Critical Survey: Southside Bancshares (NYSE:SBSI) vs. Banc of California (NYSE:BANC)

Banc of California (NYSE:BANC) and Southside Bancshares (NYSE:SBSI) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, dividends, institutional ownership and risk.

Risk and Volatility

Banc of California has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Southside Bancshares has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500.

Dividends

Banc of California pays an annual dividend of $0.40 per share and has a dividend yield of 2.3%. Southside Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 5.0%. Banc of California pays out 38.5% of its earnings in the form of a dividend. Southside Bancshares pays out 62.6% 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 30 consecutive years. Southside Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Banc of California and Southside Bancshares”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banc of California	$1.07 billion	2.41	$126.89 million	$1.04	16.85
Southside Bancshares	$240.20 million	3.59	$88.49 million	$2.30	12.48

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Banc of California and Southside Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banc of California	0	2	8	1	2.91
Southside Bancshares	0	1	0	0	2.00

Banc of California presently has a consensus price target of $19.25, suggesting a potential upside of 9.87%. Given Banc of California’s stronger consensus rating and higher probable upside, equities analysts plainly believe Banc of California is more favorable than Southside Bancshares.

Institutional and Insider Ownership

86.9% of Banc of California shares are owned by institutional investors. Comparatively, 55.7% of Southside Bancshares shares are owned by institutional investors. 2.7% of Banc of California shares are owned by insiders. Comparatively, 6.0% of Southside Bancshares shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Banc of California and Southside Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banc of California	11.49%	8.00%	0.70%
Southside Bancshares	15.58%	10.94%	1.07%

Summary

Banc of California beats Southside Bancshares on 10 of the 18 factors compared between the two stocks.

About Banc of California

Banc of California, Inc. operates as the bank holding company for Banc of California that provides various banking products and services in California. The company offers deposit products, such as checking, savings, money market, demand, and time deposits; certificates of deposit; retirement accounts; and safe deposit boxes. It also provides real estate loans to professional developers and real estate investors for the acquisition, construction, refinancing, renovation, and on-going operation of commercial real estate properties; commercial real estate mortgage, residential real estate mortgage, and real estate construction and land loans; commercial loans and leases, such as equipment finance, other asset-based, venture capital, secured business, warehouse, and other lending services; small business administration loans; and consumer loans comprising personal, auto, and other loans, as well as home equity and revolving lines of credit. In addition, the company offers international banking, multi-state deposit, and asset and investment management services, as well as cash and treasury management services; and online, mobile, remote deposit, and telephone banking services. It serves small and middle-market businesses, venture capital firms, non-profit organizations, business owners, entrepreneurs, professionals, and high-net worth individuals. Banc of California, Inc. was founded in 1941 and is headquartered in Los Angeles, California.

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 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 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, revocable and testamentary trusts, and custodian services for individuals, partnerships, and corporations; safe deposit services; and brokerage services. As of December 31, 2021, the company operated through 56 banking facilities and 73 ATMs/ITMs. Southside Bancshares, Inc. was founded in 1960 and is headquartered in Tyler, Texas.