Economic Conditions and Profitability - The company's profitability is significantly influenced by the economic conditions in Central and West Central Missouri and the Kansas City MSA, with potential declines in profitability due to local economic downturns [71]. - An increase in unemployment, decreased profitability of regional businesses, or rising interest rates could weaken the local economy, adversely affecting the bank's loan origination and profitability [72]. - The bank's primary source of earnings is net interest income, which may decrease if prevailing interest rates decline, impacting the company's overall profitability [73]. - The bank's interest rate management strategy aims to stabilize net interest income, but significant fluctuations in interest rates could negatively affect profitability [74]. - The provision for probable credit losses may need to be increased due to potential borrower defaults and declining real estate values, which could adversely impact financial results [81]. - Adverse market conditions, including rising inflation and increasing unemployment, may negatively affect credit performance and lead to additional write-downs [82]. - Deterioration in the housing market could lead to increased delinquencies and non-performing assets, negatively affecting the company's income and growth [94]. - Changes in FDIC deposit insurance premiums could increase non-interest expenses and reduce profitability [95]. - The company may face a material adverse impact on its business due to potential deterioration in risk-based capital ratios or adjustments to deposit insurance premium assessment rates [97]. - The company is required to maintain adequate capital levels and may need to raise additional capital for growth or acquisitions, which could dilute ownership interests [98][99]. Competition and Market Risks - The company faces competitive pressures from emerging financial technologies, which could reduce demand for traditional banking services and impact long-term growth prospects [86]. - Competition for loans and deposits is substantial, with many competitors having greater financial resources and advanced technology [101][102]. - The company's wealth management fees are at risk of decreasing due to poor investment performance, which could negatively impact revenues and net earnings [106][107]. - The Company is exposed to various market risks, including competitive pressures and changes in the interest rate environment [182]. Regulatory and Compliance Risks - Regulatory changes could materially affect the company's operations and financial condition, including minimum capital requirements and restrictions on dividend payments [120][122]. - The Federal Reserve may require the company to commit capital resources to support its subsidiary bank, potentially impacting financial condition and results [123]. - Non-compliance with laws such as the USA PATRIOT Act could result in fines, sanctions, and limitations on expansion opportunities [127]. - Increased costs and operational impacts may arise from compliance with privacy and data protection laws, potentially affecting business opportunities [128]. - The Company and the Bank are subject to various regulatory capital requirements, including new minimum risk-based capital and leverage ratios effective since January 2015 [124]. - Stricter capital requirements could lead to lower returns on invested capital and may necessitate raising additional capital [125]. - The Company is committed to maintaining compliance with the Securities Exchange Act of 1934 [218]. Cybersecurity and Technology Risks - The company faces risks related to cybersecurity, including potential costs from successful cyber-attacks that could damage reputation and financial condition [139]. - The financial services industry is undergoing rapid technological change, and failure to keep pace could adversely impact the Company's operations and financial results [140]. - The development and use of artificial intelligence present risks, including compliance challenges and potential liability for erroneous outputs [141]. - The reliance on third-party vendors for key business infrastructure poses risks, as their operational difficulties could disrupt the Company's services [143]. - The company maintains a cybersecurity and IT risk management program integrated into its overall enterprise risk management, overseen by the board of directors [150]. - The cybersecurity program is based on frameworks established by NIST and FFIEC, led by a Director with over 15 years of experience in cybersecurity [151]. - The Audit Committee meets quarterly to assess cyber threats and risks, receiving reports on the company's cybersecurity status and metrics [152]. - The company engages outside experts for cybersecurity assessments and audits, ensuring sound risk management strategies [154]. - The Incident Response Program categorizes incidents by severity and includes timely