Hawthorn Bancshares Inc. (NASDAQ: HWBK), today
reported consolidated financial results for the Company for the
first quarter ended March 31, 2015.
Net income for the current quarter was $2.1 million, or $0.41
per diluted share, compared to $2.0 million, or $0.38 per diluted
share, for the linked quarter ended December 31, 2014 and $2.0
million, or $0.38 per diluted share, for the first quarter ended
March 31, 2014.
The year-to-date annualized return on average common equity was
10.60% and the annualized return on average assets was 0.73% for
the current quarter compared with 9.71% and 0.69%, respectively,
for the prior linked quarter and 10.67% and 0.70%, respectively,
for the prior year quarter.
Commenting on earnings performance, Chairman David T. Turner
said, “Hawthorn continues to report positive earnings performance
with quarterly earnings per diluted share increasing $0.03 from the
linked fourth quarter 2014 and the prior year quarter. Loan demand
further increased during the current quarter and quarterly average
balances were $15.1 million, or 1.8%, ahead of last year’s first
quarter. The net interest margin remained strong at 3.71% for the
current quarter, comparable to prior periods, while net interest
income for the current quarter was equal to the linked quarter and
exceeded the prior year quarter by $0.3 million, or 3.4%. We have
been able to maintain both our net interest margins and net
interest income levels throughout the extended low interest rate
environment. No loan loss provision was required for the
current quarter, prior linked quarter or prior year quarter
following continuing extensive evaluation of loan portfolio
risk. Non-interest income of $2.0 million for the current
quarter was slightly lower than the linked prior quarter and the
prior year quarter primarily due to reduced residential real estate
mortgage income. Non-interest expense of $8.7 million was $0.4
million, or 4.2%, below the linked prior quarter, primarily due to
lower real estate foreclosure gains and expenses, and unchanged
from the prior year quarter.”
Net Interest Income
Net interest income for the quarter ended March 31, 2015 of
$10.0 million was unchanged from the linked quarter ended December
31, 2014 and $0.3 million ahead of the same quarter in 2014.
Average loans were relatively unchanged from the linked December
2014 quarter and $15.1 million, or 1.8%, ahead of the prior year
quarter which contributed to the continued strong net interest
margin for the current quarter of 3.71% versus 3.72% for the March
2014 quarter.
Non-Interest Income and Expense
Non-interest income for the three months ended March 31, 2015
was $2.0 million compared to $2.2 million for the December 2014
quarter and $2.1 million for the same period in 2014. The variances
from the linked quarter and prior year quarter were mostly due to
moderate decreases in combined real estate servicing income and
mortgage loan sales.
Non-interest expense was $8.7 million for the quarter ended
March 31, 2015 compared to $9.1 million for the linked December
2014 quarter and $8.7 million for the prior year quarter. The
decrease from the linked quarter was primarily due to a $0.4
million decrease in real estate foreclosure gains and expense.
Compared to the prior year quarter, salaries and benefits were $0.3
million higher while real estate foreclosure gains and expense
decreased $0.3 million due to lower losses recognized on foreclosed
assets during the current year.
Allowance for Loan Losses
The Company’s level of non-performing loans was 3.38% of total
loans at March 31, 2015, compared to 4.18% at December 31, 2014 and
4.29% at March 31, 2014. During the quarter ended March 31, 2015,
the Company recognized net recoveries of $0.7 million compared to
$2.9 million of net charge offs for the fourth quarter of 2014 and
$0.9 million of net charge-offs for the first quarter of 2014.
Included in the net recoveries for the current quarter was a $0.5
million recovery of one loan previously charged off. The increase
in charge offs during the fourth quarter 2014 included $2.7 million
of charge offs related to six impaired loan relationships with
specific reserves that management determined to be uncollectable.
The Company did not record a loan loss provision during the current
quarter, the prior linked quarter or the prior year quarter. The
allowance for loan losses at March 31, 2015 was $9.8 million, or
1.13% of outstanding loans and 33.48% of non-performing loans. At
December 31, 2014, the allowance for loan losses was $9.1 million,
or 1.06% of outstanding loans and 25.26% of non-performing loans.
The increase in the allowance for loan losses coverage of
non-performing loans was primarily due to a $6.4 million troubled
debt restructure loan relationship that was moved to performing
loans during the current quarter due to subsequent restructuring at
market rates and terms followed by satisfactory payment
performance. 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 March
31, 2015.
Financial Condition
Comparing March 31, 2015 balances with December 31, 2014, total
assets increased $27.8 million to $1.2 billion. The largest driver
in asset growth was investment securities increasing $35.9 million
followed by loans increasing $2.0 million to $863.2 million. Total
deposits increased $23.6 million to $993.1 million primarily due to
seasonal increases in public fund deposits. During the same period,
stockholders’ equity increased to $83.0 million or 6.93% of total
assets. The total risk based capital ratio of 15.49% and the
leverage ratio of 9.24% at March 31, 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: March 31, 2015
March 31, 2014 December 31, 2014 Total interest
income $ 11,198 $ 10,963 $ 11,214 Total interest expense 1,220
1,309 1,217 Net interest income 9,978 9,654 9,997 Provision for
loan losses 0 0 0 Noninterest income 1,987 2,085 2,168 Noninterest
expense 8,708 8,707 9,090 Pre-tax income 3,257 3,032 3,075 Income
taxes 1,119 1,045 1,074 Net income $ 2,138 $ 1,987 $ 2,001
Earnings Per Share: Basic: $ 0.41 $ 0.38 $ 0.38 Diluted: $
0.41 $ 0.38 $ 0.38
Key financial ratios:
March 31, 2015 March 31, 2014 December 31,
2014 Return on average assets (YTD) 0.73 % 0.70 % 0.66 % Return
on average common equity (YTD) 10.60 % 10.67 % 9.69 %
March 31, 2015 March 31, 2014 December 31,
2014 Allowance for loan losses to total loans 1.13 % 1.52 %
1.06 % Nonperforming loans to total loans 3.38 % 4.29 % 4.18 %
Nonperforming assets to loans and foreclosed assets 4.67 % 5.85 %
5.49 % Allowance for loan losses to nonperforming loans 33.48 %
35.44 % 25.26 % Allowance for loan losses to nonperforming loans -
excluding performing TDRs
54.85 % 51.36 % 49.72 %
Balance sheet information:
March 31, 2015 March 31, 2014 December 31,
2014 Loans, net of allowance for loan losses $ 853,406 $
832,462 $ 852,114 Investment securities 239,594 215,702 203,720
Total assets 1,197,511 1,164,969 1,169,731 Deposits 993,111 987,736
969,514 Total stockholders’ equity 82,956 76,682 80,568 Book value
per share $ 15.85 $ 14.65 $ 15.39 Market price per share $ 13.39 $
12.72 $ 14.25
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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