First Bank (NASDAQ:FRBA) & Hawthorn Bancshares (NASDAQ:HWBK) Critical Contrast

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

Analyst Ratings

This is a breakdown of recent recommendations for First Bank and Hawthorn Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bank	0	0	3	0	3.00
Hawthorn Bancshares	0	0	0	0	0.00

First Bank currently has a consensus target price of $17.83, indicating a potential upside of 6.40%. Given First Bank’s stronger consensus rating and higher possible upside, equities analysts clearly believe First Bank is more favorable than Hawthorn Bancshares.

Institutional & Insider Ownership

64.9% of First Bank shares are held by institutional investors. Comparatively, 30.7% of Hawthorn Bancshares shares are held by institutional investors. 13.1% of First Bank shares are held by company insiders. Comparatively, 22.7% of Hawthorn Bancshares shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

First Bank has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, Hawthorn Bancshares has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.

Earnings and Valuation

This table compares First Bank and Hawthorn Bancshares”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bank	$229.43 million	N/A	$42.24 million	$1.51	11.10
Hawthorn Bancshares	$109.67 million	2.10	$18.26 million	$2.97	11.23

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

Dividends

First Bank pays an annual dividend of $0.24 per share and has a dividend yield of 1.4%. Hawthorn Bancshares pays an annual dividend of $0.80 per share and has a dividend yield of 2.4%. First Bank pays out 15.9% of its earnings in the form of a dividend. Hawthorn Bancshares pays out 26.9% 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. 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Bank	16.13%	9.51%	1.02%
Hawthorn Bancshares	18.88%	13.63%	1.12%

About First Bank

First Bank provides various banking products and services to small to mid-sized businesses and individuals. The company accepts various deposits, including non-interest-bearing demand deposits, interest bearing demand accounts, money market accounts, savings accounts, and certificates of deposit, as well as commercial checking accounts. It also offers various loan products comprising commercial and industrial loans, which include line of credit, inventory, equipment, and short-term working capital financing; commercial real estate loans, such as owner-occupied, investor, construction and development, and multi-family loans; residential real estate loans comprising residential mortgages, first and second lien home equity loans, and revolving lines of credit; and consumer and other loans consists of auto, personal, traditional installment, and other loans. The company also provides electronic banking services, including Internet and mobile banking, electronic bill payment, and banking by phone; ATM and debit cards, and wire and ACH transfer services; remote deposit capture; and cash management services, as well as engages in the capital markets activities. It operates full-service branches in Cinnaminson, Delanco, Denville, Ewing, Fairfield, Flemington, Hamilton, Lawrence, Monroe, Pennington, Randolph, Somerset, and Williamstown, New Jersey; Doylestown, Trevose, Warminster, and West Chester, Paoli, Malvern, Coventry, Devon, Lionville, and Glen Mills Pennsylvania; and Palm Beach, Florida. First Bank was incorporated in 2007 and is headquartered in Hamilton, New Jersey.

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.