Core Viewpoint - Hawthorn Bancshares reported a strong second quarter for 2025, with significant improvements in profitability and cost control, despite declines in overall loans and deposits [1][5][12] Financial Performance - Net income reached $6.1 million, with earnings per share (EPS) of $0.88, a 33.3% increase from $0.66 in Q2 2024 [1][2] - Net interest income rose to $16.1 million, up 13.8% year-over-year, driven by higher loan yields and lower deposit costs [2][5] - The net interest margin expanded to 3.89%, an increase from 3.33% in the prior year [2][5] Efficiency and Cost Control - The efficiency ratio improved to 62.32%, down from over 66% in the prior year, indicating better cost management [2][6] - Non-interest income decreased by 11.3% year-over-year, reflecting challenges in service fee categories [2][6] Balance Sheet Trends - Loans held for investment decreased by $7.4 million (0.5%) from the previous quarter and $35.6 million (2.4% annualized) from the prior year [7] - Deposits declined primarily due to reduced balances in savings and interest-bearing accounts, while investment securities increased by $38.2 million compared to the prior year [7][10] Credit Quality - Non-performing assets constituted 0.35% of loans, an improvement from 0.54% in the prior year, although there was a sequential increase [8] - Net loan charge-offs were minimal at $51,000, significantly lower than the $1.98 million recorded in Q2 2024 [8] Business Overview and Priorities - Hawthorn Bancshares focuses on providing loans and deposit accounts to individuals and small-to-mid-size businesses in Missouri [3] - Recent priorities include maintaining regulatory compliance, managing capital levels, and adjusting the balance sheet in response to market changes [4] Outlook - Management did not provide formal guidance for the upcoming quarter or fiscal year 2025, indicating a cautious approach [11] - The quarterly dividend was maintained at $0.20 per share, with no changes to the dividend policy indicated [12]

Core Viewpoint - Hawthorn Bancshares, Inc. reported strong financial results for the second quarter of 2025, with significant improvements in net income and earnings per share, reflecting effective management of net interest margin and expenses in a competitive market [1][3][6]. Financial Performance - Net income for Q2 2025 was $6.1 million, an increase of $1.5 million or 31.8% from Q2 2024, and an increase of $0.7 million or 13.3% from Q1 2025 [6][7]. - Earnings per diluted share (EPS) improved to $0.88, up $0.22 or 33% from the prior year quarter [6][7]. - The efficiency ratio improved to 62.32% from 66.24% in the prior year quarter, indicating better cost management [6][15]. Balance Sheet Highlights - Total assets as of June 30, 2025, were $1.877 billion, a slight decrease from $1.883 billion in Q1 2025 [4]. - Loans held for investment decreased by $7.4 million or 0.5% from Q1 2025, totaling $1.463 billion [4][16]. - Total deposits were $1.518 billion, down $25.9 million or 1.7% from Q1 2025 [4][22]. Interest Income and Margin - Net interest income for Q2 2025 was $16.1 million, an increase of $0.8 million from Q1 2025 and $2.0 million from Q2 2024 [9]. - The net interest margin improved to 3.89% from 3.67% in Q1 2025 and 3.33% in Q2 2024 [10][27]. Asset Quality - Non-performing assets to total loans ratio was 0.35% as of June 30, 2025, improving from 0.54% in the prior year quarter [18][27]. - The allowance for credit losses was $21.6 million, or 1.47% of outstanding loans, indicating a strong capital position [21][23]. Capital and Shareholder Returns - The company maintained a "well capitalized" status with a total risk-based capital ratio of 15.12% [23][28]. - A quarterly cash dividend of $0.20 per common share was approved, payable on October 1, 2025 [25]. Non-Interest Income and Expenses - Total non-interest income for Q2 2025 was $3.5 million, a slight increase from Q1 2025 but a decrease from Q2 2024 [13]. - Non-interest expenses decreased by $0.2 million or 1.8% from Q1 2025, totaling $12.3 million [14].

