Hawthorn Bancshares Inc. (NASDAQ: HWBK), today
reported consolidated financial results for the Company for the
year ended December 31, 2014.
Net income available to common shareholders for the current year
was $7.7 million, or $1.46 per diluted common share, compared to
$4.4 million, or $0.83 per diluted common share, for 2013.
The return on average common equity was 9.69% and the return on
average assets was 0.66% for the current year compared to 5.95% and
0.43% for the prior year, respectively.
Commenting on earnings performance, Chairman David T. Turner
said, “I am pleased to report that net income for 2014 increased
76% over 2013 and reached its highest level since 2007. Our
earnings improvement for 2014 was primarily due to a $4.1 million
reduction in foreclosed property expenses and a $2.0 million
decrease in the provision for loan losses. Foreclosed property
expenses fell largely because we sold a significant portion of
foreclosed properties in 2013. Continuation of those sales in 2014
led to our lowest year-end ORE balance since 2009. The decrease in
the provision for loan losses resulted from the determination,
following continuing extensive evaluation of loan portfolio risk,
that no provision was required for 2014. Loan demand increased
during the current year and average balances were $19.1 million, or
2.3%, ahead of last year. The net interest margin remained strong
and exceeded peers at 3.72% for the current and prior year. Net
interest income for the current year was equal to the prior year in
spite of the on-going low interest rate environment. Non-interest
income was $2.1 million lower than the prior year primarily due to
reduced residential real estate mortgage activity and investment
security gains realized in the prior year; but the variance was
more than offset by the $4.1 million decrease in foreclosed
property expenses.”
Net Interest Income
Net interest income for the year ended December 31, 2014
improved slightly to $39.5 million compared to $39.3 million for
the year ended December 31, 2013. Average loans increased $19.1
million, or 2.3%, from the prior year, which contributed to the
continued strong net interest margin for the current year of 3.72%
equal to the prior year.
Non-Interest Income and Expense
Non-interest income for the year ended December 31, 2014 was
$8.7 million compared to $10.8 million for the year ended December
31, 2013. The $2.1 million decrease from the prior year was
primarily due to a $0.3 million, or 5.2%, decrease in service
charge income, a $1.1 million decrease in combined real estate
servicing fees and mortgage loan sales income resulting primarily
from the significant decrease in refinancing activity during the
current year and $0.8 million of securities gains recognized last
year.
Non-interest expense for the year ended December 31, 2014 was
$36.5 million compared to $40.8 million for the prior year 2013.
The $4.3 million decrease, or 10.4%, resulted primarily from a $4.1
million decrease in other real estate expense due to reduced
foreclosed asset levels and related expenses; a $0.4 million
decrease in processing expenses due to renegotiated contract
pricing with the Company’s core processing provider; and partially
offset by an increase in salaries and benefits expense of $0.8
million.
Allowance for Loan Losses
The Company’s level of non-performing loans was 4.18% of total
loans at December 31, 2014, compared to 4.21% at December 31, 2013.
During the year ended December 31, 2014, the Company recognized net
charge-offs of $4.6 million compared to $3.2 million for the year
ended December 31, 2013. The Company did not record a loan loss
provision during the current year compared to $2.0 million provided
to the allowance for loan losses during last year. The allowance
for loan losses at December 31, 2014 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. At December 31,
2013, the allowance for loan losses was $13.7 million, or 1.63% of
outstanding loans, 38.84% of non-performing loans and 57.35% of
nonperforming loans when excluding accruing TDR’s. The decrease in
the allowance for loan losses as a percentage of loans from 2013 to
the current year end was primarily due to charging off impaired
loans with specific reserves in 2014 that management determined to
be uncollectable. 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 December 31, 2014.
Financial Condition
Comparing December 31, 2014 balances with December 31, 2013,
total assets increased $29.6 million to $1.2 billion. The largest
driver in asset growth was loans, net of allowance for loan losses,
increasing 3.2% to $852.1 million driven by increasing loan demand.
Total deposits increased $13.0 million to $969.5 million and
Federal Home Loan Bank advances increased $19.0 million to $43.0
million at December 31, 2014. During the same period, stockholders’
equity increased 8.3% to $80.6 million, or 6.9% of total assets.
The total risk based capital ratio of 15.78% and the leverage ratio
of 9.42% at December 31, 2014, respectively, far exceed minimum
regulatory requirements of 8.00% and 3.00%, respectively.
[Tables follow]
FINANCIAL SUMMARY
(unaudited) $000
Three Months Ended Statement of income
information: December 31, 2014 September 30, 2014
December 31, 2013 Total interest income $ 11,214 $ 11,196 $
11,230 Total interest expense 1,217 1,240 1,316 Net interest income
9,997 9,956 9,914 Provision for loan losses 0 0 30 Noninterest
income 2,168 2,313 2,324 Noninterest expense 9,090 9,899 9,576
Pre-tax income 3,075 2,370 2,632 Income taxes 1,074 802 903 Net
income available to common shareholders $ 2,001 $ 1,568 $ 1,729
Earnings Per Common Share: Basic: $ 0.38 $ 0.30 $
0.33 Diluted: $ 0.38 $ 0.30 $ 0.33
For the Year
Ended Statement of income information: December 31,
2014 December 31, 2013 Total interest income $ 44,498 $
45,665 Total interest expense 5,044 6,342 Net interest income
39,454 39,323 Provision for loan losses 0 2,030 Noninterest income
8,749 10,866 Noninterest expense 36,507 40,763 Pre-tax income
11,696 7,396 Income taxes 4,042 2,422 Net income 7,654 4,974
Dividends & accretion on preferred stock issued to U.S.
Treasury 0 615 Net income available to common shareholders $ 7,654
$ 4,359
Earnings Per Common Share: Basic: $ 1.46 $
0.83 Diluted: $ 1.46 $ 0.83
Key financial
ratios: December 31, 2014 September 30, 2014
December 31, 2013 Return on average assets (YTD) 0.66 % 0.65
% 0.43 % Return on average common equity (YTD) 9.69 % 9.69 % 5.95 %
December 31, 2014 September 30, 2014
December 31, 2013 Allowance for loan losses to total loans
1.06 % 1.40 % 1.63 % Nonperforming loans to total loans 4.18 % 4.15
% 4.21 % Nonperforming assets to loans and foreclosed assets 5.49 %
5.51 % 5.87 % Allowance for loan losses to nonperforming loans
25.26 % 33.68 % 38.84 %
Balance sheet information:
December 31, 2014 September 30, 2014 December 31,
2013 Loans, net of allowance for loan losses
$
852,114 $ 848,952 $ 825,828 Investment securities 203,720 210,218
209,986 Total assets 1,169,731 1,156,526 1,140,122 Deposits 969,514
964,705 956,471 Total stockholders’ equity 80,568 80,521 74,380
Book value per common share $ 15.39 $ 15.38 $ 14.21 Market price
per common share $ 14.25 $ 13.75 $ 11.68
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, Raymore, 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.
Hawthorn BancsharesBruce Phelps, 573-761-6100Chief
Financial OfficerFax: 573-761-6272www.HawthornBancshares.com
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