This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

10 Bank Stocks Bringing Home the Bacon (Mmm... Bacon)

7. Southside Bancshares

Southside Bancshares (SBSI) of Tyler, Texas, has seen its stock rise 6% year-to-date, closing last Friday at $20.74. Based on a quarterly payout of 18 cents, the shares have a dividend yield of 3.47%. The company increased the dividend by a penny in the third quarter.

The company's year-to-date ROA was 1.35% as of Sept. 30, and its five-year average ROA was 1.30%.

Southside had $3.2 billion in total assets as of Sept. 30, with 39 branches.

Third-quarter net income available to common shareholders was $11.5 million, or 70 cents a share, increasing from $11.0 million, or 67 cents a share, in both the second quarter and in the third quarter of 2010.

Net interest income increased 13% year-over-year to $24.0 million in the third quarter, as the company continued to reduce its funding costs, by exercising "call options on our brokered CDs in order to lock in lower cost longer term funding," and replaced maturing Federal Home Loan Bank advances with lower-cost funding.

Partially offsetting the improved net interest income was a decline in gains on the sale of securities, to $3.9 million in the third quarter, from $8.0 million a year earlier.

Brady Gailey of KBW has a neutral rating on Southside Bancshares, with a $20 price target, saying on Oct. 27 that the bank had "navigated this recession well with credit that remained better than peers, a strong dividend and increasing core earnings," and that "its success has largely been due to its leveraged strategy (buy bonds with brokered CDs and FHLB advances), which has added spread income and provided handsome bond gains over the last several years as rates have fallen."

Looking forward, the analyst is "nervous about the size of its bond book (over 60% of assets) as the yield will fall, in our opinion, and earnings will decline."

Of course, a rapid increase in interest could also lead to significant losses.

The shares trade for 10.9 times the consensus 2012 EPS estimate of $1.90, among analysts polled by FactSet, and 1.5 times tangible book value, according to SNL.

Both analysts covering Southside Bancshares have neutral ratings.

5 of 11

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs