1 Bank Buy and 1 Bank Sale

As an analyst for The Motley Fool, I manage a bank-centric real-money account.

Today, I'm announcing the sale of one small bank (Texas-based International Bancshares (IBOC 0.69%), and the purchase of more shares of one even smaller bank (Missouri-based Great Southern Bancorp (GSBC 1.64%)).

With smaller banks, I try to stick to the numbers. Evaluating management beyond the numbers is tough at a big bank, with tons of press and analyst coverage, and much more so at a small bank. Instead, I let track record, the balance sheet, and current prices be my guide. I like banks that have strong operations, conservative lending, good dividends, and low price tags.

At this point, Great Southern is looking better all around. In terms of operations, its 12.7% return on equity beats International Bancorp's subpar 7.1%, as it's been converting more of its deposits into interest-generating loans (and at higher net interest margins to boot).

In terms of conservative lending, just 0.9% of Great Southern's loans are non-performing vs. 1.5% for International. Just as importantly, it's reserving more conservatively for those bad loans. (International's allowance is less than 100%, while Great Southern's is well above.)

On dividends, it's 2.9% to 1.9%, in Great Southern's favor.

And, finally, on price, they both trade a little above their tangible book values. Great Southern's 7.7 P/E ratio is almost half of International's, though. Extenuating circumstances include a gain on the sale of Great Southern's insurance business and International Bancshares' TARP charges (it paid back its bailout funds in November 2012).

All this isn't a condemnation of International Bancshares, but, like I said, I like to stick to the numbers. Since I bought International Bancshares in August 2011, shares are up 41% vs. a 32% rise for the market, while operational and lending metrics have gone the wrong way.

In the next couple trading days, it will be goodbye to International Bancshares, and a second helping hello to Great Southern Bancorp.

You can follow along with all my moves here.