Financial Analysis: First Busey (NASDAQ:BUSE) & Old Second Bancorp (NASDAQ:OSBC)

Old Second Bancorp (NASDAQ:OSBC) and First Busey (NASDAQ:BUSE) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.

Analyst Recommendations

This is a summary of current recommendations and price targets for Old Second Bancorp and First Busey, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Old Second Bancorp	0	1	4	1	3.00
First Busey	0	4	3	0	2.43

Old Second Bancorp presently has a consensus price target of $21.63, suggesting a potential upside of 5.95%. First Busey has a consensus price target of $26.33, suggesting a potential upside of 5.84%. Given Old Second Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe Old Second Bancorp is more favorable than First Busey.

Risk and Volatility

Old Second Bancorp has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, First Busey has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Old Second Bancorp	$341.72 million	3.15	$85.26 million	$1.51	13.52
First Busey	$663.36 million	3.32	$113.69 million	$1.15	21.63

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

Profitability

This table compares Old Second Bancorp and First Busey’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%
First Busey	11.00%	9.05%	1.11%

Dividends

Old Second Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. First Busey pays an annual dividend of $1.00 per share and has a dividend yield of 4.0%. Old Second Bancorp pays out 18.5% of its earnings in the form of a dividend. First Busey pays out 87.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Old Second Bancorp has increased its dividend for 1 consecutive years and First Busey has increased its dividend for 10 consecutive years. First Busey is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

67.8% of Old Second Bancorp shares are held by institutional investors. Comparatively, 56.5% of First Busey shares are held by institutional investors. 3.8% of Old Second Bancorp shares are held by company insiders. Comparatively, 3.9% of First Busey shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Old Second Bancorp beats First Busey on 11 of the 18 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 First Busey

First Busey Corporation operates as the bank holding company for Busey Bank that engages in the provision of retail and commercial banking products and services to individual, corporate, institutional, and governmental customers in the United States. It operates through three segments: Banking, Wealth Management, and FirsTech. The Banking segment provides banking services to individual customers, such as demand and savings deposits, money transfers, safe deposit services, individual retirement accounts and other fiduciary services, automated teller machines, and technology-based networks, as well as loan products, including residential real estate, home equity lines of credit, and consumer loans. This segment also offers banking services to corporate customers, including commercial, commercial real estate, real estate construction, and agricultural loans, as well as cash management services. The Wealth Management segment offers a range of investment and asset management, investment, brokerage, investment strategy consulting, fiduciary, philanthropic advisory, tax preparation, business succession planning, and employee retirement plan services to individuals, businesses, and foundations; and professional farm management services to the agricultural industry. The FirsTech segment provides payment technology solutions comprising online, mobile, and voice-recognition bill payments; money management and credit card networks; direct debit services; lockbox remittance processing for payments made by mail; and walk-in payments, as well as tools to help clients with billing, reconciliation, bill reminders, and treasury services. The company was founded in 1868 and is headquartered in Champaign, Illinois.