Financial Analysis: American Business Bank (OTCMKTS:AMBZ) & Southside Bancshares (NYSE:SBSI)

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for American Business Bank and Southside Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Business Bank	0	0	0	0	0.00
Southside Bancshares	0	1	0	0	2.00

Dividends

American Business Bank pays an annual dividend of $1.00 per share and has a dividend yield of 1.4%. Southside Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 4.3%. American Business Bank pays out 17.1% of its earnings in the form of a dividend. Southside Bancshares pays out 62.9% 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.

Risk & Volatility

American Business Bank has a beta of 0.32, indicating that its share price is 68% less volatile than the S&P 500. Comparatively, Southside Bancshares has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500.

Institutional and Insider Ownership

9.9% of American Business Bank shares are owned by institutional investors. Comparatively, 55.7% of Southside Bancshares shares are owned by institutional investors. 6.0% of Southside Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
American Business Bank	26.85%	N/A	N/A
Southside Bancshares	15.61%	10.72%	1.06%

Earnings and Valuation

This table compares American Business Bank and Southside Bancshares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Business Bank	$199.36 million	3.13	$54.20 million	$5.86	11.99
Southside Bancshares	$235.49 million	4.29	$69.22 million	$2.29	14.68

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

Summary

Southside Bancshares beats American Business Bank on 12 of the 15 factors compared between the two stocks.

About American Business Bank

American Business Bank, a California-chartered bank, provides banking products and services to small and medium-sized firms, non-profits, business executives, and professionals in Southern California. The company offers credit and depository; treasury management; asset-based lending; SBA lending; international banking comprising money transfers, import and export commercial letters of credit, standby letters of credit, documentary and clean collections, and foreign currency exchange services; and consulting and referral services. It operates regional loan production offices located in North Orange County, Orange County, South Bay, San Fernando Valley, Riverside County, Inland Empire, and Long Beach. American Business Bank was incorporated in 1998 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.