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

Profitability

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

Net Margins Return on Equity Return on Assets
Pathfinder Bancorp 8.28% 4.72% 0.38%
Old Second Bancorp 26.06% 15.05% 1.50%

Risk and Volatility

Pathfinder Bancorp has a beta of -0.38, meaning that its share price is 138% less volatile than the S&P 500. Comparatively, Old Second Bancorp has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.

Institutional & Insider Ownership

9.9% of Pathfinder Bancorp shares are held by institutional investors. Comparatively, 69.8% of Old Second Bancorp shares are held by institutional investors. 20.0% of Pathfinder Bancorp shares are held by insiders. Comparatively, 3.8% of Old Second Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Pathfinder Bancorp and Old Second Bancorp, as reported by MarketBeat.com.

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

Old Second Bancorp has a consensus price target of $14.50, suggesting a potential upside of 122.05%. Given Old Second Bancorp’s higher probable upside, analysts clearly believe Old Second Bancorp is more favorable than Pathfinder Bancorp.

Valuation and Earnings

This table compares Pathfinder Bancorp 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
Pathfinder Bancorp $46.20 million 0.99 $3.58 million N/A N/A
Old Second Bancorp $151.39 million 1.29 $39.46 million $1.30 5.02

Old Second Bancorp has higher revenue and earnings than Pathfinder Bancorp.

Dividends

Pathfinder Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 2.5%. Old Second Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.6%. Old Second Bancorp pays out 3.1% of its earnings in the form of a dividend. Pathfinder Bancorp has increased its dividend for 4 consecutive years. Pathfinder Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Old Second Bancorp beats Pathfinder Bancorp on 10 of the 15 factors compared between the two stocks.

Pathfinder Bancorp Company Profile

Pathfinder Bancorp, Inc. operates as a holding company for Pathfinder Bank that provides various banking and financial products and services primarily in Oswego and Onondaga counties, New York. The company accepts various deposits, including checking, savings, and money market deposit accounts, as well as certificates of deposit, and demand and time deposits. Its loan portfolio comprises commercial real estate loans; commercial loans; residential real estate and construction loans; tax-exempt loans; home equity loans and junior liens; municipal loans; and consumer loans comprising automobile, recreational vehicles, and unsecured personal loans, as well as unsecured lines of credit and loans secured by deposit accounts. The company is also involved in the property, casualty, and life insurance brokerage business. It primarily serves individuals, families, small to mid-size businesses, and municipalities. As of April 4, 2018, it operated nine full service offices. The company also operates one loan production office in Oneida County. Pathfinder Bancorp, Inc. was founded in 1859 and is headquartered in Oswego, New York.

Old Second Bancorp Company Profile

Old Second Bancorp, Inc. is a bank holding company, which engages in the provision of traditional retail and commercial banking services through its wholly owned subsidiaries. Its services includes personal banking, loans, business banking, and wealth management. The company was founded in 1981 and is headquartered in Aurora, IL.

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