Reviewing Old Second Bancorp (NASDAQ:OSBC) & M&T Bank (NYSE:MTB)

M&T Bank (NYSE:MTB) and Old Second Bancorp (NASDAQ:OSBC) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, valuation, analyst recommendations, risk, earnings, dividends and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for M&T Bank and Old Second Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
M&T Bank	0	9	5	0	2.36
Old Second Bancorp	0	0	2	1	3.33

M&T Bank currently has a consensus target price of $159.79, suggesting a potential upside of 12.39%. Old Second Bancorp has a consensus target price of $17.67, suggesting a potential upside of 29.43%. Given Old Second Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Old Second Bancorp is more favorable than M&T Bank.

Earnings & Valuation

This table compares M&T Bank and Old Second Bancorp’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
M&T Bank	$12.75 billion	1.86	$2.74 billion	$14.79	9.61
Old Second Bancorp	$326.15 million	1.88	$91.73 million	$1.97	6.93

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

Volatility & Risk

M&T Bank has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500. Comparatively, Old Second Bancorp has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.

Dividends

M&T Bank pays an annual dividend of $5.40 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 1.5%. M&T Bank pays out 36.5% 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.

Insider and Institutional Ownership

84.7% of M&T Bank shares are held by institutional investors. Comparatively, 67.8% of Old Second Bancorp shares are held by institutional investors. 0.8% of M&T Bank shares are held by company insiders. Comparatively, 3.8% of Old Second Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares M&T Bank and Old Second Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
M&T Bank	19.52%	10.68%	1.25%
Old Second Bancorp	26.90%	16.36%	1.58%

Summary

Old Second Bancorp beats M&T Bank on 10 of the 17 factors compared between the two stocks.

About M&T Bank

M&T Bank Corporation operates as a bank holding company for Manufacturers and Traders Trust Company and Wilmington Trust, National Association that engages in the provision of retail and commercial banking products and services in the United States. The company operates through three segments: Commercial Bank, Retail Bank, and Institutional Services and Wealth Management. It offers a range of credit products and banking services, such as commercial lending and leasing, letters of credits, commercial real estate loans, and credit facilities secured by various commercial real estate to middle-market and large commercial customers. The company also provides customers deposit products, including demand, savings and time accounts, and other services; automobile and recreational finance loans, home equity loans and lines of credit, credit cards, and other loan products, as well as residential mortgage and real estate loans; business loans, cash management, payroll, and direct deposit services to consumers and small businesses through branch network, telephone banking, internet banking, and automated teller machines. In addition, it offers trustee, agency, investment management, security brokerage, and administrative services; personal trust, planning, fiduciary, asset management, family office, and other services; and investment products, including mutual funds and annuities, and other services for corporations and institutions, investment bankers, corporate tax, finance and legal executives, and other institutional clients. The company was founded in 1856 and is headquartered in Buffalo, New York.

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.