Core Points - Hawthorn Bancshares, Inc. has been included in the Russell 3000 Index and the Russell 2000 Index, effective June 30, 2025, marking a significant milestone for the company [1][2] - The Russell 3000 Index consists of the largest 3,000 U.S. public companies by market capitalization, while the Russell 2000 Index focuses on small-cap companies [3] - The inclusion in these indexes is expected to enhance the company's visibility in the investment community and validate its growth and shareholder value [4] Company Overview - Hawthorn Bancshares, Inc. is a financial-bank holding company based in Jefferson City, Missouri, and is the parent company of Hawthorn Bank, which has been serving families and businesses for over 150 years [6] - The bank operates multiple locations, including areas in the greater Kansas City metropolitan area, Jefferson City, Columbia, Springfield, and Clinton [6] Market Impact - The Russell indexes are widely utilized by investment managers and institutional investors, with approximately $10.6 trillion in assets benchmarked against them as of June 2024 [4]

Core Viewpoint - Hawthorn Bancshares, Inc. has announced a new common stock repurchase program authorizing the repurchase of up to $10.0 million in market value of its common stock, replacing the previous program [1] Summary by Sections Stock Repurchase Program - The management has been given discretion to determine the number and pricing of shares to be purchased, as well as the timing of such purchases, which will depend on market conditions [2] - The program has no termination date and may be suspended or discontinued at any time, without obligating the company to acquire any specific amount of common stock [2] Use of Repurchased Shares - Repurchased shares will be held in treasury and may be utilized for general corporate purposes, including stock-based employee benefit plans and stock dividends [3] - The stock repurchases are expected to be funded by cash generated through cash on hand, operations, and other sources [3] Company Overview - Hawthorn Bancshares, Inc. is a financial-bank holding company headquartered in Jefferson City, Missouri, and is the parent company of Hawthorn Bank, which has been serving families and businesses for over 150 years [4] - The bank operates multiple locations, including in the greater Kansas City metropolitan area, Jefferson City, Columbia, Springfield, and Clinton [4]

Financial Performance - For the first quarter ended March 31, 2025, the Company reported a net income of $5.4 million, or $0.77 per diluted share, representing a 20.8% increase from $4.5 million, or $0.63 per diluted share, in the same period of 2024[155]. - Non-interest income rose to $3.5 million in the first quarter of 2025, compared to $3.0 million in the same quarter of 2024[157]. - The efficiency ratio improved to 66.6% for the first quarter of 2025, down from 70.78% in the same quarter of 2024[155]. Interest Income and Margin - Net interest income for the first quarter of 2025 was $15.3 million, an increase of $0.5 million compared to $14.7 million in the first quarter of 2024, with a net interest margin of 3.67%, up from 3.39% year-over-year[156]. - Net interest income on a fully taxable equivalent (FTE) basis increased by $0.6 million, or 3.9%, for the three months ended March 31, 2025, compared to the same period in 2024[170]. - The net interest margin (FTE) rose to 3.67% for the three months ended March 31, 2025, up from 3.39% in the prior year[170]. Asset Quality - Non-performing assets decreased to $3.1 million, or 0.21% of total loans, at March 31, 2025, down from $10.5 million, or 0.69% of total loans, at March 31, 2024[160]. - The allowance for credit losses was $21.8 million, or 1.48% of loans outstanding, as of March 31, 2025, compared to $23.7 million, or 1.56%, as of March 31, 2024[161]. - Total non-performing assets were $3.1 million, or 0.21% of total loans, at March 31, 2025, down from $4.2 million, or 0.29% of total loans, at December 31, 2024[200]. Deposits and Liquidity - Total deposits increased by $10.7 million to $1.54 billion as of March 31, 2025, compared to $1.53 billion as of December 31, 2024, and increased by $16.0 million compared to $1.53 billion as of March 31, 2024[162]. - Cash and cash equivalents increased by $51.3 million to $102.3 million as of March 31, 2025, compared to $51.0 million as of December 31, 2024[158]. - The Company had $368.7 million in unused loan commitments and standby letters of credit as of March 31, 2025, indicating adequate liquidity resources[224]. Expenses - Total non-interest expense decreased by $0.1 million, or 0.6%, to $12.5 million for the three months ended March 31, 2025, compared to $12.6 million for the same period in 2024[186]. - Occupancy expense increased by $0.1 million, or 15.0%, to $0.9 million for the three months ended March 31, 2025, primarily due to the opening of two new branch locations[186]. - Legal, examination, and professional fees decreased by $0.3 million, or 40.1%, to $0.5 million for the three months ended March 31, 2025, due to prior year settlement costs[187]. Capital Adequacy - The Company maintained a "well capitalized" regulatory capital position with a total risk-based capital ratio of 14.94% and a tier 1 leverage ratio of 11.64% as of March 31, 2025[163]. - As of March 31, 2025, the Company and the Bank met all capital adequacy requirements, with total capital to risk-weighted assets at 14.94% for the Company and 14.41% for the Bank[233]. - The Company’s Common Equity Tier 1 Capital ratio was 10.64% as of March 31, 2025, exceeding the minimum requirement of 7.00%[233]. Cash Flow - Operating activities generated total cash of $5.7 million for the three months ended March 31, 2025[221]. - Investing activities used total cash of $6.0 million, primarily due to a $4.1 million net increase in loans held for investment and $6.7 million in purchases of securities[222]. - Financing activities provided total cash of $51.5 million, mainly from a $42.1 million increase in demand deposits and a $42.6 million net increase in FHLB advances[223]. Loans and Borrowings - Loans held for investment increased by $4.2 million to $1.47 billion as of March 31, 2025, compared to $1.47 billion as of December 31, 2024[159]. - The company had $124.0 million in outstanding borrowings with the Federal Home Loan Bank as of March 31, 2025, compared to $81.4 million at December 31, 2024[217]. - Average borrowings decreased by $35.5 million, or 22.1%, to $125.0 million for the quarter ended March 31, 2025[179]. Interest Rate Risk - Interest rate risk exposure is managed through simulations and analyses, with a projected 12.00% increase in net interest income for a 200 basis point increase in interest rates[240]. - Management believes the change in projected net interest income from interest rate shifts of up to 200 basis points is an acceptable level of interest rate risk[240].

Core Viewpoint - Hawthorn Bancshares, Inc. has announced a quarterly cash dividend of $0.20 per common share, reflecting a $0.01 increase from the previous quarter's dividend [1] Group 1: Company Overview - Hawthorn Bancshares, Inc. is a financial-bank holding company based in Jefferson City, Missouri, and is the parent company of Hawthorn Bank, which has been serving families and businesses for over 150 years [2] - The bank operates multiple locations, including areas in the greater Kansas City metropolitan area, Jefferson City, Columbia, Springfield, and Clinton [2] Group 2: Dividend Announcement - The approved dividend of $0.20 per common share is payable on July 1, 2025, to shareholders of record as of June 15, 2025 [1] - This dividend increase indicates a positive trend in the company's financial performance, as it marks an increase from the prior quarter's dividend [1]

Core Insights - Hawthorn Bancshares, Inc. reported a net income of $5.4 million for the first quarter of 2025, representing a 17.1% increase from the prior quarter and a 20.8% increase from the same quarter last year, with earnings per diluted share (EPS) of $0.77 [1][4][5] Financial Performance - Total assets as of March 31, 2025, were $1.883 billion, an increase from $1.825 billion at December 31, 2024 [3] - Loans held for investment increased by $4.2 million, or 1.2% annualized, to $1.470 billion compared to the prior quarter, but decreased by $48.5 million, or 12.9% annualized, from the prior year quarter [14] - Total deposits rose by $10.7 million, or 2.8% annualized, to $1.544 billion from the prior quarter, and increased by $16.0 million, or 4.2% annualized, from the prior year quarter [20] - Non-interest income for the first quarter was $3.5 million, a decrease of 1.7% from the prior quarter but an increase of 14.7% from the prior year quarter [10] - Total non-interest expense decreased by $0.4 million, or 3.3%, from the prior quarter, and by $0.1 million, or 0.6%, from the prior year quarter [12] Efficiency and Ratios - The efficiency ratio improved to 66.64% compared to 70.78% for the prior year quarter, driven by higher net interest margin and lower non-interest expenses [4][13] - Return on average assets and equity were 1.20% and 14.29%, respectively [4][24] - The net interest margin (FTE) improved to 3.67% from 3.55% in the prior quarter and 3.39% in the prior year quarter [4][24] Asset Quality - Non-performing assets to total loans improved to 0.21% from 0.69% in the prior year quarter, with non-performing assets totaling $3.1 million [16][24] - The allowance for credit losses was $21.8 million, or 1.48% of outstanding loans, and 885.01% of non-performing loans [19][24] Capital and Shareholder Returns - The company maintained a "well capitalized" regulatory capital position with a total risk-based capital ratio of 14.94% [21] - A quarterly cash dividend of $0.20 per common share was approved, representing a 5.3% increase from the prior year quarter's dividend [23]

