First Financial Bankshares (NASDAQ:FFIN) & Southern Michigan Bancorp (OTCMKTS:SOMC) Financial Analysis

First Financial Bankshares (NASDAQ:FFIN) and Southern Michigan Bancorp (OTCMKTS:SOMC) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Volatility and Risk

First Financial Bankshares has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500. Comparatively, Southern Michigan Bancorp has a beta of 0.28, suggesting that its share price is 72% less volatile than the S&P 500.

Profitability

This table compares First Financial Bankshares and Southern Michigan Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Financial Bankshares	28.76%	13.43%	1.56%
Southern Michigan Bancorp	12.27%	10.19%	0.70%

Analyst Recommendations

This is a summary of current ratings and target prices for First Financial Bankshares and Southern Michigan Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Financial Bankshares	0	4	0	0	2.00
Southern Michigan Bancorp	0	0	0	0	0.00

First Financial Bankshares presently has a consensus target price of $40.00, suggesting a potential upside of 8.84%. Given First Financial Bankshares’ stronger consensus rating and higher probable upside, analysts clearly believe First Financial Bankshares is more favorable than Southern Michigan Bancorp.

Valuation & Earnings

This table compares First Financial Bankshares and Southern Michigan Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Financial Bankshares	$509.47 million	10.31	$198.98 million	$1.45	25.34
Southern Michigan Bancorp	$73.31 million	1.20	$10.90 million	$2.25	8.56

First Financial Bankshares has higher revenue and earnings than Southern Michigan Bancorp. Southern Michigan Bancorp is trading at a lower price-to-earnings ratio than First Financial Bankshares, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

69.8% of First Financial Bankshares shares are owned by institutional investors. 4.2% of First Financial Bankshares shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

First Financial Bankshares pays an annual dividend of $0.72 per share and has a dividend yield of 2.0%. Southern Michigan Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 3.1%. First Financial Bankshares pays out 49.7% of its earnings in the form of a dividend. Southern Michigan Bancorp pays out 26.7% 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. First Financial Bankshares has increased its dividend for 13 consecutive years. Southern Michigan Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

First Financial Bankshares beats Southern Michigan Bancorp on 13 of the 16 factors compared between the two stocks.

About First Financial Bankshares

First Financial Bankshares, Inc., through its subsidiaries, provides commercial banking products and services in Texas. The company offers checking, savings and time deposits; automated teller machines, drive-in, and night deposit services; safe deposit facilities, remote deposit capture, internet banking, mobile banking, payroll cards, funds transfer, and performing other customary commercial banking services; securities brokerage services; and trust and wealth management services, including wealth management, estates administration, oil and gas management, testamentary trusts, revocable and irrevocable trusts, and agency accounts. It also provides commercial and industrial, municipal, agricultural, construction and development, farm, residential, and consumer auto and non-auto, as well as non-owner occupied and owner occupied commercial real estate loans. In addition, the company offers advisory and specialized services related to asset management, investing, purchasing, advertising, public relations, and technology services. First Financial Bankshares, Inc. was founded in 1890 and is headquartered in Abilene, Texas.

About Southern Michigan Bancorp

Southern Michigan Bancorp, Inc. operates as the bank holding company for Southern Michigan Bank & Trust that provides a range of commercial banking services to individuals, businesses, institutions, and governmental agencies primarily in the southwest Michigan communities. Its deposit products include interest and non-interest checking, savings, and various types of money market accounts; time, savings, and demand deposits; and certificates of deposit and IRAs. The company also provides home mortgages and equity loans, home equity lines of credit, VA and FHA home loans, USDA rural development loans, and auto/personal loans; business loans, such as lines of credit, term loans, commercial real estate loans, commercial and industrial loans, agriculture loans, letters of credit, small business administration loans, and capital access loans; industrial, construction, real estate, and inventory loans; and consumer lending products comprising direct and indirect loans to purchasers of residential real property and consumer goods. In addition, it offers trust and investment services that include investment management, trustee, IRA rollovers and retirement plan, institutional and personal custody, estate settlement, wealth management, estate and wealth transfer planning assistance, charitable gift planning assistance, and cash management custody services; and safe deposit box and automated teller machine services. Further, the company provides bill pay, e-statements, ACH, wire transfer, remote deposit capture, and insurance services, as well as ATM, debit, credit, and gift cards. The company was founded in 1871 and is based in Coldwater, Michigan.