PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) Hawthorn Bancshares' Q1 2019 unaudited financial statements report total assets of $1.54 billion, net income of $4.7 million, boosted by a $2.1 million branch sale gain, and reflect new lease accounting standards [Consolidated Balance Sheets](index=2&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $1.54 billion by March 31, 2019, driven by increased cash and net loans, with deposits reaching $1.25 billion and equity rising to $104.9 million Consolidated Balance Sheet Highlights (Unaudited) | (In millions) | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $90.7 | $42.1 | | Net loans | $1,142.8 | $1,135.0 | | Total assets | $1,538.3 | $1,481.7 | | **Liabilities & Equity** | | | | Total deposits | $1,250.6 | $1,198.5 | | Total liabilities | $1,433.4 | $1,382.3 | | Total stockholders' equity | $104.9 | $99.4 | [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) Q1 2019 net income more than doubled to $4.7 million, driven by a $2.1 million branch sale gain and an 8.1% rise in net interest income, with diluted EPS at $0.77 Consolidated Income Statement Highlights (Unaudited) | (In millions, except per share) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net interest income | $11.6 | $10.8 | | Provision for loan losses | $0.15 | $0.30 | | Non-interest income | $2.1 | $2.2 | | Gain on branch sale, net | $2.1 | $— | | Non-interest expense | $9.9 | $10.3 | | Net income | $4.7 | $2.1 | | Diluted earnings per share | $0.77 | $0.35 | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income surged to $6.1 million in Q1 2019, up from $0.4 million, due to higher net income and a $1.4 million gain from available-for-sale securities Consolidated Comprehensive Income (Unaudited) | (In millions) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net income | $4.7 | $2.1 | | Other comprehensive income (loss) | $1.4 | $(1.7) | | **Total comprehensive income** | **$6.1** | **$0.4** | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity increased to $104.9 million by March 31, 2019, primarily from $4.7 million net income and $1.4 million other comprehensive income, offset by $603 thousand in dividends - Key drivers for the change in stockholders' equity in Q1 2019 were net income of **$4.7 million** and other comprehensive income of **$1.4 million**, which were partially offset by **$603 thousand** in common stock dividends[11](index=11&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased by $48.6 million in Q1 2019, with $3.7 million from operations, $14.5 million used in investing, and $59.5 million provided by financing Summary of Cash Flows (Unaudited) | (In millions) | Three Months Ended March 31, 2019 | | :--- | :--- | | Net cash provided by operating activities | $3.7 | | Net cash used in investing activities | $(14.5) | | Net cash provided by financing activities | $59.5 | | **Net increase in cash and cash equivalents** | **$48.6** | [Notes to the Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Notes detail accounting policies, including the 2019 lease standard adoption ($2.3 million ROU assets/liabilities), loan portfolio, ALL, and the $2.1 million pre-tax gain from a branch sale - On February 8, 2019, the Company completed the sale of its Branson, Missouri branch, which resulted in a pre-tax gain of approximately **$2.1 million**[20](index=20&type=chunk) - The Company adopted ASU No. 2016-02 (Leases) on January 1, 2019, resulting in the recognition of right-of-use assets and lease liabilities of **$2.3 million** each on the consolidated balance sheets[21](index=21&type=chunk)[23](index=23&type=chunk) - Beginning in Q1 2019, management adjusted the look-back period for calculating the allowance for loan losses to start from Q1 2012 to better account for the extended economic cycle, moving away from the previous five-year look-back period[29](index=29&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202%20-%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20And%20Results%20of%20Operations) Management attributes Q1 2019 net income of $4.7 million to a $2.1 million branch sale gain and 8.1% net interest income growth, with stable credit quality and strong capital ratios Q1 2019 vs Q1 2018 Performance Summary | (In millions) | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net interest income | $11.6 | $10.8 | | Gain on branch sale, net | $2.1 | $— | | Net income | $4.7 | $2.1 | - Excluding the after-tax gain of **$1.6 million** from the Branson branch sale, non-GAAP net income for Q1 2019 was **$3.0 million**, or **$0.50** per diluted share[179](index=179&type=chunk) - The net interest margin (fully taxable equivalent basis) decreased slightly to **3.26%** in Q1 2019 from **3.30%** in Q1 2018, as the cost of interest-bearing liabilities repriced faster than the yield on interest-earning assets[183](index=183&type=chunk)[199](index=199&type=chunk) [Results of Operations Analysis](index=40&type=section&id=RESULTS%20OF%20OPERATIONS%20ANALYSIS) Q1 2019 net income rose 