Hawthorn Bancshares Inc. (NASDAQ: HWBK), today reported
consolidated financial results for the Company for the third
quarter ended September 30, 2015.
Net income for the third quarter 2015 was $2.5 million, or $0.47
per diluted common share, compared to $1.9 million, or $0.35 per
diluted common share, for second quarter 2015, and $1.6 million, or
$0.29 per diluted common share, for the third quarter 2014. For the
nine months ended September 30, 2015, net income was $6.6 million,
or $1.21 per diluted common share, compared to $5.7 million, or
$1.04 per diluted common share, for the prior year-to-date.
The return on average common equity was 11.82% and the return on
average assets was 0.84% for the third quarter ended September 30,
2015 compared to 7.71% and 0.54% for the third quarter ended
September 30, 2014, respectively. For the current year, return on
average common equity was 10.55% and the return on average assets
was 0.74% compared to 9.69% and 0.65% for the prior year-to date,
respectively.
Commenting on earnings performance, Chairman David T. Turner
said, “Hawthorn reported improved earnings for the current quarter
of $0.47 per diluted common share, up $0.12 per diluted common
share compared to the prior quarter and up $0.17 per diluted common
share compared to the prior year to date results. These increases
were partially due to recoveries of nonaccrual interest from
several problem loan relationships resolved during the current
quarter although average loans increased $10.1 million during the
current quarter and average loan balances for the current year were
$13.8 million, or 1.6%, ahead of last year. The net interest margin
improved to 3.78% for the current quarter versus 3.52% for the
prior quarter and 3.71% for the prior year quarter while it was
equal to the prior year-to-date level at 3.71%. Net interest income
for the current quarter was $0.6 million ahead of the linked
quarter and the prior year quarter while the current year was $1.1
million, or 3.6%, higher than the prior year. We have continued to
maintain our net interest margins during the extended low interest
rate environment and with improved loan volumes, our net interest
income has continued to grow. No loan loss provision was recorded
in the current quarter, while a $0.3 million provision was made for
the prior linked quarter. The decrease in the provision for
loan losses from the prior quarter resulted primarily from a
reduction in nonperforming loans. Non-interest income of $2.3
million for the current quarter was $0.2 million below the prior
quarter and equal to the prior year quarter. Non-interest expense
of $9.0 million was $0.3 million, or 3.1%, below the linked prior
quarter and $0.9 million, or 9.3%, below the prior year quarter
mostly due to lower real estate foreclosure expenses.”
Net Interest Income
Net interest income was $10.6 million for the third quarter and
$10.0 million for the linked quarter 2015 and $10.0 million for the
third quarter 2014. Average loans increased $13.8 million, or 1.6%,
from the prior year, which contributed to the continued strong net
interest margin for the current year of 3.71% consistent with the
prior year.
Non-Interest Income and Expense
Non-interest income for the third quarter ended September 30,
2015 was $2.3 million compared to $2.5 million for the second
quarter ended June 30, 2015 and $2.3 million for the third quarter
ended September 30, 2014.
Non-interest expense was $9.0 million for the third quarter
ended September 30, 2015 compared to $9.9 million for the third
quarter 2014. The $0.9 million decrease, or 9.3%, resulted
primarily from a $0.3 million decrease, or 4.7%, in salaries and
employee benefits coupled with a $0.7 million decrease in real
estate foreclosure expenses.
Allowance for Loan Losses
The Company’s level of non-performing loans improved
significantly during the current year to 1.66% of total loans at
September 30, 2015, compared to 2.09% at June 30, 2015 and 4.18% at
December 31, 2014. During the third quarter ended September 30,
2015, the Company recognized net charge-offs of $740,000 compared
to net charge-offs of $117,000 for the third quarter ended
September 30, 2014. The increase over the prior quarter was
primarily due to the charge-off of specific reserves on three
impaired loan relationships during the current quarter. For the
nine months ended September 30, 2015, net charge-offs of $103,000
were recorded compared to net charge-offs of $1.7 million for the
prior year. No provision for loan losses was recorded during the
third quarter ended September 30, 2015 or in the prior year
quarter. The allowance for loan losses at September 30, 2015 was
$9.3 million, or 1.05% of outstanding loans, 63.51% of
non-performing loans and 99.36% 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 September 30, 2015.