Financial Performance - Net income for Q1 2025 was $5.4 million, an increase of 20.8% from Q1 2024, with EPS of $0.77, up 22% year-over-year[2][4][6] - Total non-interest income was $3.5 million, a 14.7% increase from the prior year quarter, primarily due to higher earnings on bank-owned life insurance[12][13] - The efficiency ratio improved to 66.64% from 70.78% in the prior year quarter, driven by higher net interest margin and lower non-interest expenses[4][15] - The net interest margin (FTE) increased to 3.67% from 3.39% in the prior year quarter, reflecting improved interest income dynamics[4][8][28] - Total assets reached $1.88 billion, with total stockholders' equity at $153.4 million, representing a book value per share of $21.97, up 13% year-over-year[11][23] Loan and Deposit Activity - Loans increased by $4.2 million, or 1.2% annualized, while deposits rose by $10.7 million, or 2.8% annualized, compared to the prior quarter[4][16][22] - The allowance for credit losses was $21.8 million, or 1.48% of outstanding loans, indicating a strong reserve against potential loan losses[21][28] - Non-performing assets to total loans improved to 0.21%, down from 0.69% in the prior year quarter, indicating strong credit quality[4][18] Shareholder Returns - The company repurchased 15,856 shares at an average cost of $27.51 per share during Q1 2025, with $3.5 million remaining for future repurchases[24] - A quarterly cash dividend of $0.20 per share was approved, reflecting a 5.3% increase from the prior year quarter's dividend[25] Regulatory and Forward-Looking Statements - The financial results presented are preliminary and unaudited, pending the filing of the Quarterly Report on Form 10-Q[31] - Actual results may differ materially from forward-looking statements made by the company, as noted in the press release[31] - The company disclaims any obligation to update forward-looking statements unless required by law[31]

Financial Performance and Position - The Company reported a fourth-quarter repositioning of its balance sheet by selling $83.7 million in investment securities, resulting in an after-tax realized loss of $9.1 million[67]. - The profitability of the Company is significantly affected by local economic conditions in central and west-central Missouri and eastern Kansas, with potential declines in profitability due to increased unemployment and decreased real estate values[64]. - The primary source of earnings for the Bank is net interest income, which may decrease if prevailing interest rates decline, impacting the overall profitability of the Company[66]. - The Company faces credit risk as a lender, with potential loan defaults and increased charge-offs if borrowers are unable to repay their loans[70]. - The Bank's loan portfolio is susceptible to local economic conditions, and high levels of non-performing assets could adversely affect the Company's financial condition[71]. - The provision for credit losses may need to be increased if the financial condition of borrowers deteriorates or if real estate values decline, impacting future profitability[72]. - Adverse market conditions, including increased unemployment and reduced availability of commercial credit, could negatively impact the Company's business and credit performance[73]. - The FDIC's changes in deposit insurance premium calculations could increase non-interest expenses and adversely affect the Company's profitability[82]. - Liquidity risk is a concern for the Company, as insufficient liquidity could impair its ability to fund operations and meet obligations[78]. - The Company relies on customer deposits and may face challenges in replacing withdrawals or maturing deposits if market conditions change[79]. - The company may need to seek additional capital in the future, which could be affected by illiquid credit markets and economic conditions[83]. - The stock price of the company is subject to significant fluctuations due to various factors, including market conditions and operational performance, which could affect shareholder liquidity[122]. - The trading volume of the company's common stock is low, making it difficult for shareholders to sell shares quickly and potentially leading to price volatility[125]. - The company is not insured by any governmental entity, which poses additional risks for investors[126]. - The Company has not issued any new securities recently[154]. Competition and Market Conditions - The bank faces substantial competition from various financial institutions, which may adversely affect its ability to attract loans and deposits[85]. - Increased competition could lead to a decline in the bank's market share of deposits and loans, impacting its financial condition[86]. Operational and Compliance Risks - The company may experience difficulties in managing growth and integrating newly acquired companies, which could pose risks to profitability[87]. - The bank's success depends on its ability to generate loans and deposits at acceptable risk levels without significant increases in non-interest expenses[90]. - The bank's reputation is critical to its success, and any misconduct