Southside Bancshares, Inc. – Value Analysis (NASDAQ:SBSI) : September 22, 2017

Capitalcube gives Southside Bancshares, Inc. a score of 54.

Our analysis is based on comparing Southside Bancshares, Inc. with the following peers – Cullen/Frost Bankers, Inc., Texas Capital Bancshares, Inc., First Financial Bankshares, Inc., Prosperity Bancshares, Inc.(R), International Bancshares Corporation, Bank of the Ozarks, LegacyTexas Financial Group, Inc., Independent Bank Group, Inc., Apogee Enterprises, Inc. and BOK Financial Corporation (CFR-US, TCBI-US, FFIN-US, PB-US, IBOC-US, OZRK-US, LTXB-US, IBTX-US, APOG-US and BOKF-US).

Fundamental Overview

Southside Bancshares, Inc. has a fundamental score of 54 and has a relative valuation of NEUTRAL.

Fundamental Score

Company Overview

  • It’s current Price/Book of 1.81 is about median in its peer group.
  • The market expects SBSI-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • SBSI-US‘s relative capital efficiency and net profit margins are both around the median level.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • SBSI-US‘s return on equity currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • SBSI-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company is likely overinvesting in a business with only median returns.

Drivers of Margin

  • Margins do not suggest any relative benefit from a pricing or an operating cost advantage.
  • The company’s net interest income (net interest income/total revenues) of 78.90% is around peer median suggesting that SBSI-US‘s lending operations does not benefit from any differentiating pricing advantage. In addition, SBSI-US‘s pre-tax margin of 36.71% is also around the peer median suggesting no operating cost advantage relative to peers.
  • The company’s proportion of fee based income (i.e. non interest income/total revenues) of 21.10% is around peer median. In addition, SBSI-US‘s proportion of overhead costs (i.e. non interest expense/total revenues) of 59.81x is also around peer median — suggesting no cost advantage on fee-based overhead operations.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

Southside Bancshares, Inc. operates as a bank holding company of Southside Bank. The company was founded on August 11, 1982 and is headquartered in Tyler, TX.