Hawthorn Bancshares Inc. (NASDAQ: HWBK), today reported
consolidated financial results for the Company for the quarter
ended June 30, 2018.
Net income for the current quarter was $2.9
million, or $0.48 per diluted common share, compared to net income
of $2.1 million, or $0.35 per diluted common share, for the linked
quarter ended March 31, 2018 and net income of $1.9 million, or
$0.32 per diluted common share for the quarter ended June 30,
2017. Net income for the six months ended June 30, 2018 was
$5.0 million, or $0.83 per diluted common share, compared to $4.0
million, or $0.66 per diluted common share for the six months ended
June 30, 2017.
The year-to-date annualized return on average
common equity for the current year was 11.00% and the annualized
return on average assets was 0.70% compared to 8.65% and 0.61%,
respectively, for the prior year.
Commenting on earnings performance, Chairman
David T. Turner said, “Hawthorn reported earnings per diluted
common share for the current quarter of $0.48, which was an
increase of $0.13, or 37.1% over the linked quarter, and an
increase of $0.16, or 50.0% over the prior year quarter.
Year-to-date net income has increased $1.0 million or 24.3% over
the prior year-to-date level. These increases have resulted
primarily from continued loan growth and the positive impact of the
lower corporate income tax rate for 2018 enacted by the Tax Cuts
and Jobs Act (the “Tax Act”). Gross loans increased $9.9
million, or 0.9% from the linked quarter-end, $59.2 million, or
5.7%, from the prior year quarter-end, and they have increased
$229.1 million, or 26.5%, since year-end 2015. This growth was
accomplished without a deterioration in credit quality as
nonperforming loans to total loans improved from 1.19% at 12/31/15
to 0.94% at 6/30/18. Our current year-to-date net interest margin
of 3.27% continues to be squeezed by increased interest expense
during the recent rising interest rate environment although the
decline has slowed to just 2 basis points from the prior linked
quarter compared to the 22 basis points decline since the prior
year quarter. Non-interest income of $2.5 million for the current
quarter was $0.2 million above the prior linked quarter and $0.4
million higher than the prior year quarter. Non-interest
expense of $9.9 million was $0.4 million lower than the prior
linked quarter and $0.2 million higher than the prior year
quarter. Year-to-date non-interest expense of $20.2 million
was $1.2 million, or 6.0%, higher than the prior year-to-date
level. This increase over the prior year includes an increase in
salaries and benefits of $1.1 million, or 10.2%, due to bonuses of
$1,000 for full-time staff and $500 for part-time staff paid in the
first quarter 2018 as a result of the benefits accruing from the
enactment of the Tax Act; annual cost of living increases averaging
3%; and higher medical and pension benefit costs. As of June
30, 2018, we have been able to reduce our full-time equivalent head
count by 13, or approximately 4%, since December 31, 2017.
The cost savings from this reduction will be more fully realized
during the remainder of this year. While this is certainly
positive, we understand that additional initiatives will be
required to narrow the gap between our efficiency ratio and that of
our peers.”
Net Interest Income
Net interest income for the quarter ended June
30, 2018 was $11.0 million compared to $10.8 million for the prior
linked quarter and $10.8 million for the prior year quarter.
Year-to-date 2018 net interest income of $21.8 million was $0.5
million, or 2.2%, higher than the prior year-to-date amount of
$21.3 million. The increase in net interest income from the prior
year was primarily due to an increase in average loans of $73.2
million, or 7.3%. The year-to-date net interest margin of 3.27%
declined 2 basis points from the prior linked quarter and 22 basis
points from the prior year. These decreases are primarily due
to the cost of average interest bearing liabilities increasing
faster than the yield on average earning assets. The majority
of these increased funding costs has occurred in our most stable
funding base of average total deposits, which have grown by $111.8
million, or 10.7%, from the prior year.
Non-Interest Income and
Expense
Non-interest income for the quarter ended June
30, 2018 was $2.5 million compared to $2.3 million for the prior
linked quarter ended March 31, 2018 and $2.1 million for the prior
year quarter ended June 30, 2017. The net increase from the
prior year quarter was primarily due to an increase of $0.2 million
in combined real estate loan income and $0.1 million of securities
gains recognized in the current quarter. Non-interest income
for the six months ended June 30, 2018 was $4.8 million, a $0.3
million increase, or 6.2%, over the prior year-to-date level of
$4.5 million. Contributing to this increase was additional
service charge income of $0.1 million and securities gains of $0.2
million.