or errors could materially harm its performance[91]. - The company is exposed to operational risks, including fraudulent activities and cybersecurity incidents, which could disrupt business and increase costs[92]. - Regulatory changes may impact the profitability of the company's business activities and require significant management resources to comply[101]. - The Federal Reserve may require the company to commit capital resources to support its subsidiary bank, which could adversely affect its financial condition[102]. - Changes to regulatory capital requirements could result in lower returns on invested capital and require raising additional capital[104]. - The company is subject to increased FDIC deposit insurance premiums due to a decline in the reserve ratio of the Deposit Insurance Fund (DIF) relative to total insured deposits, which could adversely affect its financial condition[105]. - Non-compliance with laws such as the USA PATRIOT Act and Bank Secrecy Act could lead to fines, sanctions, and restrictions on expansion opportunities, impacting the company's growth potential[106]. - The company faces potential increased costs and operational impacts due to evolving privacy, cybersecurity, and data protection regulations, which could affect its business opportunities[107]. - Compliance with current and future laws may result in higher costs and restrict the company's ability to provide certain products and services, adversely affecting its financial condition[109]. Cybersecurity and IT Risks - The company relies heavily on technology and third-party vendors, and any operational disruptions or failures in these areas could materially impact its business operations and financial results[121]. - The Company has implemented a comprehensive cybersecurity and IT risk management program based on NIST and FFIEC frameworks, led by a Director with over 15 years of experience in cybersecurity[130]. - The Audit Committee meets quarterly to assess cybersecurity risks and receives reports on the status of the Company's information security program and emerging threats[131]. - The Company engages outside experts for cybersecurity assessments and audits, ensuring robust vendor management and annual due diligence on critical vendors[134]. - The Incident Response Program categorizes incidents into five severity levels, assessing impacts on financial loss, reputation, and service interruption[136]. - The Company has not experienced material adverse impacts from cyber threats to date, but acknowledges ongoing risks from malicious cyber activity[137]. - The company may face reputational damage and financial losses due to potential cybersecurity incidents, which could lead to increased costs for remediation and protection[118]. - Changes in accounting policies and adverse publicity could also impact the company's future financial performance and operational results[127]. Financial Reporting and Governance - The Company maintained effective internal control over financial reporting as of December 31, 2024, based on the criteria established in the Internal Control – Integrated Framework (2013)[170]. - There were no changes in the Company's internal control over financial reporting during the quarter ended December 31, 2024, that materially affected its internal control[168]. - The independent registered public accounting firm expressed an unqualified opinion on the Company's consolidated financial statements for the year ended December 31, 2024[171]. - The Company has no disagreements with accountants on accounting and financial disclosure[164]. - The consolidated financial statements for the years ended December 31, 2024, 2023, and 2022 are included in the Company's 2024 Annual Report to Shareholders[189]. - The auditor for the Company is Forvis Mazars, LLP, located in Kansas City, MO[190]. - The consolidated balance sheets as of December 31, 2024, and 2023 are reported, indicating the Company's financial position[190]. - The consolidated statements of income for the years ended December 31, 2024, 2023, and 2022 are provided, detailing revenue and expenses[191]. - The consolidated statements of comprehensive income for the years ended December 31, 2024, 2023, and 2022 are included, reflecting overall financial performance[192]. - The consolidated statements of stockholders' equity for the years ended December 31, 2024, 2023, and 2022 are presented, showing changes in equity[193]. - The consolidated statements of cash flows for the years ended December 31, 2024, 2023, and 2022 are available, detailing cash inflows and outflows[193]. - The Company has omitted certain financial statement schedules as they are not required or applicable[194]. - The Company has filed various exhibits related to executive compensation and corporate governance in its definitive Proxy Statement for the 2025 Annual Meeting of Shareholders[188]. - The Company has a policy for the recovery of erroneously awarded compensation, indicating a commitment to ethical governance practices[195].

