Hawthorn Bancshares Inc. (NASDAQ: HWBK), today reported consolidated
financial results for the Company for the second quarter ended June 30,
2015.
Net income for the second quarter 2015 was $1.9 million, or $0.35 per
diluted common share, compared to $2.1 million, or $0.39 per diluted
common share, for first quarter 2015, and $2.1 million, or $0.39 per
diluted common share, for the second quarter 2014. For the six months
ended June 30, 2015, net income was $4.1 million, or $0.75 per diluted
common share, compared to $4.1 million, or $0.75 per diluted common
share, for the prior year-to-date.
The return on average common equity was 9.21% and the return on average
assets was 0.65% for the second quarter ended June 30, 2015 compared to
10.83% and 0.72% for the second quarter ended June 30, 2014,
respectively. For the current year, return on average common equity was
9.89% and the return on average assets was 0.69% compared to 10.75% and
0.71% for the prior year-to date, respectively.
Commenting on earnings performance, Chairman David T. Turner said,
“Hawthorn continues to report solid earnings performance with quarterly
earnings per diluted common share decreasing slightly from the first
quarter 2015 and the prior year quarter. However, on a year-to date
basis, earnings have matched the prior year at $0.75 per diluted common
share. Average loans increased $4.5 million during the current quarter
and average loan balances for the current year were $13.9 million, or
1.6%, ahead of last year. The net interest margin contracted modestly to
3.63% for the current quarter versus 3.71% for the prior quarter and
3.72% for the prior year quarter while it is only 4 basis points below
the prior year-to-date level at 3.67%. Net interest income for the
current quarter was equal to the linked quarter and the prior year
quarter but for the current year it was $0.5 million, or 2.4%, higher
than the prior year. We continue to maintain both our net interest
margins and net interest income levels during the extended low interest
rate environment. A loan loss provision of $0.3 million was recorded in
the current quarter, while no provision was made for the prior linked
quarter or prior year quarter. The increase in the provision for loan
losses resulted primarily from an increase in the specific reserves
required for impaired loans mostly related to one loan relationship.
Non-interest income of $2.5 million for the current quarter was $0.5
million ahead of the prior quarter and $0.3 million above the prior year
quarter primarily due to increased residential real estate mortgage
income. Non-interest expense of $9.3 million was $0.6 million, or 6.4%,
above the linked prior quarter, primarily due to higher real estate
foreclosure expenses, and $0.5 million, or 5.2%, higher than the prior
year quarter.”
Net Interest Income
Net interest income was $10.0 million for both the second and first
quarters of 2015 and $9.8 million for the second quarter 2014. Average
loans increased $13.9 million, or 1.6%, from the prior year, which
contributed to the continued strong net interest margin for the current
year of 3.67%.
Non-Interest Income and Expense
Non-interest income for the second quarter ended June 30, 2015 was $2.5
million compared to $2.2 million for the second quarter ended June 30,
2014. The $0.3 million increase from the prior year was primarily due to
a $0.3 million increase in combined real estate servicing fees and
mortgage loan sales income resulting primarily from an increase in
refinancing activity during the current year.
Non-interest expense was $9.3 million for the second quarter ended June
30, 2015 compared to $8.8 million for the second quarter 2014. The $0.5
million increase, or 5.2%, resulted primarily from a $0.2 million
increase, or 4.3%, in salaries and employee benefits coupled with a $0.1
million increase in legal, examination and professional fees.
Allowance for Loan Losses
The Company’s level of non-performing loans improved significantly
during the current year to 2.09% of total loans at June 30, 2015,
compared to 3.38% at March 31, 2015 and 4.18% at December 31, 2014.
During the second quarter ended June 30, 2015, the Company recognized
net charge-offs of $25,000 compared to net charge-offs of $695,000 for
the second quarter ended June 30, 2014. For the six months ended June
30, 2015, net recoveries of $637,000 were recorded compared to net
charge-offs of $1.6 million for the prior year. A $250,000 provision for
loan losses was recorded during the second quarter ended June 30, 2015
while no loan loss provision was recorded in the linked prior quarter or
the prior year quarter. The current quarter loan loss provision resulted
primarily from additional specific reserves required for impaired loans
mostly related to one loan relationship. The allowance for loan losses
at June 30, 2015 was $10.0 million, or 1.16% of outstanding loans,
55.30% of non-performing loans and 83.48% of nonperforming loans when
excluding accruing TDR’s. At December 31, 2014, the allowance for loan
losses was $9.1 million, or 1.06% of outstanding loans, 25.26% of
non-performing loans and 49.72% of nonperforming loans when excluding
accruing TDR’s. The allowance for loan losses represents management’s
best estimate of probable losses contained in the loan portfolio and is
commensurate with risks in the loan portfolio as of June 30, 2015.