notifications to law enforcement and regulatory agencies [158]. - The company experiences ongoing malicious cyber activity, including unauthorized access attempts and phishing, but has not faced material adverse impacts to date [159]. Corporate Governance and Financial Reporting - The Company has adopted a Code of Business Conduct and Ethics for its directors, officers, and employees [202]. - The Company has an Insider Trading Policy to promote compliance with insider trading laws and regulations [203]. - The consolidated financial statements for the years ended December 31, 2025, 2024, and 2023 will be included in the Company's 2025 Annual Report to Shareholders [210]. - The independent registered public accounting firm for the Company is Forvis Mazars, LLP, located in Kansas City, MO [211]. - The financial statements include consolidated balance sheets, statements of income, comprehensive income, and stockholders' equity for the specified years [211]. - The Company has omitted certain financial statement schedules as they are not required or applicable [212]. - The Proxy Statement will contain information on related party transactions and corporate governance matters [209]. - The Company has filed various exhibits, including the Amended and Restated Bylaws and the Equity Incentive Plan, which are incorporated by reference [214][215]. - The report includes certifications from the Chief Executive Officer and Chief Financial Officer as required by the Securities Exchange Act [220][223]. - The Company has a policy for the recovery of erroneously awarded compensation, which is referenced in the Annual Report [216]. - The report has been signed by key executives, including the CEO and CFO, on March 5, 2026 [223]. Stock Performance and Share Repurchase - The stock price of the Company could experience significant volatility, affecting the ability of shareholders to resell shares at attractive prices [144]. - A significant decline in stock price could lead to substantial losses for shareholders and potential securities litigation [145]. - The trading volume of the company's common stock has been low, leading to potential price depression and difficulty in selling shares [146]. - The company does not insure its common stock through any governmental entity, and it is not a deposit account or obligation of any bank [148]. - The Company repurchased a total of 9,892 shares in November 2025 at an average price of $30.58 per share [173]. - As of December 31, 2025, the Company has $8.4 million remaining available for share repurchases under its stock repurchase program [173]. - The Company announced a new common stock repurchase program on June 5, 2025, allowing for repurchases up to $10.0 million [173]. Internal Control and Financial Management - The Company maintains effective internal control over financial reporting as of December 31, 2025, as confirmed by an independent audit [192]. - There were no changes in the Company's internal control over financial reporting that materially affected its effectiveness during the quarter ended December 31, 2025 [188]. - The Company's interest rate risk models indicate that annual net interest income could change by as much as (0.43)% or (1.58)% with a 200 basis point increase or decrease in interest rates, respectively [179].

Financial Performance - The company reported a fourth quarter 2025 net income of $6.2 million, or earnings per diluted share (EPS) of $0.90, representing a 0.86% increase from the previous quarter and a 34.5% increase from the fourth quarter of 2024 [4][5][8] - For the year ended December 31, 2025, net income was $23.8 million, or EPS of $3.43, an increase of $5.5 million, or 30.4%, from $18.3 million, or $2.61 per diluted share, in 2024 [5][8] Net Interest Income - Net interest income for the fourth quarter of 2025 was $17.6 million, a 4.2% increase from the prior quarter and a 14.6% increase from the fourth quarter of 2024 [6][8] - The net interest margin, on a fully taxable equivalent (FTE) basis, improved to 4.03% in the fourth quarter of 2025, compared to 3.97% in the prior quarter and 3.55% in the prior year quarter [7][8] Loans and Deposits - Loans held for investment decreased by $27.2 million, or 1.8%, to $1.49 billion as of December 31, 2025, compared to $1.51 billion at September 30, 2025, but increased by $20.6 million, or 1.4%, from $1.47 billion at the end of the prior year [18] - Total deposits increased by $28.2 million, or 1.9%, to $1.55 billion from $1.53 billion as of September 30, 2025, and increased by $21.0 million, or 1.4%, from $1.53 billion as of December 31, 2024 [25] Asset Quality - Non-performing assets totaled $7.0 million at December 31, 2025, a slight decrease from $7.3 million at September 30, 2025, and an increase from $4.2 million at December 31, 2024 [21] - The allowance for credit losses was $21.1 million, or 1.42% of outstanding loans, and represented 307.52% of non-performing loans as of December 31, 2025 [24] Capital Position - The company maintained a "well capitalized" regulatory capital position with total risk-based capital of 15.49% at the end of the year, compared to 14.79% at the end of the prior year [26] - The book value per share increased to $25.13, a rise of $3.77, or 17.6%, from $21.36 per share for the prior year [8][29] Dividends and Share Repurchase - The Board of Directors approved a quarterly cash dividend of $0.21 per common share, an increase of $0.01 per share, or 5%, from the previous quarterly dividend [28] - The company repurchased 100,358 common shares under its Repurchase Plan during 2025, with $8.4 million remaining available for future repurchases [27]

