Regional banks continue to operate amid changing interest rate dynamics, evolving regulatory requirements and ongoing demand for diversified financial services. Against this backdrop, Hawthorn Bancshares, Inc. (HWBK Quick QuoteHWBK - Free Report) and Southside Bancshares, Inc. (SBSI Quick QuoteSBSI - Free Report) are two bank holding companies providing a broad range of banking and financial solutions to individuals and businesses. HWBK operates through Hawthorn Bank, offering traditional banking, lending and wealth management services. In contrast, SBSI operates through Southside Bank, providing lending, deposit, wealth management, trust and brokerage services.

While both companies operate within the community banking space, their differing scale and business footprints result in distinct financial profiles and competitive positioning. These differences ultimately shape each company’s investment appeal. This raises an important question: which stock is better positioned for investors today? Let’s take a closer look.

Stock Performance & Valuation: HWBK vs. SBSI

HWBK (down 1.3%) has outperformed SBSI (down 10.9%) over the past three months. In the past year, Hawthorn Bancshares stock has gained 23.7% compared with Southside Bancshares’ gain of 9.8%.

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Meanwhile, HWBK is trading at a trailing 12-month price-to-earnings (P/E) ratio of 9.99X, below its median of 10.30X over the past two years. SBSI’s trailing 12-month P/E multiple sits at 9.78X, below its last two-year median of 10.66X. HWBK and SBSI both appear to be cheap when compared with the Zacks Finance sector’s average of 18.27X.

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Factors Driving Hawthorn Bancshares Stock

Hawthorn Bancshares’ improving net interest margin has strengthened the underlying earnings profile by lifting the spread between asset yields and funding costs. Lower deposit costs have been particularly supportive, helping offset pressure from softer loan balances. This points to better core revenue generation from the existing balance sheet and suggests that funding discipline is becoming a more meaningful contributor to profitability.

Hawthorn Bancshares continues to maintain a well-capitalized position, giving the company greater flexibility in how it allocates capital. A stronger equity base can support organic growth, absorb potential credit volatility and provide room for shareholder returns through dividends and repurchases. This balance-sheet strength is especially important as HWBK works through a changing rate environment and pursues broader strategic initiatives.

The completed merger with FSC Bancshares expands Hawthorn Bancshares’ franchise beyond its legacy footprint and increases its operating scale. The deal adds banking locations, customers and market coverage, while also creating opportunities to extend HWBK’s broader banking and wealth offerings across the combined franchise. The integration therefore provides a new avenue for growth beyond the company’s existing markets.

Factors Aiding Southside Bancshares Stock

Southside Bancshares continues to generate healthy loan demand despite elevated payoffs that kept balances relatively subdued during the second quarter of 2026. Management’s pipeline remains broad across term loans, construction credits and commercial lines, while commercial and industrial lending has become a larger part of the portfolio. This mix supports organic growth without relying on a single lending category and could gradually improve portfolio diversification as new production converts into funded balances.

Southside Bancshares is building a broader fee-based revenue stream through trust, wealth management and brokerage services. The Fort Worth wealth team was established faster than expected, and activity in both trust and brokerage remained ahead of internal expectations. Expanding these offerings across larger Texas markets will likely help deepen customer relationships and reduce dependence on spread-based banking revenues over time.

Credit quality remains a core strength, with non-performing assets staying low and classified assets declining sequentially. Management also expects further improvement as certain criticized credits are resolved through property sales or refinancing. This healthier credit backdrop can help contain provisioning needs and reduce the risk of earnings volatility if broader economic conditions become less favorable.

Choose HWBK Over SBSI Now

Both Hawthorn Bancshares and Southside Bancshares have supportive fundamentals. HWBK is benefiting from an improving core earnings profile, with better spreads and lower deposit costs strengthening its underlying banking operations. Its well-capitalized position provides additional financial flexibility, while the completed FSC Bancshares acquisition expands the company’s franchise and creates a broader platform for future growth.

SBSI also has several positives, including a healthy loan pipeline, expansion of its wealth management operations and favorable credit quality. These factors support organic growth and provide greater revenue diversification beyond traditional spread income.

From a valuation perspective, both stocks remain below their respective historical norms and trade at discounts to the broader sector. Although Southside Bancshares carries a slightly lower valuation, Hawthorn Bancshares’ stronger recent stock performance has been accompanied by improving operating fundamentals rather than valuation expansion alone. For investors, this suggests that HWBK still offers exposure to improving profitability and acquisition-led growth without trading at an elevated valuation.

Considering HWBK’s improving core banking performance, strong capital position and expanded growth platform following the FSC acquisition, Hawthorn Bancshares appears better positioned at present. Its valuation also remains below its own historical norm, which keeps the stock from looking stretched despite its stronger recent performance.