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Hawthorn Bancshares Reports First Quarter 2025 Results

1. HWBK's Q1 2025 net income rose by 20.8% year-over-year. 2. Earnings per share increased to $0.77, up 22% from Q1 2024. 3. Loan growth of 1.2% and deposits up by 2.8% annualized reported. 4. Non-performing assets to total loans improved significantly to 0.21%. 5. Quarterly cash dividend increased by 5.3% to $0.20 per share.

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Why Bullish?

HWBK's solid earnings growth and improved loan deposits positively signal investor confidence. Historical performance shows that consistent quarterly gains typically lead to stock price appreciation.

How important is it?

The article highlights key financial improvements and a dividend increase, crucial for investors' confidence. These factors play a significant role in stock price dynamics.

Why Short Term?

The immediate positive news on earnings and dividends is likely to boost the stock in the upcoming quarter based on investor reactions to strong financials.

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JEFFERSON CITY, Mo., April 30, 2025 (GLOBE NEWSWIRE) -- Hawthorn Bancshares, Inc. (NASDAQ: HWBK), (the “Company”), the bank holding company for Hawthorn Bank, reported first quarter 2025 net income of $5.4 million, or earnings per diluted share (“EPS”) of $0.77. First Quarter 2025 Results Net income improved $0.9 million, or 20.8%, to $5.4 million from the first quarter 2024 (the "prior year quarter") and the efficiency ratio improved to 66.64% compared to 70.78% for the prior year quarterEPS of $0.77, an improvement of $0.14 per share, or 22%, from the prior year quarterNet interest margin, fully taxable equivalent ("FTE") improved in the first quarter 2025 to 3.67% compared to 3.55% for fourth quarter 2024 (the "prior quarter”)Provision for credit losses were $0.6 million lower than the prior quarter and $0.1 million lower than the prior year quarterReturn on average assets and equity of 1.20% and 14.29%, respectivelyLoans increased $4.2 million, or 1.2% annualized, and deposits increased $10.7 million, or 2.8% annualized, compared to the prior quarterInvestments increased $2.8 million, or 5.0% annualized, compared to the prior quarterCredit quality remained strong with non-performing assets to total loans of 0.21% improving from 0.69% in the prior year quarterRemained well capitalized with total risk-based capital of 14.94%Book Value per share increased $2.54 to $21.97, or 13%, compared to the prior year quarter Brent Giles, Chief Executive Officer of Hawthorn Bancshares, Inc. commented, “Our strong first quarter aligns with our focus on growing core relationships and improving financial results. We continue to enhance our products, operations and resources to serve the customers in our communities and collectively achieve success." (unaudited)$000, except per share data  March 31, December 31, March 31, 2025 2024 2024Balance sheet information     Total assets$1,883,423 $1,825,185 $1,833,760Loans held for investment 1,470,323  1,466,160  1,518,853Investment securities 226,581  223,801  189,741Deposits 1,543,888  1,533,182  1,527,874Total stockholders’ equity$153,411 $149,547 $136,620      Market and per share data     Book value per share$21.97 $21.36 $19.43Market price per share$28.23 $28.35 $20.43Diluted earnings per share (QTR)$0.77 $0.66 $0.63 Financial Results for the First Quarter Earnings Net income for the first quarter 2025 was $5.4 million, an increase of $0.8 million, or 17.1%, from the prior quarter, and an increase of $0.9 million, or 20.8%, from the prior year quarter. EPS improved to $0.77 for the first quarter 2025 compared to $0.66 for the prior quarter and $0.63 for the prior year quarter. Net Interest Income and Net Interest Margin Net interest income for the first quarter 2025 was $15.3 million, a decrease of $0.1 million from the prior quarter, and an increase of $0.5 million from the prior year quarter. Interest income decreased $0.6 million in the current quarter compared to the prior year quarter, driven primarily by lower average interest earning assets, while interest expense decreased $1.1 million compared to the prior year quarter. Net interest margin, on an FTE basis, was 3.67% for the current quarter, compared to 3.55% for the prior quarter, and 