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]
FINANCIAL
SUMMARY
(unaudited)
$000
Three Months Ended Statement of income
information: June 30, 2015 March 31, 2015 June
30, 2014 Total interest income $ 11,214 $ 11,198 $ 11,125 Total
interest expense 1,230 1,220 1,278 Net interest income 9,984 9,978
9,847 Provision for loan losses 250 0 0 Noninterest income 2,461
1,987 2,183 Noninterest expense 9,267 8,708 8,811 Pre-tax income
2,928 3,257 3,219 Income taxes 1,001 1,119 1,121 Net income $ 1,927
$ 2,138 $ 2,098
Earnings per share: Basic: $ 0.35 $ 0.39 $
0.39 Diluted: $ 0.35 $ 0.39 $ 0.39
For the Year Ended
Statement of income information: June 30, 2015
June 30, 2014 Total interest income $ 22,412 $ 22,089 Total
interest expense 2,450 2,588 Net interest income 19,962 19,501
Provision for loan losses 250 0 Noninterest income 4,448 4,269
Noninterest expense 17,975 17,518 Pre-tax income 6,185 6,252 Income
taxes 2,120 2,167 Net income $ 4,065 $ 4,085
Earnings per
share: Basic: $ 0.75 $ 0.75 Diluted: $ 0.75 $ 0.75
Key financial ratios: June 30, 2015
March 31, 2015 June 30, 2014
December 31, 2014 Return on average assets (YTD) 0.69
% 0.73 % 0.71 % 0.66 % Return on average common equity (YTD) 9.89 %
10.60 % 10.75 % 9.69 %
June 30, 2015 March
31, 2015 June 30, 2014 December 31,
2014 Allowance for loan losses to total loans 1.16 %
1.13 % 1.42 % 1.06 % Nonperforming loans to total loans 2.09 % 3.38
% 4.36 % 4.18 % Nonperforming assets to loans and foreclosed assets
3.49 % 4.67 % 5.68 % 5.49 % Allowance for loan losses to
nonperforming loans 55.30 % 33.48 % 32.53 % 25.26 % Allowance for
loan losses to nonperforming loans - excluding performing TDRs
83.48 % 54.85 % 46.30 % 49.72 %
Balance sheet
information: June 30, 2015 March 31, 2015
June 30, 2014 December 31, 2014
Loans, net of allowance for loan losses $ 853,668 $ 853,406 $
845,311 $ 852,114 Investment securities 247,403 239,594 219,615
203,720 Total assets 1,204,363 1,197,511 1,170,544 1,169,731
Deposits 988,866 993,111 988,450 969,514 Total stockholders’ equity
83,789 82,956 79,525 80,568 Book value per share $ 15.39 $
15.24 $ 14.61 $ 14.80 Market price per share $ 14.32 $ 12.88 $
12.04 $ 13.70
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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version on businesswire.com: http://www.businesswire.com/news/home/20150814005684/en/
Hawthorn BancsharesBruce Phelps, 573-761-6100Chief
Financial OfficerFAX: 573-761-6272www.HawthornBancshares.com
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