Financial Condition
Comparing September 30, 2015 balances with December 31, 2014,
total assets increased $57.9 million to $1.2 billion. The largest
driver in asset growth was investment securities increasing $49.8
million, or 24.4%. Total deposits increased $2.7 million to $972.2
million; federal funds purchased and securities sold under
agreements to repurchase increased $9.8 million to $27.8 million at
September 30, 2015; and FHLB advances increased $37 million to $80
million at September 30, 2015. During the same period,
stockholders’ equity increased 8.1% to $87.0 million, or 7.1% of
total assets. The total risk based capital ratio of 14.91% and the
leverage ratio of 9.70% at September 30, 2015, respectively, far
exceed minimum regulatory requirements of 8.00% and 4.00%,
respectively.
FINANCIAL
SUMMARY
(unaudited)
$000
Three Months Ended Statement of income
information:
September 30,2015
June 30,2015
September 30,2014
Total interest income $ 11,829 $ 11,214 $ 11,196 Total interest
expense 1,271 1,230 1,240 Net interest income 10,558 9,984 9,956
Provision for loan losses 0 250 0 Noninterest income 2,336 2,461
2,313 Noninterest expense 8,977 9,267 9,899 Pre-tax income 3,917
2,928 2,370 Income taxes 1,378 1,001 802 Net income $ 2,539 $ 1,927
$ 1,568
Earnings per share: Basic: $ 0.47 $ 0.35 $ 0.29
Diluted: $ 0.47 $ 0.35 $ 0.29
For the Year Ended Statement of
income information:
September 30,2015
September 30,2014
Total interest income $ 34,241 $ 33,284 Total interest expense
3,721 3,827 Net interest income 30,520 29,457 Provision for loan
losses 250 0 Noninterest income 6,785 6,582 Noninterest expense
26,953 27,417 Pre-tax income 10,102 8,622 Income taxes 3,497 2,969
Net income $ 6,605 $ 5,653
Earnings per share: Basic: $ 1.21
$ 1.04 Diluted: $ 1.21 $ 1.04
Key financial
ratios:
September 30,2015
June 30,2015
September 30,2014
December 31,2014
Return on average assets (YTD) 0.74 % 0.69 % 0.65 % 0.66 %
Return on average common equity (YTD) 10.55 % 9.89 % 9.69 % 9.69 %
September 30,2015
June 30,2015
September 30,2014
December 31,2014
Allowance for loan losses to total loans 1.05 % 1.16 % 1.40
% 1.06 % Nonperforming loans to total loans 1.66 % 2.09 % 4.15 %
4.18 % Nonperforming assets to loans and foreclosed assets 3.32 %
3.49 % 5.51 % 5.49 % Allowance for loan losses to
nonperforming loans
63.51 % 55.30 % 33.68 % 25.26 % Allowance for loan losses to
nonperforming loans - excluding performing TDRs 99.36 % 83.48 %
49.14 % 49.72 %
Balance sheet information:
September 30,2015
June 30,2015
September 30,2014
December 31,2014
Loans, net of allowance for loan losses $ 870,228 $ 853,668
$ 848,952 $ 852,114 Investment securities 253,487 247,403 210,218
203,720 Total assets 1,227,624 1,204,363 1,156,526 1,169,731
Deposits 972,168 988,866 964,705 969,514 Total stockholders’ equity
87,073 83,789 80,521 80,568 Book value per share $ 16.00 $
15.39 $ 14.79 $ 14.80 Market price per share $ 13.97 $ 14.32 $
13.22 $ 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/20151117006344/en/
Hawthorn BancsharesBruce Phelps, 573-761-6100Chief
Financial OfficerFax: 573-761-6272www.HawthornBancshares.com
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