Financial Performance - Fourth quarter 2025 net income was $6.2 million, or $0.90 per diluted share, an increase from $6.1 million, or $0.88 per diluted share in the prior quarter[6] - For the year ended December 31, 2025, net income was $23.8 million, or $3.43 per diluted share, representing a 30.4% increase from $18.3 million, or $2.61 per diluted share in 2024[8] - Diluted earnings per share for the year ended December 31, 2025, rose to $3.43, a 31.5% increase compared to $2.61 in 2024[35] Income and Expenses - Net interest income for the year ended December 31, 2025, increased to $65,880, up 12.0% from $58,593 in 2024[35] - Non-interest income for Q4 2025 was $3.6 million, a decrease of 3.5% from the prior quarter but an increase of 1.8% from the prior year quarter[16] - Non-interest income for the year ended December 31, 2025, was $14,309, slightly down from $14,320 in 2024[35] - Non-interest expense for Q4 2025 was $13.3 million, an increase of 3.4% from the prior quarter, primarily due to higher other non-interest expenses[18] Asset and Liability Management - Total deposits increased by $28.2 million, or 1.9%, to $1.55 billion from $1.53 billion at September 30, 2025[29] - Loans decreased by $27.2 million, or 1.8%, to $1.49 billion from $1.51 billion at September 30, 2025, but increased by $20.6 million, or 1.4%, from $1.47 billion at the end of 2024[23] - Total assets as of December 31, 2025, were $1,894,850, a decrease of 1.4% from $1,932,105 as of September 30, 2025[34] Credit Quality - The allowance for credit losses at December 31, 2025 was $21.1 million, or 1.42% of outstanding loans, and 307.52% of non-performing loans[28] - The provision for credit losses for the year ended December 31, 2025, decreased to $360 from $1,027 in 2024[35] - Non-performing loans increased to $6,865 as of December 31, 2025, compared to $4,911 as of September 30, 2025[35] Efficiency and Capital Ratios - The efficiency ratio for the year improved to 63.41%, a decrease of 451 basis points from 67.92% in the prior year[22] - The efficiency ratio for the three months ended December 31, 2025, improved to 62.64% from 62.30% in the previous quarter[35] - Total risk-based capital ratio as of December 31, 2025, was 15.49%, an increase from 14.90% as of September 30, 2025[35] Shareholder Actions - The Company repurchased 100,358 common shares under its Repurchase Plan during 2025, with $8.4 million remaining available for future repurchases[31] Interest Income - Total interest income for the three months ended December 31, 2025, was $25,286, up from $25,003 in the previous quarter[34] - Net interest margin improved to 4.03% in Q4 2025 from 3.97% in the prior quarter and 3.55% in the prior year quarter[10] Return Metrics - Return on average assets for the three months ended December 31, 2025, was 1.33%, consistent with the previous quarter[35]

Core Viewpoint - Zacks Investment Research has initiated coverage of Hawthorn Bancshares, Inc. (HWBK) with a "Neutral" recommendation, reflecting a mixed outlook for the company amid industry challenges [1] Company Overview - Hawthorn Bancshares, based in Jefferson City, MO, is a financial holding company that owns all outstanding capital stock of Hawthorn Bank, which operates 18 banking offices in Missouri and offers a range of financial services [2] Financial Performance - Hawthorn Bancshares reported continued operating strength in its third-quarter 2025 results, with higher net income driven by expanding margins and improved efficiency. Loan and deposit balances grew modestly, and asset quality remained stable despite one commercial credit moving to non-accrual [3] - The company's capital levels remained strong, allowing for ongoing dividends and share repurchases [3] Growth Drivers - Key factors driving future growth for Hawthorn Bancshares include sustained margin strength from disciplined balance-sheet management, strong capital levels providing flexibility for dividends and buybacks, and an emerging wealth management business contributing to fee income diversification [4] Market Position - Hawthorn Bancshares' stock has underperformed compared to industry peers and the broader market over the past year, with valuation reflecting cautious expectations from investors. There is potential for upside if earnings remain durable, but limited room for error exists if credit, funding, or margin pressures arise [6] Additional Insights - The company has a modest market capitalization of $234.5 million, indicating a promising yet risky segment of the market for potential investors [7]