Non-interest expense was $9.9 million for the
quarter ended June 30, 2018, compared to $10.3 million for the
prior linked quarter and $9.7 million for the prior year quarter
ended June 30, 2017. The $0.4 million decrease from the prior
linked quarter was primarily due to a $0.2 million reduction in
salaries and benefits resulting from the bonuses paid to all staff
in the prior linked quarter resulting from the enactment of the Tax
Act. Non-interest expense for the six months ended June 30,
2018 was $20.2 million, an increase of $1.1 million, or 6.0%, from
the six months ended June 30, 2017. The majority of this
increase was caused by salaries and benefits increasing $1.1
million, or 10.2%, from the prior year-to-date to the current
year-to-date. These compensation costs increased due to the
aforementioned bonuses paid to all staff resulting from the Tax Act
lowering corporate income tax rates; annual cost of living
increases; and higher medical and pension benefit costs.
Allowance for Loan Losses
The Company’s level of non-performing loans at
June 30, 2018 was 0.94% of total loans compared to 1.00% at
December 31, 2017 and 0.97% at June 30, 2017. For the six months
ended June 30, 2018, the Company recorded net charge-offs of
$390,000, or 0.04% of average loans, compared to net charge-offs of
$21,000 for the six months ended June 30, 2017. The allowance
for loan losses at June 30, 2018 was $11.2 million, or 1.02% of
outstanding loans, 108.93% of non-performing loans and 176.48% of
nonperforming loans when excluding accruing TDR’s. At December 31,
2017, the allowance for loan losses was $10.9 million, or 1.02% of
outstanding loans, 101.57% of non-performing loans and 180.87% of
nonperforming loans when excluding accruing TDR’s. The allowance
for loan losses represents management’s best estimate of probable
losses inherent in the loan portfolio and is commensurate with
risks in the loan portfolio as of June 30, 2018.
Financial Condition
Comparing June 30, 2018 balances with December
31, 2017, total assets increased $19.4 million to $1.5 billion.
This asset growth was primarily due to an increase in gross loans
of $25.8 million, or 2.4%, partially offset by a decrease in cash
and cash equivalents of $12.1 million. Total deposits increased
$57.6 million, or 5.1%, to $1.2 billion while FHLB advances and
other borrowings decreased $47.1 million to $74.3 million at June
30, 2018. Stockholders’ equity at June 30, 2018 was $93.1 million,
or 6.4% of total assets. The total risk based capital ratio of
13.41% and the leverage ratio of 9.09% at June 30, 2018,
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, |
|
|
March 31, |
|
|
June 30, |
|
|
|
2018 |
|
|
2018 |
|
|
2017 |
|
Total interest income |
$ |
14,288 |
|
$ |
13,544 |
|
$ |
12,681 |
|
Total interest expense |
|
3,261 |
|
|
2,790 |
|
|
1,861 |
|
Net
interest income |
|
11,027 |
|
|
10,754 |
|
|
10,820 |
|
Provision for loan losses |
|
450 |
|
|
300 |
|
|
330 |
|
Noninterest income |
|
2,486 |
|
|
2,301 |
|
|
2,099 |
|
Noninterest expense |
|
9,931 |
|
|
10,254 |
|
|
9,687 |
|
Pre-tax income |
|
3,132 |
|
|
2,501 |
|
|
2,902 |
|
Income taxes |
|
225 |
|
|
411 |
|
|
983 |
|
Net
income |
$ |
2,907 |
|
$ |
2,090 |
|
$ |
1,919 |
|
Earnings per
share: |
|
|
|
|
|
|
|
|
|
Basic: |
$ |
0.48 |
|
$ |
0.35 |
|
$ |
0.32 |
|
Diluted: |
$ |
0.48 |
|
$ |
0.35 |
|
$ |
0.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of
income information: |
|
|
|
For the Six Months Ended |
|
|
|
