Hawthorn Bancshares(US:HWBK)2025-11-07 20:24Financial 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].