Head to Head Review: Eagle Financial Services (OTCMKTS:EFSI) & Old Second Bancorp (NASDAQ:OSBC)

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

Volatility & Risk

Eagle Financial Services has a beta of 0.47, meaning that its share price is 53% less volatile than the S&P 500. Comparatively, Old Second Bancorp has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Eagle Financial Services	10.05%	9.75%	0.58%
Old Second Bancorp	25.62%	14.83%	1.52%

Insider and Institutional Ownership

0.3% of Eagle Financial Services shares are owned by institutional investors. Comparatively, 67.8% of Old Second Bancorp shares are owned by institutional investors. 12.3% of Eagle Financial Services 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 company will outperform the market over the long term.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eagle Financial Services	$97.87 million	1.16	$9.36 million	$2.65	12.08
Old Second Bancorp	$278.69 million	2.76	$91.73 million	$1.97	8.70

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

Dividends

Eagle Financial Services pays an annual dividend of $1.20 per share and has a dividend yield of 3.8%. Old Second Bancorp pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. Eagle Financial Services pays out 45.3% of its earnings in the form of a dividend. Old Second Bancorp pays out 10.2% 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.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Eagle Financial Services and Old Second Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eagle Financial Services	0	0	0	0	N/A
Old Second Bancorp	0	1	3	0	2.75

Old Second Bancorp has a consensus price target of $18.88, indicating a potential upside of 10.19%. Given Old Second Bancorp’s higher probable upside, analysts clearly believe Old Second Bancorp is more favorable than Eagle Financial Services.

Summary

Old Second Bancorp beats Eagle Financial Services on 11 of the 15 factors compared between the two stocks.

About Eagle Financial Services

Eagle Financial Services, Inc. operates as the bank holding company for Bank of Clarke that provides various retail and commercial banking products and services in the Shenandoah Valley, Northern Virginia and Frederick, Maryland. It operates through three segments: Community Banking, Marine Lending, and Wealth Management. The company's deposit products include checking, NOW, money market, and regular savings accounts; and demand and time deposits. Its loan portfolio comprises one-to-four-family residential real estate, commercial real estate, construction and land development, and commercial and industrial loans, as well as secured and unsecured consumer loans, which include personal installment loans, personal lines of credit, automobile loans, and credit card loans. The company also offers fiduciary services; advisory services and investment products, including individual retirement accounts, mutual funds, tax-deferred annuities, 529 college savings plans, life insurance, long term care insurance, brokerage certificates of deposit, and other brokerage services; non-deposit investment products; and title insurance products. In addition, it provides ATM and debit cards; online bill payment services; wealth management services; and telephone, internet, and mobile banking services, as well as other commercial deposit account services, such as ACH origination and remote deposit capture services. The company operates through full-service branches, loan production offices, drive-through only facility, and ATM locations in the Virginia communities of Berryville, Winchester, Boyce, Stephens City, Purcellville, Warrenton, Leesburg, Ashburn, and Fairfax, as well as Maryland community of Frederick. Eagle Financial Services, Inc. was founded in 1881 and is headquartered in Berryville, 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.