3.39% for the prior year quarter. The yield earned on average loans held for investment increased to 5.89%, on an FTE basis, for the first quarter 2025, compared to 5.86% for the prior quarter and 5.75% for the prior year quarter. The average cost of deposits was 2.44% for the first quarter 2025, compared to 2.49% for the prior quarter and 2.61% for the prior year quarter. Non-interest bearing demand deposits as a percent of total deposits was 27.7% as of March 31, 2025, compared to 25.1% and 25.7% at December 31, 2024 and March 31, 2024, respectively. Non-interest Income Total non-interest income for the first quarter 2025 was $3.5 million, a decrease of $0.1 million, or 1.7%, from the prior quarter, and an increase of $0.4 million, or 14.7%, from the prior year quarter. Compared to the prior quarter, the decrease in non-interest income was primarily due to lower gains on other real estate owned. The increase in the current quarter compared to the prior year quarter was primarily due to an increase in earnings on bank owned life insurance partially offset by a decrease in the gains on sale of mortgage loans. Non-interest Expense Total non-interest expense for the first quarter 2025 was $12.5 million, a decrease of $0.4 million, or 3.3%, from the prior quarter, and a decrease of $0.1 million, or 0.6%, from the prior year quarter. The first quarter 2025 efficiency ratio was 66.64% compared to 68.48% and 70.78% for the prior quarter and prior year quarter, respectively. The improvement in the current quarter compared to the prior quarter was primarily due to higher net interest margin and lower non-interest expenses in the current quarter. Loans Loans held for investment increased $4.2 million, or 1.2% annualized, to $1.5 billion as of March 31, 2025 compared to December 31, 2024, and decreased $48.5 million, or 12.9% annualized, from March 31, 2024. Investments Investments increased $2.8 million, or 1.2%, to $226.6 million as of March 31, 2025 compared to December 31, 2024, and increased $36.8 million, or 19.4%, from March 31, 2024. Asset Quality Non-performing assets to total loans was 0.21% at March 31, 2025, compared to 0.29% and 0.69% at December 31, 2024 and March 31, 2024, respectively. Non-performing assets totaled $3.1 million at March 31, 2025, compared to $4.2 million and $10.5 million at December 31, 2024 and March 31, 2024, respectively. The decrease in non-performing assets in the current quarter compared to the prior year quarter was primarily the result of the prior year quarter including a significant commercial loan charge-off and the foreclosure and subsequent sale of two commercial real estate loans. In the first quarter 2025, the Company had net loan charge-offs of $0.02 million, or 0% of average loans, compared to net loan charge-offs of $0.04 million, or 0.01% of average loans, and $0.07 million, or 0.02% of average loans, in the prior quarter and prior year quarter, respectively. The Company released provision for credit losses of $0.3 million for the first quarter 2025 compared to providing a $0.3 million provision in the prior quarter, and a release of provision of $0.2 million for the prior year quarter. The allowance for credit losses at March 31, 2025 was $21.8 million, or 1.48% of outstanding loans, and 885.01% of non-performing loans. At December 31, 2024, the allowance for credit losses was $22.0 million, or 1.50% of outstanding loans, and 802.48% of non-performing loans. At March 31, 2024, the allowance for credit losses was $23.7 million, or 1.56% of outstanding loans, and 276.93% of non-performing loans. The allowance for credit losses represents management’s best estimate of expected losses inherent in the loan portfolio and is commensurate with risks in the loan portfolio as of March 31, 2025 as determined by management. Deposits Total deposits at March 31, 2025 were $1.5 billion, an increase of $10.7 million, or 2.8% annualized, from December 31, 2024, and an increase of $16.0 million, or 4.2% annualized, from March 31, 2024. The increase in deposits at March 31, 2025 as compared to March 31, 2024 was primarily a result of an increase in demand and savings deposits. Capital The Company maintains its “well capitalized” regulatory capital position. At March 31, 2025, capital ratios were as follows: total risk-based capital to risk-weighted assets 