International Bancshares (NASDAQ:IBOC) vs. Southern Michigan Bancorp (NASDAQ:SOMC) Critical Analysis

Southern Michigan Bancorp (OTCMKTS:SOMC) and International Bancshares (NASDAQ:IBOC) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Southern Michigan Bancorp and International Bancshares, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southern Michigan Bancorp 0 0 0 0 N/A
International Bancshares 0 0 0 0 N/A

Dividends

Southern Michigan Bancorp pays an annual dividend of $0.92 per share and has a dividend yield of 2.4%. International Bancshares pays an annual dividend of $1.00 per share and has a dividend yield of 2.9%. International Bancshares has increased its dividend for 7 consecutive years. International Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Southern Michigan Bancorp and International Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Southern Michigan Bancorp 21.72% 10.90% 1.09%
International Bancshares 32.82% 10.79% 1.76%

Insider and Institutional Ownership

59.4% of International Bancshares shares are held by institutional investors. 16.0% of International Bancshares shares are held by 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.

Risk & Volatility

Southern Michigan Bancorp has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500. Comparatively, International Bancshares has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.

Earnings & Valuation

This table compares Southern Michigan Bancorp and International Bancshares’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Southern Michigan Bancorp $36.24 million 2.44 $8.13 million N/A N/A
International Bancshares $630.86 million 3.58 $215.93 million N/A N/A

International Bancshares has higher revenue and earnings than Southern Michigan Bancorp.

Summary

International Bancshares beats Southern Michigan Bancorp on 11 of the 12 factors compared between the two stocks.

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 southern Michigan communities. Its deposit products include interest and non-interest checking, passbook savings, and various types of money market accounts; time, savings, and demand deposits; and certificates of deposit. The company also provides home mortgages, equity loans, and personal loans; business loans, such as lines of credit, term loans, commercial real estate 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, individual retirement account 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 online and mobile banking, bill pay, e-statements, health savings account, business succession planning, life insurance, and remote deposit capture services, as well as payroll, prepaid, gift, and credit cards. It operates through a network of 14 banking offices located in Battle Creek, Camden, Centreville, Coldwater, Constantine, Hillsdale, Marshall, Mendon, Portage, Tekonsha, Three Rivers, and Union City, Michigan. The company was founded in 1871 and is based in Coldwater, Michigan.

About International Bancshares

International Bancshares Corporation, a financial holding company, provides commercial and retail banking services. It accepts checking and saving deposits; and offers commercial, real estate, personal, home improvement, automobile, and other installment and term loans. The company also provides international banking services, including letters of credit, commercial and industrial loans, and foreign exchange. In addition, it offers other banking related services, such as credit cards and safety deposit boxes; collection, notary public, escrow, and drive up and walk up facilities, as well as other customary banking services; and Internet banking services, as well as securities products through third party providers. As of February 27, 2019, the company had 189 branch facilities and 287 ATMs serving 89 communities in Texas and Oklahoma. International Bancshares Corporation was founded in 1966 and is based in Laredo, Texas.

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