Southside Bancshares (NASDAQ:SBSI) versus Western Alliance Bancorporation (NYSE:WAL) Critical Review

Southside Bancshares (NASDAQ:SBSI) and Western Alliance Bancorporation (NYSE:WAL) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, earnings, valuation, dividends and profitability.

Risk & Volatility

Southside Bancshares has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500. Comparatively, Western Alliance Bancorporation has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500.

Valuation & Earnings

This table compares Southside Bancshares and Western Alliance Bancorporation”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southside Bancshares	$395.58 million	2.71	$86.69 million	$2.77	12.77
Western Alliance Bancorporation	$4.32 billion	2.28	$722.40 million	$6.48	13.77

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

Insider & Institutional Ownership

55.7% of Southside Bancshares shares are owned by institutional investors. Comparatively, 79.2% of Western Alliance Bancorporation shares are owned by institutional investors. 6.1% of Southside Bancshares shares are owned by insiders. Comparatively, 2.8% of Western Alliance Bancorporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Southside Bancshares and Western Alliance Bancorporation, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southside Bancshares	0	1	0	0	2.00
Western Alliance Bancorporation	0	1	14	0	2.93

Southside Bancshares presently has a consensus target price of $37.00, indicating a potential upside of 4.64%. Western Alliance Bancorporation has a consensus target price of $92.73, indicating a potential upside of 3.91%. Given Southside Bancshares’ higher probable upside, equities analysts plainly believe Southside Bancshares is more favorable than Western Alliance Bancorporation.

Dividends

Southside Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 4.1%. Western Alliance Bancorporation pays an annual dividend of $1.52 per share and has a dividend yield of 1.7%. Southside Bancshares pays out 52.0% of its earnings in the form of a dividend. Western Alliance Bancorporation pays out 23.5% 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. 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 Western Alliance Bancorporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Southside Bancshares	18.94%	10.64%	1.01%
Western Alliance Bancorporation	14.66%	13.16%	1.03%

Summary

Western Alliance Bancorporation beats Southside Bancshares on 11 of the 17 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 Western Alliance Bancorporation

Western Alliance Bancorporation operates as the bank holding company for Western Alliance Bank that provides various banking products and related services primarily in Arizona, California, and Nevada. It operates through Commercial and Consumer Related segments. The company offers deposit products, including checking, savings, and money market accounts, as well as fixed-rate and fixed maturity certificates of deposit accounts; demand deposits; and treasury management and residential mortgage products and services. It also provides commercial and industrial loan products, such as working capital lines of credit, loans to technology companies, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans; commercial real estate loans, which are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties; construction and land development loans for single family and multi-family residential projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments; and consumer loans. In addition, the company provides other financial services, such as internet banking, wire transfers, electronic bill payment and presentment, funds transfer and other digital payment offerings, lock box services, courier, and cash management services. Further, the company holds certain investment securities, municipal and non-profit loans, and leases; invests primarily in low-income housing tax credits and small business investment corporations; and holds certain real estate loans and related securities. Western Alliance Bancorporation was founded in 1994 and is headquartered in Phoenix, Arizona.