versus Old Second Bancorp (NASDAQ:OSBC) Financial Contrast

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

Volatility and Risk

National Bankshares has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, Old Second Bancorp has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500.

Institutional and Insider Ownership

29.7% of National Bankshares shares are held by institutional investors. Comparatively, 67.8% of Old Second Bancorp shares are held by institutional investors. 3.3% of National Bankshares shares are held by company insiders. Comparatively, 3.6% of Old Second Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
National Bankshares	23.22%	10.66%	1.09%
Old Second Bancorp	20.22%	12.79%	1.65%

Earnings and Valuation

This table compares National Bankshares and Old Second Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
National Bankshares	$60.48 million	4.57	$15.83 million	$3.18	13.64
Old Second Bancorp	$374.97 million	3.37	$80.31 million	$1.74	14.28

Old Second Bancorp has higher revenue and earnings than National Bankshares. National Bankshares 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

National Bankshares pays an annual dividend of $1.50 per share and has a dividend yield of 3.5%. Old Second Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.1%. National Bankshares pays out 47.2% of its earnings in the form of a dividend. Old Second Bancorp pays out 16.1% 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. Old Second Bancorp has raised its dividend for 1 consecutive years.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Bankshares	0	1	1	0	2.50
Old Second Bancorp	0	2	4	1	2.86

Old Second Bancorp has a consensus target price of $26.20, suggesting a potential upside of 5.48%. Given Old Second Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe Old Second Bancorp is more favorable than National Bankshares.

Summary

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

About National Bankshares

National Bankshares, Inc. operates as the bank holding company for the National Bank of Blacksburg that provides retail and commercial banking products and services to individuals, businesses, non-profits, and local governments. The company accepts interest-bearing and non-interest-bearing demand deposit accounts, money market deposit accounts, savings accounts, certificates of deposit, health savings accounts, and individual retirement accounts. Its loan products include commercial and agricultural, commercial real estate, residential real estate, home equity, and various consumer loan products, as well as loans for the construction of commercial and residential properties. The company also provides business and consumer debit and credit cards; letters of credit, night depository services, safe deposit boxes, utility payment services, and automatic funds transfer; wealth management, trust, and estate services; non-deposit investment and insurance products; and telephone, mobile, and Internet banking services. The company was founded in 1891 and is headquartered in Blacksburg, Virginia.

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.