Hawthorn Bancshares (NASDAQ:HWBK) and Financial Institutions (NASDAQ:FISI) Critical Analysis

Financial Institutions (NASDAQ:FISI) and Hawthorn Bancshares (NASDAQ:HWBK) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, analyst recommendations, risk, dividends and valuation.

Dividends

Financial Institutions pays an annual dividend of $1.24 per share and has a dividend yield of 3.9%. Hawthorn Bancshares pays an annual dividend of $0.80 per share and has a dividend yield of 2.4%. Financial Institutions pays out -90.5% of its earnings in the form of a dividend. Hawthorn Bancshares pays out 25.1% 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. Financial Institutions has raised its dividend for 1 consecutive years and Hawthorn Bancshares has raised its dividend for 5 consecutive years. Financial Institutions is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

60.5% of Financial Institutions shares are owned by institutional investors. Comparatively, 30.7% of Hawthorn Bancshares shares are owned by institutional investors. 2.4% of Financial Institutions shares are owned by company insiders. Comparatively, 22.7% of Hawthorn Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Financial Institutions has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500. Comparatively, Hawthorn Bancshares has a beta of 0.53, meaning that its stock price is 47% less volatile than the S&P 500.

Profitability

This table compares Financial Institutions and Hawthorn Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Financial Institutions	-2.93%	11.10%	1.03%
Hawthorn Bancshares	20.09%	14.22%	1.18%

Valuation & Earnings

This table compares Financial Institutions and Hawthorn Bancshares”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Financial Institutions	$366.61 million	1.77	-$41.65 million	($1.37)	-23.50
Hawthorn Bancshares	$109.67 million	2.07	$18.26 million	$3.19	10.30

Hawthorn Bancshares has lower revenue, but higher earnings than Financial Institutions. Financial Institutions is trading at a lower price-to-earnings ratio than Hawthorn Bancshares, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and target prices for Financial Institutions and Hawthorn Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Financial Institutions	0	4	1	0	2.20
Hawthorn Bancshares	0	1	0	0	2.00

Financial Institutions presently has a consensus target price of $33.67, suggesting a potential upside of 4.55%. Given Financial Institutions’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Financial Institutions is more favorable than Hawthorn Bancshares.

Summary

Hawthorn Bancshares beats Financial Institutions on 9 of the 17 factors compared between the two stocks.

About Financial Institutions

Financial Institutions, Inc. operates as a holding company for the Five Star Bank, a chartered bank that provides banking and financial services to individuals, municipalities, and businesses in New York. The company provides checking and savings account programs, including money market accounts, certificates of deposit, sweep investments, and individual retirement and other qualified plan accounts, as well as NOW accounts. Its loan products include term loans and lines of credit; short and medium-term commercial loans for working capital, business expansion, and purchase of equipment; commercial business loans to the agricultural industry; commercial mortgage loans; one-to-four family residential mortgage loans, home improvement loans, closed-end home equity loans, and home equity lines of credit; and consumer loans, such as automobile, secured installment, and personal loans. The company offers personal insurance products, including automobile, homeowners, boat, recreational vehicle, landlord, and umbrella coverage; commercial insurance comprising property, liability, automobile, inland marine, workers compensation, bonds, crop, and umbrella insurance products; and financial services, such as life and disability insurance, medicare supplements, long-term care, annuities, mutual funds, and retirement programs. In addition, it offers customized investment advisory, wealth management, investment consulting, and retirement plan services, as well as operates a real estate investment trust that holds residential mortgages and commercial real estate loans. Financial Institutions, Inc. was founded in 1817 and is headquartered in Warsaw, New York.

About Hawthorn Bancshares

Hawthorn Bancshares, Inc. operates as the bank holding company for Hawthorn Bank that provides various banking services in the United States. It accepts checking, savings, money market, individual retirement, and other time deposit accounts, as well as certificates of deposit. The company also offers commercial and industrial, single payment personal, installment, commercial and residential real estate, and consumer loans, as well as equipment, operating, and small business administration loans; and debit and credit cards. In addition, it provides trust services that include estate planning, investment, and asset management services; and cash management, safety deposit box, brokerage, and Internet banking services. Hawthorn Bancshares, Inc. was founded in 1865 and is headquartered in Jefferson City, Missouri.