Overview

TFS Financial Corporation (NASDAQ: TFSL) and Old Second Bancorp Inc. (NASDAQ: OSBC) are both participants in the Regional – Midwest Banks sector. Despite operating in the same regional banking space, the two companies present notably different financial profiles across valuation, profitability, risk, dividends, analyst coverage, and share ownership. This article breaks down those differences across each dimension to give investors a clear, side-by-side picture.

Valuation and Earnings

The table below compares gross revenue, price-to-sales ratio, net income, earnings per share (EPS), and price-to-earnings (P/E) ratio for both companies.

TFSL generates significantly higher gross revenue than OSBC, but OSBC delivers a higher EPS ($1.09 vs. $0.30). This apparent paradox is explained by share count: TFSL has a much larger share base, which dilutes per-share earnings. TFSL also trades at a substantially higher P/E ratio (56.63 vs. 11.81), making it the more expensive stock by that measure. OSBC’s lower price-to-sales ratio of 3.01 compared to TFSL’s 15.86 further reinforces that OSBC is valued more conservatively relative to its revenue.

Profitability

The profitability comparison covers net margins, return on equity (ROE), and return on assets (ROA).

Net margins are nearly identical between the two companies (roughly 26.7%). However, OSBC demonstrates meaningfully stronger capital efficiency. Its ROE of 14.7% is more than three times that of TFSL’s 4.7%, and its ROA of 1.2% is double TFSL’s 0.6%. These metrics suggest OSBC is generating more profit per dollar of equity and assets — a sign of stronger operational efficiency relative to its balance sheet size.

Volatility and Risk

Beta is a common measure of a stock’s price volatility relative to the broader market (S&P 500). A beta below 1.0 indicates lower volatility than the market.

• TFS Financial Corporation (TFSL): Beta of 0.21, indicating approximately 79% less volatility than the S&P 500. TFSL is a relatively stable, low-movement stock.
• Old Second Bancorp Inc. (OSBC): Beta of 0.96, indicating price movement very close to the broader market — approximately 4% less volatile than the S&P 500.

TFSL’s very low beta may reflect its mutual holding company structure and conservative lending focus, which tend to insulate the stock from broader market swings.

Dividends

• TFS Financial Corporation (TFSL): Annual dividend of $0.92 per share, representing a dividend yield of approximately 5.17%.
• Old Second Bancorp Inc. (OSBC): Annual dividend of $0.04 per share, representing a dividend yield of approximately 0.31%.

TFSL offers a substantially higher dividend yield, which may appeal to income-focused investors. OSBC’s minimal dividend suggests the company prioritizes retaining capital for growth or balance sheet strength over returning cash to shareholders.

Analyst Ratings

TFSL carries no active analyst coverage at the time of this comparison, which is not uncommon for companies with a mutual holding company structure and limited institutional trading interest. OSBC holds one Buy rating, with an analyst price target of $15.00 — implying a potential upside of approximately 21.16% from the price at the time of writing.

Institutional and Insider Ownership

• TFS Financial Corporation (TFSL): Institutional ownership at approximately 93%; insider ownership at roughly 0.3%.
• Old Second Bancorp Inc. (OSBC): Institutional ownership at approximately 67.6%; insider ownership at roughly 2.6%.

TFSL’s very high institutional ownership reflects the fact that most of its public float is held by large asset managers, pension funds, and similar entities. OSBC’s higher insider ownership (2.6% vs. 0.3%) can be interpreted as a sign that management has meaningful skin in the game, which is often viewed favorably by investors aligned with long-term value creation.

Price Performance

The table below shows rolling price performance across multiple timeframes as of late June 2019.

TFSL showed positive price momentum across all measured timeframes, with a one-year gain of approximately 14.32%. OSBC, by contrast, posted negative returns across the same periods, declining roughly 11.75% over the prior year. This divergence in price trend — TFSL bullish, OSBC bearish — is a significant contrast given their similar net margin profiles.

Company Background: TFS Financial Corporation

TFS Financial Corporation is the holding company for Third Federal Savings and Loan Association of Cleveland, one of the largest thrift institutions in the United States. The company focuses primarily on residential real estate mortgage loans and retail savings deposits. Its product lines include:

• Savings accounts, checking accounts, certificates of deposit, IRAs, and other qualified plan accounts
• Residential real estate mortgage loans, residential construction loans, and home equity loans and lines of credit
• Net lease transactions on commercial buildings
• Escrow and settlement services
• Reinsurance of private mortgage insurance on residential mortgage loans

The company operates through its main office in Cleveland, Ohio, along with 38 full-service branches and 8 loan production offices across Ohio and Florida. Founded in 1938 and headquartered in Cleveland, TFS Financial Corporation is a subsidiary of Third Federal Savings and Loan Association of Cleveland, MHC.

Summary

These two Midwest regional banks offer contrasting investment profiles. TFSL is a large, low-volatility thrift with high institutional ownership, a strong dividend yield, and positive price momentum — but trades at a premium valuation and shows weaker capital efficiency. OSBC is a smaller community bank with stronger ROE and ROA, more competitive valuation multiples, and meaningful insider ownership, but has experienced negative price momentum and offers a minimal dividend. Investors should weigh these factors alongside their own risk tolerance and investment objectives, and consult current financial data before making any decisions.

All financial data cited in this article is sourced from stocksbeat.com and reflects figures available as of June 2019. This article is for informational purposes only and does not constitute investment advice.