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
Total interest income |
|
|
|
$ |
27,832 |
|
$ |
24,781 |
|
Total interest expense |
|
|
|
|
6,050 |
|
|
3,474 |
|
Net
interest income |
|
|
|
|
21,782 |
|
|
21,307 |
|
Provision for loan losses |
|
|
|
|
750 |
|
|
680 |
|
Noninterest income |
|
|
|
|
4,787 |
|
|
4,506 |
|
Noninterest expense |
|
|
|
|
20,186 |
|
|
19,037 |
|
Pre-tax income |
|
|
|
|
5,633 |
|
|
6,096 |
|
Income taxes |
|
|
|
|
636 |
|
|
2,076 |
|
Net
income |
|
|
|
$ |
4,997 |
|
$ |
4,020 |
|
Earnings per
share: |
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
$ |
0.83 |
|
$ |
0.66 |
|
Diluted: |
|
|
|
$ |
0.83 |
|
$ |
0.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key financial
ratios: |
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
|
2018 |
|
|
2018 |
|
|
2017 |
|
Return on average assets (YTD) |
|
0.70 |
% |
|
0.60 |
% |
|
0.61 |
% |
Return on average common equity (YTD) |
|
11.00 |
% |
|
9.32 |
% |
|
8.65 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
|
2018 |
|
|
2018 |
|
|
2017 |
|
Allowance for loan losses to total loans |
|
1.02 |
% |
|
1.01 |
% |
|
1.02 |
% |
Nonperforming loans to total loans |
|
0.94 |
% |
|
0.93 |
% |
|
0.97 |
% |
Nonperforming assets to loans |
|
|
|
|
|
|
|
|
|
and
foreclosed assets |
|
2.12 |
% |
|
2.13 |
% |
|
2.23 |
% |
Allowance for loan losses to |
|
|
|
|
|
|
|
|
|
nonperforming loans |
|
108.93 |
% |
|
108.05 |
% |
|
105.36 |
% |
Allowance for loan losses to nonperforming |
|
|
|
|
|
|
|
|
|
loans - excluding performing TDRs |
|
176.48 |
% |
|
198.32 |
% |
|
223.27 |
% |
|
|
|
|
|
|
|
|
|
|
Balance sheet
information: |
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
|
2018 |
|
|
2018 |
|
|
2017 |
|
Loans, net of allowance for loan losses |
$ |
1,082,983 |
|
$ |
1,073,379 |
|
$ |
1,024,475 |
|
Investment securities |
|
236,924 |
|
|
225,445 |
|
|
227,151 |
|
Total assets |
|
1,448,650 |
|
|
1,452,908 |
|
|
1,383,550 |
|
Deposits |
|
1,183,386 |
|
|
1,180,380 |
|
|
1,082,687 |
|
Total stockholders’ equity |
|
93,133 |
|
|
91,271 |
|
|
95,147 |
|
|
|
|
|
|
|
|
|
|
|
Book
value per share |
$ |
15.46 |
|
$ |
15.14 |
|
$ |
15.67 |
|
Market price per share |
$ |
21.90 |
|
$ |
19.84 |
|
$ |
20.14 |
|
Net
interest Spread (YTD) |
$ |
3.05 |
|
$ |
3.08 |
|
$ |
3.34 |
|
Net
interest Margin (YTD) |
|
3.27 |
% |
|
3.29 |
% |
|
3.49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, Osceola, Warsaw,
Belton, Drexel, Harrisonville, California and St. Robert.
Contact: Bruce PhelpsChief Financial OfficerTEL:
573.761.6100 FAX: 573.761.6272www.HawthornBancshares.com
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. Such
forward-looking statements include, but are not limited to,
statements regarding the estimated effects of the Tax Act. It is
important to note that actual results could differ materially from
those projected in such forward-looking statements. Factors that
could cause the Company's estimated effects of the Tax Act to
differ materially include, but are not limited to, changes in
interpretations and assumptions the Company has made with respect
to the anticipated effects of the Tax Act, federal tax regulations
and guidance that may be issued by the U.S. Department of Treasury
and future actions by the Company resulting from the Tax Act.
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.
Hawthorn Bancshares (NASDAQ:HWBK)
Historical Stock Chart
From Jun 2024 to Jul 2024
Hawthorn Bancshares (NASDAQ:HWBK)
Historical Stock Chart
From Jul 2023 to Jul 2024