Head to Head Contrast: Hawthorn Bancshares (NASDAQ:HWBK) & Lake Shore Bancorp (NASDAQ:LSBK)

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Lake Shore Bancorp and Hawthorn Bancshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lake Shore Bancorp	0	1	0	0	2.00
Hawthorn Bancshares	0	0	1	0	3.00

Profitability

This table compares Lake Shore Bancorp and Hawthorn Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lake Shore Bancorp	20.74%	5.91%	1.15%
Hawthorn Bancshares	22.77%	15.15%	1.42%

Risk and Volatility

Lake Shore Bancorp has a beta of 0.29, suggesting that its share price is 71% less volatile than the S&P 500. Comparatively, Hawthorn Bancshares has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500.

Institutional and Insider Ownership

8.7% of Lake Shore Bancorp shares are owned by institutional investors. Comparatively, 30.7% of Hawthorn Bancshares shares are owned by institutional investors. 8.4% of Lake Shore Bancorp 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, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Lake Shore Bancorp and Hawthorn Bancshares”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lake Shore Bancorp	$39.56 million	3.45	$7.27 million	$1.13	15.38
Hawthorn Bancshares	$111.97 million	2.47	$23.80 million	$3.82	10.49

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

Dividends

Lake Shore Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 2.1%. Hawthorn Bancshares pays an annual dividend of $0.84 per share and has a dividend yield of 2.1%. Lake Shore Bancorp pays out 31.9% 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. Hawthorn Bancshares has raised 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.

Summary

Hawthorn Bancshares beats Lake Shore Bancorp on 14 of the 16 factors compared between the two stocks.

About Lake Shore Bancorp

Lake Shore Bancorp, Inc. operates as a savings and loan holding company for Lake Shore Servings Bank. It offers personal services such as checking, savings, lending, banking, debit card, e-services, and online banking; and business services including deposit products, commercial loans, and business e-statements. The company was founded in 2006 and is headquartered in Dunkirk, NY.

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.