Group 1 - The article expresses optimism about Hawthorn Bancshares (HWBK), a regional bank based in Missouri, particularly focusing on the evolution of its net performance [1] - The Investment Doctor emphasizes a balanced investment portfolio consisting of both dividend and growth stocks, targeting European small-cap opportunities with a 5-7 year investment horizon [1] - The investment group European Small Cap Ideas provides exclusive research on European investment opportunities, focusing on high-quality small-cap ideas that offer capital gains and dividend income [1] Group 2 - The article does not contain any disclosures regarding stock positions or plans to initiate positions in the mentioned companies [2] - There are no recommendations or advice provided regarding the suitability of investments for particular investors, and past performance is not indicative of future results [3]

Group 1 - The article expresses optimism about Hawthorn Bancshares (HWBK), a regional bank based in Missouri, particularly focusing on the evolution of its net performance [1] - The Investment Doctor emphasizes a balanced investment portfolio consisting of both dividend and growth stocks, targeting European small-cap opportunities with a 5-7 year investment horizon [1] - The investment group European Small Cap Ideas provides exclusive research on European investment opportunities, focusing on high-quality small-cap ideas that offer capital gains and dividend income [1] Group 2 - The article does not contain any disclosures related to stock positions or business relationships with the companies mentioned [2] - Seeking Alpha clarifies that past performance does not guarantee future results and that no specific investment recommendations are provided [3]

Financial Performance - The Company reported net interest income of $16.9 million for the three months ended September 30, 2025, an increase of 18% from $14.3 million in the same period of 2024[160]. - Net income for the three months ended September 30, 2025, was $6.1 million, or $0.88 per diluted share, compared to $4.6 million, or $0.66 per diluted share for the same period in 2024, representing a 32% increase in net income[164]. - Non-interest income was $3.7 million for the three months ended September 30, 2025, a slight decrease from $3.8 million in the same period of 2024[166]. - The Company’s efficiency ratio improved to 62.30% for the three months ended September 30, 2025, compared to 66.23% for the same period in 2024[164]. - Total non-interest income decreased by $0.1 million, or 1.8%, to $3.7 million for the quarter ended September 30, 2025, compared to $3.8 million for the same quarter in 2024[202][203]. Assets and Liabilities - The Company’s total assets were $1.93 billion as of September 30, 2025, with loans held for investment increasing to $1.51 billion, up $47.8 million from December 31, 2024[154][169]. - Cash and cash equivalents increased to $99.9 million as of September 30, 2025, compared to $51.0 million as of December 31, 2024[168]. - Total deposits decreased by $7.3 million to $1.53 billion as of September 30, 2025, compared to $1.53 billion as of December 31, 2024, but increased by $22.4 million compared to $1.50 billion as of September 30, 2024[172]. - Total FHLB advances and other borrowings increased by $95.6 million to $177.1 million as of September 30, 2025, compared to $81.5 million as of December 31, 2024, and increased by $80.6 million compared to $96.5 million as of September 30, 2024[173]. - The Company maintains a "well capitalized" regulatory capital position with total risk-based capital to risk-weighted assets at 14.90% as of September 30, 2025[174]. Credit Quality - Non-performing assets totaled $7.3 million, or 0.48% of total loans, as of September 30, 2025, compared to $8.5 million, or 0.58% of total loans, at September 30, 2024[169]. - The allowance for credit losses was $21.9 million, or 1.45% of loans outstanding, as of September 30, 2025, slightly down from 1.50% at December 31, 2024[171]. - The Company recognized a provision for credit losses of $0.4 million for the three months ended September 30, 2025, compared to $0.5 million for the same period in 2024[232]. - As of September 30, 2025, the total non-performing assets were $7.3 million, or 0.48% of total loans, compared to $4.2 million, or 0.29% of total loans, at December 31, 2024[229]. - The allowance for credit losses to non-performing loans was 446.02% at September 30, 2025, compared to 802.48% at December 31, 2024[231]. Interest Income and Expense - The net interest margin on a fully taxable equivalent basis was 3.97% for the three