JEFFERSON CITY, Mo., July 30, 2024 (GLOBE NEWSWIRE) — Hawthorn Bancshares, Inc. (NASDAQ:HWBK), (the “Company”), the bank holding company for Hawthorn Bank, reported second quarter 2024 net income of $4.6 million and earnings per diluted share (“EPS”) of $0.66.
Second Quarter 2024 Results
Net income improved $0.2 million and EPS improved $0.03 per share from the first quarter 2024 (the “prior quarter”)
Net interest margin, fully taxable equivalent (“FTE”) of 3.33%
Return on average assets and equity of 1.02% and 13.75%, respectively
Loans decreased $20.3 million, or 1.3%, compared to the prior quarter
Investments increased $1.4 million, or 0.7%, compared to the prior quarter
Deposits increased $22.4 million, or 1.5%, compared to the prior quarter, while other borrowings decreased $9.9 million, or 6.2%, compared to the prior quarter
Credit quality remained strong with non-performing loans to total loans of 0.30%
Book Value increased to $19.76, an increase of 1.8%, compared to the end of the prior quarter
Brent Giles, Chief Executive Officer of Hawthorn Bancshares, Inc. commented, “In the second quarter, we continued to see a positive impact from focusing on the core business of the Bank. The sale of our mortgage servicing rights portfolio closed during the quarter, and we remain committed to expanding our products and services to our core customer base, while managing our operating expenses.”
Financial Summary
(unaudited)
$000, except per share data
June 30,
March 31,
June 30,
2024
2024
2023
Balance sheet information:
Total assets
$
1,847,810
$
1,833,760
$
1,900,709
Loans held for investment
1,498,504
1,518,853
1,563,206
Investment securities
191,159
189,741
260,714
Deposits
1,550,250
1,527,874
1,543,270
Total stockholders’ equity
$
138,241
$
136,620
$
126,473
Key ratios and per share data:
Book value per share (QTR)
$
19.76
$
19.43
$
17.97
Market price per share (QTR)
$
19.80
$
20.43
$
17.95
Diluted earnings (loss) per share (QTR)
$
0.66
$
0.63
$
0.36
Net interest margin (FTE) (QTR)
3.33
%
3.39
%
3.19
%
Efficiency ratio (QTR)
66.24
%
70.78
%
80.55
%
Financial Results for the Quarter and Six Months Ended June 30, 2024
Earnings
Net income for the second quarter 2024 was $4.6 million, an increase of $0.2 million, or 3.9%, from the prior quarter, and an increase of $2.1 million, or 81.6%, from the second quarter 2023 (the “prior year quarter”). EPS was $0.66 for the second quarter 2024 compared to $0.63 for the prior quarter, and $0.36 for the prior year quarter.
Net income for the six months ended June 30, 2024 was $9.1 million, or $1.29 per diluted share, an increase of $3.3 million compared to $5.8 million, or $0.83 per diluted share, for the six months ended June 30, 2023.
Net Interest Income and Net Interest Margin
Net interest income for the second quarter 2024 was $14.2 million, a decrease of $0.6 million from the prior quarter, and a decrease of $0.03 million from the prior year quarter. Net interest income for the six months ended June 30, 2024 was $28.9 million, an increase of $0.7 million compared to $28.2 million for the six months ended June 30, 2023.
Interest income increased $1.6 million in the current quarter compared to the prior year quarter, driven primarily by higher yields on interest earning assets, while interest expense increased $1.7 million compared to the prior year quarter. Net interest margin, on an FTE basis, was 3.33% for the current quarter, compared to 3.39% for the prior quarter, and 3.19% for the prior year quarter.
The yield earned on average loans held for investment was consistent at 5.75%, on an FTE basis, for both the second quarter 2024 and the prior quarter, compared to 5.23% for the prior year quarter.
The average cost of deposits was 2.69% for the second quarter 2024, compared to 2.61% for the prior quarter and 2.07% for the prior year quarter. Non-interest bearing demand deposits as a percent of total deposits was 25.9% as of June 30, 2024, compared to 25.7% and 28.4% at March 31, 2024 and June 30, 2023, respectively.
Non-interest Income
Total non-interest income for the second quarter 2024 was $4.0 million, an increase of $1.0 million, or 32.3%, from the prior quarter, and an increase of $2.4 million, or 150.3%, from the prior year quarter. For the six months ended June 30, 2024, non-interest income was $7.0 million, an increase of $2.2 million as compared to $4.8 million for the six months ended June 30, 2023.
The increase in the current quarter compared to the prior quarter was primarily due to an increase in earnings on bank owned life insurance and the recognition of a gain on sale on foreclosed property.
Non-interest Expense
Total non-interest expense for the second quarter 2024 was $12.0 million, a decrease of $0.5 million, or 4.3%, from the prior quarter, and a decrease of $0.7 million, or 5.4%, from the prior year quarter. For the six months ended June 30, 2024, non-interest expense was $24.6 million, a decrease of $0.6 million as compared to $25.2 million for the six months ended June 30, 2023.
The second quarter efficiency ratio was 66.2% compared to 70.8% and 80.5% for the prior quarter and prior year quarter, respectively. The decrease in the current quarter compared to the prior quarter was primarily due to decreases in legal, examination, and professional fees and occupancy expense.
Loans
Loans held for investment decreased $20.3 million, or 1.3%, to $1.5 billion as of June 30, 2024 as compared to March 31, 2024 and decreased $64.7 million, or 4.1%, from June 30, 2023.
Investments
Investments increased $1.4 million, or 0.7%, to $191.2 million as of June 30, 2024 compared to March 31, 2024 and decreased $69.6 million, or 26.7%, from June 30, 2023.
Asset Quality
Non-performing loans totaled $4.4 million at June 30, 2024, a decrease from $8.5 million at March 31, 2024, and an increase from $3.8 million at June 30, 2023. The decrease in non-performing loans in the current quarter compared to the prior quarter is primarily due to a $1.8 million charged off commercial loan relationship and a $2.7 million commercial real estate loan that went to foreclosure. Non-performing loans to total loans was 0.30% at June 30, 2024, compared to 0.56% and 0.25% at March 31, 2024 and June 30, 2023, respectively.
In the second quarter 2024, the Company had net loan charge-offs of $2.0 million compared to net loan charge-offs of $0.1 million in the prior quarter and net recoveries of $0.1 million in the prior year quarter. The charge-offs in the current quarter primarily related to one commercial loan relationship that was adequately reserved for in the prior quarter.
The Company recorded a $0.5 million provision for credit losses on loans and unfunded commitments for the second quarter 2024 compared to a release of provision for credit losses on loans and unfunded commitments of $0.2 million in the prior quarter and a provision expense of $0.7 million for the prior …