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| 8-K - FORM 8-K - HAWTHORN BANCSHARES, INC. | hwbk8k.htm |
Exhibit 99.1
Hawthorn Bancshares Reports Second Quarter 2017
Financial Results
Jefferson City, Mo. — July 27, 2017 — Hawthorn Bancshares Inc.
(NASDAQ: HWBK), today reported consolidated financial results for
the Company for the quarter ended June 30, 2017.
Net income for the
current quarter was $1.9 million, or $0.33 per diluted common
share, compared to $2.1 million, or $0.36 per diluted common share,
for the linked quarter ended March 31, 2017 and $1.4 million, or
$0.24 per diluted common share, for the quarter ended June 30,
2016.
The year-to-date
annualized return on average common equity was 8.65% and the
annualized return on average assets was 0.61% for the current year
compared to 9.23% and 0.65% for the prior linked quarter,
respectively, and 7.62% and 0.56%, respectively, for the prior year
quarter.
Commenting on
earnings performance, Chairman David T. Turner said, “For the
six months ended June 30, 2017, Hawthorn reported earnings per
common diluted share of $0.69 which was a 19% improvement over the
prior year-to-date results of $0.58 per diluted common share. Loans
have continued to grow increasing $24.8 million, or 2.5%, from the
prior linked quarter and increasing $112.1 million, or 12.1%, from
the prior year quarter. Our net interest margin has remained
relatively unchanged during the current quarter at 3.50% compared
to 3.48% for the prior linked quarter and for the current year at
3.49% compared to 3.50% for the prior year. Due to our loan growth
and maintaining our net interest margin, net interest income has
continued to increase, improving by $0.8 million over the prior
year quarter. Non-interest income of $2.1 million for the current
quarter was below the prior linked quarter by $0.3 million but
ahead of the prior year quarter by $0.1 million. Non-interest
expense of $9.7 million was $0.3 million higher than the prior
linked quarter and the prior year quarter.”
Net
Interest Income
Net interest income
for the quarter ended June 30, 2017 was $10.8 million compared to
$10.5 million for the prior linked quarter and $10.0 million for
the prior year quarter. The increase over the prior year quarter of
$0.8 million was primarily due to increased interest income on
loans of $1.4 million resulting from average loan growth of $128.6
million and an increase in interest expense of $0.5 million mostly
due to a $64.3 million increase in average balances of
interest-bearing liabilities.
Non-Interest
Income and Expense
Non-interest income
for the quarter ended June 30, 2017 was $2.1 million compared to
$2.4 million for the prior linked quarter and $2.0 million for the
prior year quarter. The decrease from the prior linked quarter was
primarily due to the increase in mortgage servicing rights recorded
in the prior linked quarter.
Non-interest
expense was $9.7 million for the quarter ended June 30, 2017
compared to $9.4 million for the prior linked quarter and $9.4
million for the prior year quarter. The increases over the prior
linked quarter and prior year quarter were primarily due to
increases in real estate foreclosure expense resulting from
valuation adjustments to foreclosed property.
Allowance
for Loan Losses
The Company’s
level of non-performing loans continued to remain at historically
low levels representing 0.97% of total loans at June 30, 2017,
compared to 0.93% at March 31, 2017 and 1.02% at June 30, 2016.
During the quarter ended June 30, 2017, the Company recorded net
charge-offs of $47,000 compared to net recoveries of $26,000 and
$336,000 for the prior linked quarter and the prior year quarter,
respectively. The allowance for loan losses at June 30, 2017 was
$10.5 million, or 1.02% of outstanding loans, 105.36% of
non-performing loans and 223.27% of nonperforming loans when
excluding accruing TDR’s. At December 31, 2016, the allowance
for loan losses was $9.9 million, or 1.01% of outstanding loans,
107.35% of non-performing loans and 282.94% 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, 2017.
Financial
Condition
Comparing June 30,
2017 balances with December 31, 2016, total assets increased $96.5
million to $1.4 billion. The largest driver in asset growth was the
increase in loans of $61.0 million, or 6.3%. Total deposits
increased $72.0 million to $1.1 billion at June 30, 2017. During
the same period, stockholders’ equity increased 4.5% to $95.1
million, or 6.9% of total assets. The total risk based capital
ratio of 13.47% and the leverage ratio of 9.77% at June 30, 2017,
respectively, far exceed minimum regulatory requirements of 8.00%
and 4.00%, respectively.