months ended September 30, 2025, up from 3.36% in the same period of 2024[165]. - Total interest income was $25.4 million for the three months ended September 30, 2025, compared to $24.0 million for the same period in 2024[186]. - Interest income on loans held for investment was $22.8 million for the three months ended September 30, 2025, compared to $21.8 million for the same period in 2024[187]. - Total interest expense decreased to $8.1 million for the three months ended September 30, 2025, down from $9.5 million for the same period in 2024[193]. - The average cost of deposits decreased to 2.36% for the quarter ended September 30, 2025, compared to 2.74% for the same period in 2024[195]. Capital Ratios - As of September 30, 2025, the Company reported a Total Capital ratio of 14.90%, exceeding the Basel III minimum requirement of 10.50%[263]. - The Company's Tier 1 Capital ratio was 13.65% as of September 30, 2025, above the required 8.50%[263]. - Common Equity Tier 1 Capital ratio stood at 10.71% on September 30, 2025, surpassing the 7.00% minimum requirement[263]. - The Tier 1 leverage ratio was 11.97% as of September 30, 2025, well above the regulatory minimum of 4.00%[263]. Liquidity - The company had $384.9 million in unused loan commitments and standby letters of credit as of September 30, 2025, indicating adequate liquidity resources to fund this commitment level[253]. - Management believes the company has more than adequate liquidity to meet future anticipated liquidity needs in both the short- and long-term[249]. - The company has access to credit products from the Federal Home Loan Bank, with a total available funding capacity of $225.72 million as of September 30, 2025[247]. Operational Efficiency - The average interest bearing deposits decreased by $24.2 million, or 2.2%, to $1.10 billion for the quarter ended September 30, 2025[195]. - Total non-interest expense increased by $0.8 million, or 6.9%, to $12.8 million for the quarter ended September 30, 2025, compared to $12.0 million for the same quarter in 2024[211]. - Salaries expense increased by $0.6 million, or 12.2%, to $5.7 million for the quarter ended September 30, 2025, compared to $5.1 million for the same quarter in 2024[212]. - The efficiency ratio improved to 62.3% for the quarter ended September 30, 2025, compared to 66.2% for the same quarter in 2024[210]. Market Conditions - Inflation did not significantly impact the Company's operations for the three months ended September 30, 2025[272]. - The projected net interest income is expected to decrease by 1.15% with a 200 basis point increase in interest rates as of September 30, 2025[269]. - A 100 basis point increase in interest rates is projected to decrease net interest income by 0.39% for the same period[269]. - The Asset Liability Committee reviews the sensitivity of the Company's assets and liabilities to interest rate changes quarterly[265].

Core Viewpoint - Hawthorn Bancshares, Inc. reported strong third quarter 2025 results, highlighting core growth, margin expansion, and an increase in the loan portfolio, which reflects the company's strategic focus on enhancing shareholder value [3][6]. Financial Performance - The company achieved a net income of $6.1 million for Q3 2025, marking a 34.1% increase from Q3 2024, with earnings per diluted share (EPS) of $0.88, up from $0.66 in the prior year [6][7]. - Net interest income for Q3 2025 was $16.9 million, an increase of $2.5 million from the prior year quarter [9][10]. - The net interest margin improved to 3.97% in Q3 2025, compared to 3.36% in the prior year quarter [10][28]. Balance Sheet Highlights - Total assets reached $1.93 billion as of September 30, 2025, up from $1.81 billion a year earlier [4]. - Loans held for investment increased by $51.1 million, or 3.5%, to $1.51 billion compared to the prior quarter [16]. - Total deposits were $1.53 billion, reflecting a 0.5% increase from the previous quarter [23]. Asset Quality - Non-performing assets to total loans improved to 0.48% as of September 30, 2025, compared to 0.58% in the prior year quarter [19][28]. - The allowance for credit losses was $21.9 million, representing 1.45% of outstanding loans [22][29]. Capital Position - The company maintained a "well capitalized" status with a total risk-based capital ratio of 14.90% as of September 30, 2025 [24][29]. - Book value per share increased to $23.76, up 5.5% from the prior quarter and 13.6% from the prior year [6][28]. Non-Interest Income and Expenses - Total non-interest income for Q3 2025 was $3.7 million, a slight increase from the prior quarter but a decrease from the prior year quarter [13]. - Non-interest expenses rose to $12.8 million, reflecting a 6.9% increase from the prior year quarter, primarily due to higher salaries and employee benefits [14]. Shareholder Returns - The Board of Directors approved a quarterly cash dividend of $0.20 per common share, payable on January 1, 2026 [26].

