First Mid Bancshares (NASDAQ:FMBH) versus Hawthorn Bancshares (NASDAQ:HWBK) Critical Review

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

Insider & Institutional Ownership

47.6% of First Mid Bancshares shares are owned by institutional investors. Comparatively, 30.7% of Hawthorn Bancshares shares are owned by institutional investors. 5.2% of First Mid Bancshares 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 large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

First Mid Bancshares pays an annual dividend of $1.00 per share and has a dividend yield of 2.5%. Hawthorn Bancshares pays an annual dividend of $0.80 per share and has a dividend yield of 2.5%. First Mid Bancshares pays out 27.4% 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. First Mid Bancshares has increased its dividend for 3 consecutive years and Hawthorn Bancshares has increased its dividend for 5 consecutive years. Hawthorn Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares First Mid Bancshares and Hawthorn Bancshares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Mid Bancshares	$453.67 million	2.10	$78.90 million	$3.65	10.87
Hawthorn Bancshares	$109.67 million	1.99	$18.26 million	$3.19	9.93

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for First Mid Bancshares and Hawthorn Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Mid Bancshares	0	2	5	0	2.71
Hawthorn Bancshares	0	1	0	0	2.00

First Mid Bancshares presently has a consensus price target of $42.80, suggesting a potential upside of 7.84%. Given First Mid Bancshares’ stronger consensus rating and higher possible upside, research analysts plainly believe First Mid Bancshares is more favorable than Hawthorn Bancshares.

Profitability

This table compares First Mid Bancshares and Hawthorn Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Mid Bancshares	18.77%	10.27%	1.19%
Hawthorn Bancshares	20.09%	14.22%	1.18%

Risk & Volatility

First Mid Bancshares has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500. Comparatively, Hawthorn Bancshares has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500.

Summary

First Mid Bancshares beats Hawthorn Bancshares on 11 of the 17 factors compared between the two stocks.

About First Mid Bancshares

First Mid Bancshares, Inc., a financial holding company, provides community banking products and services to commercial, retail, and agricultural customers in the United States. It accepts various deposit products, such as demand deposits, savings accounts, money market deposits, and time deposits. The company’s loan products include commercial real estate, commercial and industrial, agricultural and agricultural real estate, residential real estate, and consumer loans, as well as construction and land development, 1-4 family residential properties, and multifamily residential properties loans; and other loans comprising loans to municipalities to support community projects, such as infrastructure improvements or equipment purchases. It also offers wealth management services, which include estate planning, investment, and farm management and brokerage services for individuals; employee benefit services for businesses; and farm management and brokerage services. In addition, the company provides property and casualty, senior insurance products, and group medical insurance for businesses; and personal lines insurance to individuals. The company was formerly known as First Mid-Illinois Bancshares, Inc. and changed its name to First Mid Bancshares, Inc. in April 2019. First Mid Bancshares, Inc. was founded in 1865 and is headquartered in Mattoon, Illinois.

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.