Critical Survey: Texas Capital Bancshares (NASDAQ:TCBI) & Southern Michigan Bancorp (OTCMKTS:SOMC)

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

Volatility and Risk

Southern Michigan Bancorp has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500. Comparatively, Texas Capital Bancshares has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Southern Michigan Bancorp	12.29%	10.30%	0.71%
Texas Capital Bancshares	3.99%	9.14%	0.89%

Valuation and Earnings

This table compares Southern Michigan Bancorp and Texas Capital Bancshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southern Michigan Bancorp	$84.61 million	1.03	$10.40 million	$2.28	8.33
Texas Capital Bancshares	$1.94 billion	1.89	$77.51 million	$1.28	62.17

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

Insider and Institutional Ownership

96.9% of Texas Capital Bancshares shares are held by institutional investors. 1.0% of Texas Capital Bancshares shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Southern Michigan Bancorp and Texas Capital Bancshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southern Michigan Bancorp	0	0	0	0	0.00
Texas Capital Bancshares	3	8	4	0	2.07

Texas Capital Bancshares has a consensus price target of $79.13, suggesting a potential downside of 0.56%. Given Texas Capital Bancshares’ stronger consensus rating and higher probable upside, analysts plainly believe Texas Capital Bancshares is more favorable than Southern Michigan Bancorp.

Summary

Texas Capital Bancshares beats Southern Michigan Bancorp on 11 of the 14 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 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.

About Texas Capital Bancshares

Texas Capital Bancshares, Inc. operates as the bank holding company for Texas Capital Bank, is a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs, and individual customers. The company offers commercial banking; consumer banking; investment banking solutions, including capital markets, mergers and acquisitions, and syndicated finance, as well as financial sponsor coverage, capital solutions, and institutional services; and wealth management services, such as investment management, financial planning, lockbox and insurance, securities-based lending, estate planning, and business succession, as well as philanthropic, trustee and executor, custom credit, and depository services. It also provides deposit accounts, analyzed accounts, commercial card, SBA and business loans, packaged solutions, and merchant services; liquidity and investments, working capital, international trade and payment, and treasury and credit products; and commercial real estate, homebuilder and community, and mortgage finance. In addition, the company offers payables and receivables management; online and mobile banking; term loans and lines of credit, equipment finance and lease, acquisition finance, and asset-based lending; private wealth advisory solutions; and checking and savings accounts, debit and credit cards, and certificates of deposit, as well as ETF and funds management services. Further, it provides financial institution money market accounts and loan syndication products; commercial loans for financing for working capital, organic growth, and acquisitions; real estate term and construction loans; mortgage warehouse lending services; treasury management, trust, and advisory and escrow services; and letters of credit. The company operates in Austin, Dallas, Fort Worth, Houston, and San Antonio metropolitan areas of Texas. Texas Capital Bancshares, Inc. was incorporated in 1996 and is headquartered in Dallas, Texas.