Texas Community Bancshares (NASDAQ:TCBS) vs. Hawthorn Bancshares (NASDAQ:HWBK) Critical Survey

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

Profitability

This table compares Texas Community Bancshares and Hawthorn Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Texas Community Bancshares	12.68%	6.14%	0.76%
Hawthorn Bancshares	22.77%	15.15%	1.42%

Dividends

Texas Community Bancshares pays an annual dividend of $0.24 per share and has a dividend yield of 1.4%. Hawthorn Bancshares pays an annual dividend of $0.84 per share and has a dividend yield of 2.2%. Texas Community Bancshares pays out 19.8% of its earnings in the form of a dividend. Hawthorn Bancshares pays out 22.0% 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. Texas Community Bancshares has increased its dividend for 1 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.

Insider & Institutional Ownership

15.8% of Texas Community Bancshares shares are owned by institutional investors. Comparatively, 30.7% of Hawthorn Bancshares shares are owned by institutional investors. 15.3% of Texas Community Bancshares shares are owned by company insiders. Comparatively, 22.9% of Hawthorn Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Texas Community Bancshares and Hawthorn Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Texas Community Bancshares	0	1	0	0	2.00
Hawthorn Bancshares	0	0	1	0	3.00

Volatility & Risk

Texas Community Bancshares has a beta of -0.03, meaning that its stock price is 103% less volatile than the S&P 500. Comparatively, Hawthorn Bancshares has a beta of 0.45, meaning that its stock price is 55% less volatile than the S&P 500.

Valuation and Earnings

This table compares Texas Community 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
Texas Community Bancshares	$25.57 million	1.94	$2.84 million	$1.21	14.29
Hawthorn Bancshares	$111.97 million	2.34	$23.80 million	$3.82	9.94

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

Summary

Hawthorn Bancshares beats Texas Community Bancshares on 14 of the 16 factors compared between the two stocks.

About Texas Community Bancshares

Texas Community Bancshares, Inc. operates as the bank holding company for Mineola Community Bank, S.S.B. that provides loans and banking services to consumers and commercial customers in Mineola, Texas and the surrounding area, and the Dallas Fort Worth Metroplex. It generates a selection of deposit accounts, including savings accounts, checking accounts, certificates of deposit, and individual retirement accounts. The company also originates primarily one- to four-family residential mortgage loans, commercial real estate loans, and construction and land loans; and car, boat, share, unsecured loans, etc., as well as agricultural loans, commercial loans, and consumer and other loans. In addition, it invests in securities; and offers sweep account, safe deposit boxes, e-statement, cards, online banking, and mobile banking services. Texas Community Bancshares, Inc. was founded in 1934 and is headquartered in Mineola, Texas.

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.