123.3% to $4.7 million, primarily due to a $2.1 million branch sale gain, 8.1% net interest income growth, and a 3.7% decrease in non-interest expense - A key event in Q1 2019 was the sale of the Branson, MO branch, which resulted in a pre-tax gain of approximately **$2.1 million** (**$1.6 million** after tax)[188](index=188&type=chunk)[217](index=217&type=chunk) - Non-interest expense decreased by **$378 thousand** (**3.7%**) YoY, largely due to a **$580 thousand** reduction in salary expenses resulting from a lower employee count and a one-time bonus paid in Q1 2018[189](index=189&type=chunk)[218](index=218&type=chunk)[220](index=220&type=chunk) - The effective tax rate increased to **18.9%** in Q1 2019 from **16.4%** in Q1 2018, primarily due to higher taxable income which included the gain from the branch sale[226](index=226&type=chunk) [Lending and Credit Management](index=47&type=section&id=Lending%20and%20Credit%20Management) Total loans reached $1.15 billion by March 31, 2019, with stable credit quality, non-performing loans at 0.48%, and an allowance for loan losses of $11.8 million (1.03% of total loans) Loan Portfolio Composition | (In millions) | March 31, 2019 | % of Total | | :--- | :--- | :--- | | Commercial, financial, and agricultural | $204.8 | 17.7% | | Real estate construction | $135.8 | 11.8% | | Real estate mortgage | $782.2 | 67.7% | | Installment and other consumer | $31.9 | 2.8% | | **Total loans** | **$1,154.7** | **100.0%** | Non-Performing Assets Summary | (In millions) | March 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Non-performing loans | $5.6 | $5.6 | | Other real estate owned | $13.5 | $13.7 | | **Total non-performing assets** | **$19.1** | **$19.3** | | Non-performing loans to total loans | 0.48% | 0.49% | - The allowance for loan losses increased to **$11.8 million** at March 31, 2019, representing **1.03%** of total loans, up slightly from **1.02%** at year-end 2018[241](index=241&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity with $306.3 million in liquid assets and $1.1 billion in core deposits, while capital ratios exceeded regulatory minimums, confirming its well-capitalized status - Core deposits, a stable funding source, totaled **$1.1 billion** and represented **86.5%** of total deposits at March 31, 2019[256](index=256&type=chunk)[257](index=257&type=chunk) - As of March 31, 2019, the Company had an estimated total available future funding capacity of **$156.4 million** from the FHLB, Federal Reserve Bank, and Federal Funds lines[261](index=261&type=chunk) Regulatory Capital Ratios (Company) | Ratio | March 31, 2019 | Well-Capitalized Standard | Minimum Requirement | | :--- | :--- | :--- | :--- | | Total risk-based capital | 13.39% | N/A | 10.50% | | Tier 1 risk-based capital | 11.41% | N/A | 8.50% | | Common Equity Tier 1 | 8.65% | N/A | 7.00% | | Tier 1 leverage | 9.38% | N/A | 4.00% | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company actively manages interest rate risk, with simulations showing a 100 bps rate increase would boost net interest income by 2.90%, indicating an asset-sensitive position Net Interest Income Sensitivity Analysis | Hypothetical shift in interest rates (bps) | % Change in projected net interest income (March 31, 2019) | | :--- | :--- | | +200 | 2.93% | | +100 | 2.90% | | -100 | 2.76% | | -200 | 2.13% | - The company's interest rate risk profile shifted from December 31, 2018, to become more asset-sensitive, leading to higher projected net interest income in a rising rate environment[279](index=279&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal control over financial reporting during Q1 2019 - The principal executive and financial officers concluded that disclosure controls and procedures were effective as of March 31, 2019[283](index=283&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended March 31, 2019[284](index=284&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions incidental to its business, which management does not expect to materially affect financial condition or results - The company is a defendant in various legal actions incidental to its business, but management does not expect them to have a material adverse effect on financial results[157](index=157&type=chunk)[292](index=292&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) Exhibits filed with the Form 10-Q include articles of incorporation, bylaws, CEO/CFO certifications under Sarbanes-Oxley, and interactive data files (XBRL) - Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906, and interactive data files (XBRL)[293](index=293&type=chunk)[295](index=295&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10‑K 1934 For the fiscal year ended December 31, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to _________________. Commission file number: 0‑23636 HAWTHORN BANCSHARES, INC. (Exact name of registrant as specified in its charter) incorporation or organization) Missouri 43‑1626350 (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 O ...