Hawthorn Bancshares Inc. (NASDAQ: HWBK), today reported
consolidated financial results for the Company for the second
quarter ended June 30, 2016.
Net income for the current quarter was $1.4 million, or $0.25
per diluted share, compared to $2.0 million, or $0.35 per diluted
share, for the linked quarter ended March 31, 2016 and $1.9
million, or $0.34 per diluted share, for the quarter ended June 30,
2015. For the six months ended June 30, 2016, net income was $3.4
million, or $0.60 per diluted share, compared to $4.1 million, or
$0.72 per diluted share, for the six months ended June 30,
2015.
The return on average common equity was 6.26% and the return on
average assets was 0.46% for the second quarter ended June 30,
2016, compared to 9.21% and 0.65%, respectively, for the second
quarter ended June 30, 2015. For the current year, return on
average common equity was 7.62% and the return on average assets
was 0.56% compared to 9.89% and 0.69% for the prior year-to-date,
respectively.
Commenting on earnings performance, Chairman David T. Turner
said, “Hawthorn reported lower earnings for the current quarter
compared to the linked quarter and the prior year quarter. These
decreases were primarily the result of a higher loan loss provision
in the current quarter driven mostly by loan growth and a $472,000
securities gain recognized in the linked quarter. We have
experienced loan growth with gross loans increasing by
approximately $48 million, or 5.4%, from the linked quarter-end and
$59 million, or 6.9%, from the prior year quarter-end. This loan
growth contributed to net interest income remaining strong in spite
of a continued tight interest rate environment putting continued
pressure on our net interest margin. In spite of the yield on our
investment securities continuing to fall due to higher yielding
securities being replaced with current lower market yields, our net
interest margin only decreased 2 basis points from the linked
quarter to 3.49% for the current quarter. Due to continued loan
growth and our analysis of the risks in the loan portfolio, the
company recorded a provision for loan losses of $425,000 during the
current quarter compared to $250,000 recorded for both the linked
quarter and the prior year quarter. Non-interest income decreased
$499,000 from the linked quarter primarily due to the above
mentioned $472,000 securities gain recognized in that quarter and
decreased $512,000 from the prior year quarter mostly due to lower
real estate servicing fees, net and gain on sale of mortgage loans,
net. Non-interest expense of $9.4 million was higher than the
linked quarter by $270,000, or 3%, and relatively unchanged from
the prior year quarter.”
Net Interest Income
Net interest income increased by $0.1 million, or 1.2%, from
$9.9 million for the linked quarter to $10.0 million for the
current quarter ended June 30, 2016 and was unchanged from the
prior year quarter. Average loans increased $30.2 million, or 3.5%,
from the linked quarter and $35.1 million, or 4.1%, from the prior
year quarter. The net interest margin of 3.49% for the current
quarter was down 2 basis points from the linked quarter and
decreased 14 basis points from the prior year quarter ended June
30, 2015.
Non-Interest Income and Expense
Non-interest income for the quarter ended June 30, 2016 was $1.9
million compared to $2.4 million for the linked quarter ended March
31, 2016 and $2.5 million for the prior year quarter ended June 30,
2015. The $0.5 million decrease from the linked quarter was
primarily due to investment securities gains of $0.5 million
realized in the previous quarter. The $0.6 million decrease from
the prior year quarter was primarily due to a $0.5 million decrease
in combined real estate service fees, net and gain on sale of
mortgage loans, net resulting from reduced market demand.
Non-interest expense was $9.4 million for the quarter ended June
30, 2016 compared to $9.1 million for the linked quarter, and $9.3
million for the prior year quarter ended June 30, 2015. The $0.3
million increase from the linked March 2016 quarter primarily
resulted from increased fraud losses on debit cards and increased
employee training related expenses. The $0.1 million increase from
the prior year quarter was mostly due to increased debit card fraud
losses and employee training related expense partially offset by
reduced real estate foreclosure expense, net.
