Critical Review: First Western Financial (NASDAQ:MYFW) & Old Second Bancorp (NASDAQ:OSBC)

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

Analyst Ratings

This is a summary of current ratings and target prices for First Western Financial and Old Second Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Western Financial	0	1	1	1	3.00
Old Second Bancorp	0	1	4	0	2.80

First Western Financial presently has a consensus price target of $27.00, indicating a potential downside of 4.32%. Old Second Bancorp has a consensus price target of $23.50, indicating a potential upside of 13.53%. Given Old Second Bancorp’s higher probable upside, analysts plainly believe Old Second Bancorp is more favorable than First Western Financial.

Risk & Volatility

First Western Financial has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Old Second Bancorp has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Western Financial	8.02%	5.74%	0.48%
Old Second Bancorp	20.07%	12.67%	1.62%

Valuation & Earnings

This table compares First Western Financial and Old Second Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Western Financial	$186.36 million	1.47	$13.19 million	$1.55	18.21
Old Second Bancorp	$401.54 million	2.65	$80.31 million	$1.68	12.32

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

Institutional and Insider Ownership

60.3% of First Western Financial shares are held by institutional investors. Comparatively, 67.8% of Old Second Bancorp shares are held by institutional investors. 13.1% of First Western Financial 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 will outperform the market over the long term.

Summary

Old Second Bancorp beats First Western Financial on 10 of the 15 factors compared between the two stocks.

About First Western Financial

First Western Financial, Inc., a financial holding company, provides wealth advisory, private baking, personal trust, investment management, mortgage lending, and institutional asset management services. The company operates through two segments: Wealth Management and Mortgage. The Wealth Management segment provides deposit, loan, life insurance, and trust and investment management advisory products and services. The Mortgage segment engages in soliciting, originating, and selling mortgage loans into the secondary market. It serves entrepreneurs, professionals, high net worth individuals or families, and business and philanthropic organizations. First Western Financial, Inc. was incorporated in 2002 and is headquartered in Denver, Colorado.

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.