Critical Survey: Southside Bancshares (NASDAQ:SBSI) and First Financial (NASDAQ:THFF)

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

Volatility & Risk

Southside Bancshares has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500. Comparatively, First Financial has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500.

Dividends

Southside Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 5.4%. First Financial pays an annual dividend of $1.80 per share and has a dividend yield of 5.1%. Southside Bancshares pays out 51.2% of its earnings in the form of a dividend. First Financial pays out 35.4% 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 raised its dividend for 30 consecutive years. Southside Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Southside Bancshares	21.92%	11.59%	1.10%
First Financial	22.38%	12.13%	1.25%

Earnings and Valuation

This table compares Southside Bancshares and First Financial’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southside Bancshares	$395.58 million	2.06	$86.69 million	$2.81	9.58
First Financial	$271.10 million	1.53	$60.67 million	$5.09	6.92

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

Institutional and Insider Ownership

55.7% of Southside Bancshares shares are held by institutional investors. Comparatively, 72.7% of First Financial shares are held by institutional investors. 6.1% of Southside Bancshares shares are held by company insiders. Comparatively, 4.1% of First Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for Southside Bancshares and First Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southside Bancshares	0	0	0	0	N/A
First Financial	0	1	0	0	2.00

Southside Bancshares currently has a consensus target price of $33.50, indicating a potential upside of 24.49%. First Financial has a consensus target price of $43.00, indicating a potential upside of 22.16%. Given Southside Bancshares’ higher probable upside, research analysts plainly believe Southside Bancshares is more favorable than First Financial.

Summary

Southside Bancshares beats First Financial on 9 of the 15 factors compared between the two stocks.

About Southside Bancshares

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 deposits. 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 consumer related 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 wealth management and trust services consisting of investment management, administration of irrevocable, revocable, and testamentary trusts, estate administration, and custodian services for individuals, partnerships, and corporations; safe deposit services; and brokerage services. In addition, the company provides retirement and employee benefit accounts, including plans and profit sharing plans; and telephone, internet, and mobile banking services. The company offers various banking services through branches, drive-thru facilities, automated teller machines, and interactive teller machines. Southside Bancshares, Inc. was founded in 1960 and is headquartered in Tyler, Texas.

About First Financial

First Financial Corporation, through its subsidiaries, provides various financial services. The company offers non-interest-bearing demand, interest-bearing demand, savings, time, and other time deposits. It also provides commercial loans primarily to expand a business or finance asset purchases; residential real estate and residential real estate construction loans; and home equity loans and lines, secured loans, and cash/CD secured and unsecured loans. In addition, the company offers lease financing, trust account, depositor, and insurance services. The company was founded in 1834 and is headquartered in Terre Haute, Indiana.