Financial Performance - Fourth quarter 2024 net income was $4.6 million, or $0.66 per diluted share, consistent with the prior quarter and up 161.8% from the fourth quarter 2023[7] - For the year ended December 31, 2024, net income was $18.3 million, or $2.61 per diluted share, an increase of $17.3 million from the prior year[6] - Non-interest income for 2024 was $14.3 million, a 90.0% increase from $7.5 million in 2023[12] - Non-interest expenses decreased by $2.8 million, or 5.4%, to $49.5 million for 2024 compared to the prior year[14] Asset Quality - The allowance for credit losses was $22.0 million, or 1.50% of outstanding loans, as of December 31, 2024[22] - Non-performing loans decreased to $2,747,000 in Q4 2024 from $4,066,000 in Q3 2024, and down from $6,413,000 in Q4 2023[29] - Non-performing assets reduced to $4,193,000 in Q4 2024 from $8,451,000 in Q3 2024, and down from $8,157,000 in Q4 2023[29] - Net charge-offs for Q4 2024 were $43,000, significantly lower than $636,000 in Q3 2024 and $268,000 in Q4 2023[29] - Allowance for credit losses on non-performing loans is at 802.48% in Q4 2024, up from 539.52% in Q3 2024, and significantly higher than 370.25% in Q4 2023[29] Capital and Ratios - The company remains well capitalized with total risk-based capital of 14.79%[24] - Return on average assets for Q4 2024 is 1.00%, consistent with Q3 2024, compared to (1.57)% in Q4 2023[29] - Return on average common equity for Q4 2024 is 12.49%, slightly down from 12.87% in Q3 2024, and significantly improved from (24.54)% in Q4 2023[29] - Total risk-based capital ratio for Q4 2024 is 14.79%, slightly down from 14.91% in Q3 2024, and up from 13.99% in Q4 2023[29] - Common equity Tier 1 capital ratio for Q4 2024 is 10.49%, down from 10.53% in Q3 2024, and improved from 9.73% in Q4 2023[29] Operational Efficiency - Efficiency ratio improved to 68.48% in Q4 2024 from 66.23% in Q3 2024, and down from 81.06% in Q4 2023[29] Growth and Expansion - Total deposits increased by $29.7 million, or 2.0%, from the prior quarter, but decreased by $37.7 million, or 2.4%, from the prior year[23] - Investments rose by $14.8 million, or 7.1%, from the prior quarter and increased by $28.8 million, or 14.7%, from the prior year[18] - The company received approval to open a new banking center in Overland Park, Kansas, in February 2025[4] Interest Margin - Net interest margin improved to 3.55% in the fourth quarter 2024, compared to 3.36% in the prior quarter[4] - Net interest margin (FTE) increased to 3.55% in Q4 2024 from 3.36% in Q3 2024, and up from 3.48% in Q4 2023[29]