Financial Condition
Comparing June 30, 2015 balances with December 31, 2014, total assets
increased $34.6 million to $1.2 billion. The largest driver in asset
growth was investment securities increasing $40.5 million, or 20.3%
Total deposits increased $19.4 million to $988.9 million and federal
funds purchased and securities sold under agreements to repurchase
increased $7.9 million to $25.8 million at June 30, 2015. During the
same period, stockholders’ equity increased 4.0% to $83.8 million, or
7.0% of total assets. The total risk based capital ratio of 14.97% and
the leverage ratio of 9.36% at June 30, 2015, respectively, far exceed
minimum regulatory requirements of 8.00% and 4.00%, respectively.
[Tables follow]
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FINANCIAL SUMMARY
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(unaudited)
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$000
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Three Months Ended
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Statement of income information:
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June 30, 2015
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March 31, 2015
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June 30, 2014
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Total interest income
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$
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11,214
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$
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11,198
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$
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11,125
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Total interest expense
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1,230
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1,220
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1,278
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Net interest income
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9,984
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9,978
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9,847
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Provision for loan losses
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250
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0
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0
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Noninterest income
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2,461
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1,987
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2,183
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Noninterest expense
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9,267
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8,708
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8,811
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Pre-tax income
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2,928
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3,257
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3,219
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Income taxes
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1,001
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1,119
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1,121
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Net income
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$
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1,927
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$
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2,138
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$
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2,098
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Earnings per share:
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Basic:
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$
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0.35
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$
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0.39
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$
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0.39
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Diluted:
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$
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0.35
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$
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0.39
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$
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0.39
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For the Year Ended
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Statement of income information:
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June 30, 2015
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June 30, 2014
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Total interest income
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$
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22,412
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$
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22,089
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Total interest expense
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2,450
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2,588
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Net interest income
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19,962
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19,501
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Provision for loan losses
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250
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0
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Noninterest income
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4,448
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4,269
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Noninterest expense
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17,975
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17,518
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Pre-tax income
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6,185
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6,252
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Income taxes
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2,120
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2,167
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Net income
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$
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4,065
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$
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4,085
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Earnings per share:
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Basic:
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$
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0.75
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$
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0.75
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Diluted:
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$
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0.75
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$
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0.75
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Key financial ratios:
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June 30, 2015
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March 31, 2015
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June 30, 2014
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December 31, 2014
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Return on average assets (YTD)
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0.69
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%
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0.73
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%
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0.71
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%
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0.66
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%
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Return on average common equity (YTD)
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9.89
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%
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10.60
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%
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10.75
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%
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9.69
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%
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June 30, 2015
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March 31, 2015
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June 30, 2014
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December 31, 2014
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Allowance for loan losses to total loans
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1.16
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%
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1.13
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%
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1.42
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%
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1.06
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%
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Nonperforming loans to total loans
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2.09
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%
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3.38
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%
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4.36
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%
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4.18
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%
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Nonperforming assets to loans and foreclosed assets
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3.49
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%
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4.67
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%
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5.68
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%
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5.49
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%
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Allowance for loan losses to nonperforming loans
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55.30
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%
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33.48
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%
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32.53
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%
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25.26
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%
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Allowance for loan losses to nonperforming loans -
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excluding performing TDRs
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83.48
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%
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54.85
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%
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46.30
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%
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49.72
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%
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Balance sheet information:
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June 30, 2015
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March 31, 2015
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June 30, 2014
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December 31, 2014
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Loans, net of allowance for loan losses
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$
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853,668
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$
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853,406
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$
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845,311
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$
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852,114
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Investment securities
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247,403
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239,594
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219,615
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203,720
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Total assets
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1,204,363
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1,197,511
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1,170,544
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1,169,731
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Deposits
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988,866
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993,111
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988,450
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969,514
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Total stockholders’ equity
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83,789
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82,956
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79,525
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80,568
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Book value per share
|
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$
|
15.39
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$
|
15.24
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$
|
14.61
|
|
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$
|
14.80
|
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Market price per share
|
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$
|
14.32
|
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$
|
12.88
|
|
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$
|
12.04
|
|
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$
|
13.70
|
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About Hawthorn Bancshares
Hawthorn Bancshares, Inc., a financial-bank holding company
headquartered in Jefferson City, Missouri, is the parent company of
Hawthorn Bank of Jefferson City with locations in the Missouri
communities of Lee's Summit, Liberty, Springfield, Branson,
Independence, Columbia, Clinton, Windsor, Collins, Osceola, Warsaw,
Belton, Drexel, Harrisonville, California and St. Robert.
Statements made in this press release that suggest Hawthorn
Bancshares' 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 and 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.
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