Critical Survey: Southside Bancshares (SBSI) and First Financial Bankshares (FFIN)

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Southside Bancshares (NASDAQ: FFIN) and First Financial Bankshares (NASDAQ:FFIN) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, valuation, profitability, analyst recommendations, earnings, institutional ownership and dividends.

Valuation and Earnings

This table compares Southside Bancshares and First Financial Bankshares’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Southside Bancshares $224.95 million 5.62 $54.31 million $1.89 19.05
First Financial Bankshares $336.99 million 12.23 $120.37 million $1.70 35.82

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

Dividends

Southside Bancshares pays an annual dividend of $1.20 per share and has a dividend yield of 3.3%. First Financial Bankshares pays an annual dividend of $0.84 per share and has a dividend yield of 1.4%. Southside Bancshares pays out 63.5% of its earnings in the form of a dividend. First Financial Bankshares pays out 49.4% 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. Southside Bancshares has increased its dividend for 20 consecutive years and First Financial Bankshares has increased its dividend for 7 consecutive years. Southside Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Southside Bancshares and First Financial Bankshares, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southside Bancshares 0 2 0 0 2.00
First Financial Bankshares 1 3 0 0 1.75

Southside Bancshares currently has a consensus price target of $37.00, suggesting a potential upside of 2.78%. First Financial Bankshares has a consensus price target of $45.25, suggesting a potential downside of 25.70%. Given Southside Bancshares’ stronger consensus rating and higher probable upside, research analysts clearly believe Southside Bancshares is more favorable than First Financial Bankshares.

Risk & Volatility

Southside Bancshares has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, First Financial Bankshares has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500.

Institutional & Insider Ownership

48.0% of Southside Bancshares shares are held by institutional investors. Comparatively, 53.8% of First Financial Bankshares shares are held by institutional investors. 17.2% of Southside Bancshares shares are held by company insiders. Comparatively, 4.8% of First Financial Bankshares shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Southside Bancshares and First Financial Bankshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Southside Bancshares 24.55% 9.07% 1.04%
First Financial Bankshares 37.86% 13.29% 1.70%

Summary

First Financial Bankshares beats Southside Bancshares on 10 of the 16 factors compared between the two stocks.

Southside Bancshares Company Profile

Southside Bancshares, Inc. operates as the bank holding company for Southside Bank that provides a range of financial services to individuals, businesses, municipal entities, and nonprofit organizations. Its deposit products include savings, money market, and interest and noninterest bearing checking accounts, as well as certificates of deposit. The company's loan portfolio comprises consumer loans that include 1-4 family residential loans, home equity loans, home improvement loans, automobile loans, and other installment loans; commercial loans, such as short-term working capital loans for inventory and accounts receivable, short and medium-term loans for equipment or other business capital expansion, commercial real estate loans, and municipal loans; and construction loans for 1-4 family residential and commercial real estate. It also offers trust services consisting of investment management, administration, and advisory services for individuals, partnerships, and corporations; safe deposit services; and brokerage services. The company operates through 60 branches and 40 motor bank facilities located in Tyler, Longview, Lindale, Gresham, Jacksonville, Bullard, Chandler, Hawkins, Palestine, Gun Barrel City, Whitehouse, Fort Worth, Arlington, Cleburne, Euless, Flower Mound, Frisco, Granbury, Grapevine, Irving, Watauga, Weatherford, Austin, Diboll, Lufkin, Nacogdoches, Cleveland, Splendora, Jasper, Pineland, Hemphill, and San Augustine; and a network of approximately 84 automated teller machines, as well as trust services, and/or loan production or other financial services offices. Southside Bancshares, Inc. was founded in 1960 and is headquartered in Tyler, Texas.

First Financial Bankshares Company Profile

First Financial Bankshares, Inc., through its subsidiaries, provides commercial banking products and services primarily in Texas. The company accepts checking, savings, and time deposits; and offers real estate, commercial, agricultural, and consumer loans to businesses, professionals, individuals, and farm and ranch operations. It also provides automated teller machines, drive-in and night deposit, safe deposit facilities, remote deposit capture, Internet banking, mobile banking, payroll cards, funds transmitting, and other customary commercial banking services. In addition, the company offers personal trust services, including wealth management, administration of estates, testamentary trusts, revocable and irrevocable trusts, and agency accounts; and securities brokerage services, as well as administers retirement and employee benefit accounts, such as 401(k) profit sharing plans and IRAs;. As of December 31, 2017, it had 69 financial centers in Texas, including Abilene, San Angelo, Weatherford, Cleburne, Conroe, Stephenville, Granbury, Acton, Albany, Aledo, Alvarado, Beaumont, Boyd, Bridgeport, Brock, Burleson, Cisco, Clyde, Cut and Shoot, Decatur, Eastland, Fort Worth, Glen Rose, Grapevine, Hereford, Huntsville, Keller, Magnolia, Mauriceville, Merkel, Midlothian, Mineral Wells, Montgomery, Moran, New Waverly, Newton, Odessa, Orange, Port Arthur, Ranger, Rising Star, Roby, Southlake, Sweetwater, Tomball, Trent, Trophy Club, Vidor, Waxahachie, Willis, Willow Park, Kingwood, Fulshear, El Campo, and Palacios. First Financial Bankshares, Inc. was founded in 1890 and is based in Abilene, Texas.

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