[Tables
follow]
FINANCIAL SUMMARY
(unaudited)
$ 000
|
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Three Months Ended
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||
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Statement of income information:
|
June 30,
2017
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March 31,
2017
|
June 30,
2016
|
|
Total
interest income
|
$12,681
|
$12,099
|
$11,350
|
|
Total
interest expense
|
1,861
|
1,612
|
1,379
|
|
Net
interest income
|
10,820
|
10,487
|
9,971
|
|
Provision
for loan losses
|
330
|
350
|
425
|
|
Noninterest
income
|
2,099
|
2,407
|
1,949
|
|
Noninterest
expense
|
9,687
|
9,351
|
9,353
|
|
Pre-tax
income
|
2,902
|
3,193
|
2,142
|
|
Income
taxes
|
983
|
1,093
|
730
|
|
Net
income
|
$1,919
|
$2,100
|
$1,412
|
|
Earnings per share:
|
|
|
|
|
Basic:
|
$0.33
|
$0.36
|
$0.24
|
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Diluted:
|
$0.33
|
$0.36
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$0.24
|
|
Statement of income information:
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For the Six Months Ended
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|
|
|
June 30,
2017
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June 30,
2016
|
|
Total
interest income
|
$24,781
|
$22,527
|
|
Total
interest expense
|
3,474
|
2,708
|
|
Net
interest income
|
21,307
|
19,819
|
|
Provision
for loan losses
|
680
|
675
|
|
Noninterest
income
|
4,506
|
4,397
|
|
Noninterest
expense
|
19,037
|
18,436
|
|
Pre-tax
income
|
6,096
|
5,105
|
|
Income
taxes
|
2,076
|
1,695
|
|
Net
income
|
$4,020
|
$3,410
|
|
Earnings per share:
|
|
|
|
Basic:
|
$0.69
|
$0.58
|
|
Diluted:
|
$0.69
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$0.58
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|
Key financial ratios:
|
June 30,
|
March 31,
|
June 30,
|
December 31,
|
|
|
2017
|
2017
|
2016
|
2016
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|
Return
on average assets (YTD)
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0.61%
|
0.65%
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0.56%
|
0.58%
|
|
Return
on average common equity (YTD)
|
8.65%
|
9.23%
|
7.62%
|
7.97%
|
|
|
June
30,
2017
|
March
31,
2017
|
June
30,
2016
|
December
31,
2016
|
|
Allowance
for loan losses to total loans
|
1.02%
|
1.02%
|
1.02%
|
1.01%
|
|
Nonperforming
loans to total loans
|
0.97%
|
0.93%
|
1.02%
|
0.95%
|
|
Nonperforming
assets to loans
|
|
|
|
|
|
and
foreclosed assets
|
2.23%
|
2.24%
|
2.63%
|
2.37%
|
|
Allowance
for loan losses to
|
|
|
|
|
|
nonperforming
loans
|
105.36%
|
109.70%
|
99.37%
|
107.35%
|
|
Allowance
for loan losses to nonperforming
|
|
|
|
|
|
loans
- excluding performing TDRs
|
223.27%
|
288.50%
|
257.03%
|
282.94%
|
|
Balance sheet information:
|
June 30,
2017
|
March 31,
2017
|
June 30,
2016
|
December 31,
2016
|
|
Loans,
net of allowance for loan losses
|
$1,024,475
|
$999,920
|
$913,550
|
964,143
|
|
Investment
securities
|
227,151
|
226,029
|
244,194
|
224,308
|
|
Total
assets
|
1,383,550
|
1,319,663
|
1,265,724
|
1,287,048
|
|
Deposits
|
1,082,687
|
1,043,004
|
1,005,241
|
1,010,666
|
|
Total
stockholders’ equity
|
95,147
|
93,077
|
91,741
|
91,017
|
|
|
|
|
|
|
|
Book
value per share
|
$16.29
|
$15.94
|
$15.63
|
15.52
|
|
Market
price per share
|
$20.95
|
$20.29
|
$13.26
|
17.02
|
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, Osceola, Warsaw, Belton, Drexel, Harrisonville,
California and St.
Robert.
Contact:
Bruce
Phelps
Chief
Financial Officer
TEL:
573.761.6100
FAX:
573.761.6272
www.HawthornBancshares.com
www.HawthornBancshares.com
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
thatactual 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.