Financial Performance - Net income for Q3 2025 was $6.1 million, an increase of $1.6 million, or 34.1%, from Q3 2024, with EPS of $0.88, up 33% from the prior year quarter[5] - Total non-interest income for Q3 2025 was $3.7 million, a decrease of $0.1 million, or 1.8%, from the prior year quarter[13] - Total non-interest expense for Q3 2025 was $12.8 million, an increase of $0.6 million, or 4.5%, from the prior quarter[14] - Return on average assets for Q3 2025 was 1.33%, slightly down from 1.36% in Q2 2025 and up from 1.00% in Q3 2024[29] - Return on average common equity decreased to 15.21 in Q3 2025 from 15.85 in Q2 2025, compared to 12.87 in Q3 2024[29] Loan and Deposit Activity - Loans increased by $51.1 million, or 3.5%, to $1.51 billion compared to the prior quarter, and deposits rose by $7.9 million, or 0.5%[16][23] - Non-performing loans increased to $4,911,000 in Q3 2025 from $2,761,000 in Q2 2025, but decreased from $4,066,000 in Q3 2024[29] - Non-performing assets rose to $7,336,000 in Q3 2025 from $5,186,000 in Q2 2025, down from $8,451,000 in Q3 2024[29] Capital and Efficiency Ratios - The efficiency ratio improved to 62.30% in Q3 2025, compared to 66.23% in the prior year quarter[15] - The efficiency ratio remained stable at 62.30 in Q3 2025, compared to 62.32 in Q2 2025 and improved from 66.23 in Q3 2024[29] - Total risk-based capital ratio was 14.90 in Q3 2025, slightly down from 15.12 in Q2 2025 and stable compared to 14.91 in Q3 2024[29] - Tier 1 risk-based capital ratio decreased to 13.65 in Q3 2025 from 13.87 in Q2 2025, compared to 13.66 in Q3 2024[29] - Average stockholders' equity to average total assets increased to 8.74% in Q3 2025 from 8.56% in Q2 2025 and 7.80% in Q3 2024[29] - Allowance for credit losses to total loans was 1.45 in Q3 2025, down from 1.47 in Q2 2025 and 1.50 in Q3 2024[29] Shareholder Returns - The Company repurchased 90,466 common shares at an average cost of $27.72 per share, totaling $2.5 million, with $8.7 million remaining for share repurchases[25] - A quarterly cash dividend of $0.20 per common share was approved, payable on January 1, 2026[26] Interest Margin - Net interest margin improved to 3.97% in Q3 2025, compared to 3.89% in Q2 2025 and 3.36% in Q3 2024[10] - Net interest margin (FTE) improved to 3.97 in Q3 2025 from 3.89 in Q2 2025 and 3.36 in Q3 2024[29]

Company Overview - Hawthorn Bancshares (NASDAQ: HWBK) is the owner of Hawthorn Bank, a full-service bank based in Missouri with less than $2 billion in assets and eighteen offices, indicating a relatively small scale of operations [1] Investment Focus - The investment group European Small Cap Ideas specializes in high-quality small-cap investment opportunities in Europe, emphasizing capital gains and dividend income for continuous cash flow [1] - The group offers two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content on European investing opportunities [1]