Comparing Isabella Bank (OTCMKTS:ISBA) & Southside Bancshares (NASDAQ:SBSI)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Southside Bancshares	19.40%	11.10%	1.06%
Isabella Bank	13.28%	7.34%	0.73%

Institutional and Insider Ownership

55.7% of Southside Bancshares shares are held by institutional investors. 6.0% of Southside Bancshares shares are held by company insiders. Comparatively, 9.7% of Isabella Bank shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings for Southside Bancshares and Isabella Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southside Bancshares	0	3	0	0	2.00
Isabella Bank	0	1	0	0	2.00

Southside Bancshares currently has a consensus price target of $35.00, suggesting a potential upside of 6.43%. Isabella Bank has a consensus price target of $34.00, suggesting a potential downside of 35.18%. Given Southside Bancshares’ higher possible upside, research analysts plainly believe Southside Bancshares is more favorable than Isabella Bank.

Dividends

Southside Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 4.4%. Isabella Bank pays an annual dividend of $1.12 per share and has a dividend yield of 2.1%. Southside Bancshares pays out 62.9% of its earnings in the form of a dividend. Isabella Bank pays out 43.8% 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.

Earnings and Valuation

This table compares Southside Bancshares and Isabella Bank”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southside Bancshares	$235.49 million	4.20	$88.49 million	$2.29	14.36
Isabella Bank	$76.30 million	5.04	$13.89 million	$2.56	20.49

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

Volatility & Risk

Southside Bancshares has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, Isabella Bank has a beta of 0.09, suggesting that its stock price is 91% less volatile than the S&P 500.

Summary

Southside Bancshares beats Isabella Bank on 10 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 Isabella Bank

Isabella Bank Corporation operates as the bank holding company for Isabella Bank that provides various banking products and services to businesses, institutions, and individuals and their families. Its deposit products include checking accounts, savings accounts, certificates of deposit, direct deposits, and money market accounts. The company's loan portfolio comprises commercial, agricultural, and residential real estate loans, as well as consumer loans, including secured and unsecured personal loans. It also offers cash management, mobile and internet banking, electronic bill pay, automated teller machines, trust and investment, estate planning, and safe deposit box rental services; and insurance products. The company operated banking offices in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. Isabella Bank Corporation was founded in 1903 and is headquartered in Mount Pleasant, Michigan.