14.94%; tier 1 capital to risk-weighted assets 13.69%; tier 1 leverage 11.64%; and common equity to assets 8.15%. Pursuant to the Company's 2019 Repurchase Plan, management is given discretion to determine the number and pricing of the shares to be purchased under the plan, as well as the timing of any such purchases. The Company repurchased 15,856 common shares under the repurchase plan during the first quarter of 2025 at an average cost of $27.51 per share totaling $0.4 million. As of March 31, 2025, $3.5 million remains available for share repurchases pursuant to the plan. On April 30, 2025, the Company's Board of Directors approved a quarterly cash dividend of $0.20 per common share, payable July 1, 2025 to shareholders of record at the close of business on June 15, 2025, which represents an increase of $0.01 per common share, or 5.3%, from the prior year quarter's dividend. [Tables follow] FINANCIAL SUMMARY(unaudited)$000, except per share data  Three Months Ended March 31, December 31, March 31,Statement of income information: 2025   2024  2024 Total interest income$23,458  $23,924 $24,052 Total interest expense 8,164   8,578  9,304 Net interest income 15,294   15,346  14,748 (Release of) provision for credit losses (340)  300  (230)Non-interest income 3,463   3,522  3,019 Investment securities (losses) gains, net (2)  3  — Non-interest expense 12,499   12,921  12,575 Pre-tax income 6,596   5,650  5,422 Income taxes 1,213   1,053  966 Net income$5,383  $4,597 $4,456 Earnings per share:     Basic:$0.77  $0.66 $0.63 Diluted:$0.77  $0.66 $0.63  FINANCIAL SUMMARY (continued) (unaudited) $000  As of or for the three months ended March 31, December 31, March 31,  2025   2024   2024 Performance Ratios     Return on average assets 1.20%  1.00%  0.97%Return on average common equity 14.29%  12.49%  13.12%Net interest margin (FTE) 3.67%  3.55%  3.39%Efficiency ratio 66.64%  68.48%  70.78%      Asset Quality Ratios     Non-performing loans (a)$2,461  $2,747  $8,549 Non-performing assets$3,129  $4,193  $10,486 Net charge-offs$18  $43  $69 Net Charge-offs to Average Loans (b) 0.00%  0.01%  0.02%Allowance for credit losses to total loans 1.48%  1.50%  1.56%Non-performing loans to total loans 0.17%  0.19%  0.56%Non-performing assets to loans 0.21%  0.29%  0.69%Non-performing assets to total assets 0.17%  0.23%  0.57%Allowance for credit losses on loans to     non-performing loans 885.01%  802.48%  276.93%      Capital Ratios     Average stockholders' equity to average total assets 8.42%  8.03%  7.41%Period-end stockholders' equity to period-end assets 8.15%  8.19%  7.45%Total risk-based capital ratio 14.94%  14.79%  13.92%Tier 1 risk-based capital ratio 13.69%  13.54%  12.51%Common equity Tier 1 capital 10.64%  10.49%  9.68%Tier 1 leverage ratio 11.64%  11.46%  10.71% (a) Non-performing loans include loans 90-days past due and accruing and non-accrual loans.(b) Annualized About Hawthorn BancsharesHawthorn Bancshares, Inc., a financial-bank holding company headquartered in Jefferson City, Missouri, is the parent company of Hawthorn Bank, which has served families and businesses for more than 150 years. Hawthorn Bank has multiple locations, including in the greater Kansas City metropolitan area, Jefferson City, Columbia, Springfield, and Clinton. Contact: Hawthorn Bancshares, Inc.Brent M. Giles Chief Executive OfficerTEL: 573.761.6100www.HawthornBancshares.com The financial results in this press release reflect preliminary, unaudited results, which are not final until the Company's Quarterly Report on Form 10-Q is filed. Statements made in this press release that suggest the Company's or management's intentions, hopes, beliefs, expectations, or predictions of the future include "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. It is important to note that actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those projected in such forward-looking statements is contained from time to time in the Company's quarterly and annual reports filed with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this communication, and the Company disclaims any obligation to update any forward-looking statement or to publicly announce the results of any revisions to any of the forward-looking statements included herein, except as required by law.

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