Allowance for Loan Losses
The Company’s level of non-performing loans was 1.02% of total
loans at June 30, 2016, compared to 1.03% at March 31, 2016 and
2.09% at June 30, 2015. During the quarter ended June 30, 2016, the
Company recorded net recoveries of $336,000, or (0.04%) of average
loans compared to net charge-offs of $223,000, or 0.03% of average
loans for the quarter ended March 31, 2016 and net charge-offs of
$25,000, or 0.00% of average loans for the quarter ended June 30,
2015. The allowance for loan losses at June 30, 2016 was $9.4
million, or 1.02% of outstanding loans, 99.37% of non-performing
loans and 257.03% of nonperforming loans when excluding accruing
TDR’s. At December 31, 2015, the allowance for loan losses was $8.6
million, or 0.99% of outstanding loans, 83.75% of non-performing
loans and 194.48% 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,
2016.
Financial Condition
Comparing June 30, 2016 balances with December 31, 2015, total
assets increased $64.8 million to $1.3 billion. Asset growth
occurred primarily in gross loans which increased $57.9 million, or
6.7%. Total deposits increased $58.0 million to $1.0 billion and
FHLB advances increased $24.0 million to $74.0 million, while
federal funds purchased and securities sold under agreements to
repurchase decreased $21.1 million to $35.7 million at June 30,
2016. During the same period, stockholders’ equity increased 5.1%
to $91.7 million, or 7.25% of total assets. The total risk based
capital ratio of 14.19% and the leverage ratio of 9.88% at June 30,
2016 far exceed minimum regulatory requirements of 8.00% and 4.00%,
respectively.
FINANCIAL
SUMMARY
(unaudited)
$000
Three Months Ended Statement of income
information: June 30, 2016 March 31, 2016 June
30, 2015 Total interest income $ 11,350 $ 11,176 $ 11,214 Total
interest expense 1,379 1,328 1,230 Net interest income 9,971 9,848
9,984 Provision for loan losses 425 250 250 Noninterest income
1,949 2,448 2,461 Noninterest expense 9,353 9,083 9,267 Pre-tax
income 2,142 2,963 2,928 Income taxes 730 965 1,001 Net income $
1,412 $ 1,998 $ 1,927
Earnings per share: Basic: $ 0.25 $
0.35 $ 0.34 Diluted: $ 0.25 $ 0.35 $ 0.34
For the Six Months Ended
Statement of income information: June 30, 2016
June 30, 2015 Total interest income $ 22,527 $ 22,412 Total
interest expense 2,708 2,450 Net interest income 19,819 19,962
Provision for loan losses 675 250 Noninterest income 4,397 4,448
Noninterest expense 18,436 17,975 Pre-tax income 5,105 6,185 Income
taxes 1,695 2,120 Net income $ 3,410 $ 4,065
Earnings per
share: Basic: $ 0.60 $ 0.72 Diluted: $ 0.60 $ 0.72
Key financial ratios: June
30, 2016 March 31, 2016 June 30, 2015 December
31, 2015 Return on average assets (YTD) 0.56 % 0.66 % 0.69 %
0.72 % Return on average common equity (YTD) 7.62 % 9.02 % 9.89 %
10.14 %
June 30, 2016 March 31, 2016 June
30, 2015 December 31, 2015 Allowance for loan losses to
total loans 1.02 % 0.99 % 1.16 % 0.99 % Nonperforming loans to
total loans 1.02 % 1.03 % 2.09 % 1.19 % Nonperforming assets to
loans and foreclosed assets 2.98 % 2.75 % 3.49 % 2.98 % Allowance
for loan losses to nonperforming loans 99.37 % 96.01 % 55.30 %
83.75 % Allowance for loan losses to nonperforming loans -
excluding performing TDRs 257.03 % 275.05 % 83.48 % 194.48 %
Balance sheet information: June 30, 2016 March 31,
2016 June 30, 2015 December 31, 2015 Loans, net
of allowance for loan losses $ 913,550 $ 866,681 $ 853,668 $
856,476 Investment securities 244,194 253,853 247,403 243,091 Total
assets 1,265,724 1,234,156 1,204,363 1,200,921 Deposits 1,005,241
992,560 988,866 947,197 Total stockholders’ equity 91,741 89,853
83,789 87,286 Book value per share $ 16.24 $ 15.90 $ 14.80 $
15.42 Market price per share $ 13.79 $ 14.18 $ 13.77 $ 15.14
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/20160816006047/en/
Hawthorn BancsharesBruce Phelps, 573-761-6100Chief
Financial OfficerFAX: 573-761-6272www.HawthornBancshares.com
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