United Community Banks (NASDAQ:UCB) and Southside Bancshares (NASDAQ:SBSI) Critical Contrast

United Community Banks (NASDAQ:UCB) and Southside Bancshares (NASDAQ:SBSI) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, valuation, earnings, profitability, analyst recommendations, dividends and institutional ownership.

Insider and Institutional Ownership

82.3% of United Community Banks shares are held by institutional investors. Comparatively, 55.7% of Southside Bancshares shares are held by institutional investors. 0.5% of United Community Banks shares are held by company insiders. Comparatively, 5.9% of Southside Bancshares shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares United Community Banks and Southside Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Community Banks	16.48%	8.64%	1.04%
Southside Bancshares	19.40%	11.10%	1.06%

Valuation & Earnings

This table compares United Community Banks and Southside Bancshares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Community Banks	$930.04 million	4.11	$252.40 million	$2.04	15.69
Southside Bancshares	$257.86 million	3.60	$88.49 million	$2.91	10.53

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

Dividends

United Community Banks pays an annual dividend of $0.96 per share and has a dividend yield of 3.0%. Southside Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 4.7%. United Community Banks pays out 47.1% of its earnings in the form of a dividend. Southside Bancshares pays out 49.5% 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.

Volatility and Risk

United Community Banks has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500. Comparatively, Southside Bancshares has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for United Community Banks and Southside Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Community Banks	0	2	1	0	2.33
Southside Bancshares	0	3	0	0	2.00

United Community Banks presently has a consensus target price of $33.33, indicating a potential upside of 4.13%. Southside Bancshares has a consensus target price of $37.00, indicating a potential upside of 20.76%. Given Southside Bancshares’ higher possible upside, analysts clearly believe Southside Bancshares is more favorable than United Community Banks.

Summary

United Community Banks beats Southside Bancshares on 9 of the 16 factors compared between the two stocks.

About United Community Banks

United Community Banks, Inc. operates as the financial holding company for United Community Bank that provides financial products and services to commercial, retail, government, education, energy, health care, and real estate sectors. It accepts various deposit products, including checking, savings, money market, and other deposit accounts. The company also offers lending services, including real estate, consumer, and commercial loans, to individuals, small businesses, mid-sized commercial businesses, and non-profit organizations, as well as secured and unsecured, and mortgage loans. In addition, it originates loans partially guaranteed by the SBA and USDA loan programs. Further, the company provides wealth management services comprising financial planning, customized portfolio management, and investment advice; trust services to manage fiduciary assets; non-deposit investment products; and insurance products, including life insurance, long-term care insurance, and tax-deferred annuities, as well as invests in residential and commercial mortgage-backed securities, asset-backed securities, the U.S. treasury, the U.S. agency, and municipal obligations. Additionally, it offers reinsurance on a property insurance contract; insurance agency services; treasury management; credit cards; payment and commerce solution, equipment finance, investment advisory, and other related financial services; brokerage services; and payment processing, merchant, wire transfer, private banking, and other related financial services. The company was founded in 1950 and is headquartered in Blairsville, Georgia.

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.