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Hawthorn Bancshares, Inc. reported a strong first quarter 2024 with a net income of $4.5 million and EPS of $0.63, showing a 34.0% increase from the prior year quarter. The bank holding company saw improvements in net income, efficiency, and margin. Loans, investments, and deposits decreased, while non-performing loans remained low. The Company maintains a 'well capitalized' regulatory position, repurchasing shares and increasing dividends.
Hawthorn Bancshares, Inc. ha riportato un forte primo trimestre del 2024 con un reddito netto di $4,5 milioni e un EPS di $0,63, segnando un aumento del 34,0% rispetto al trimestre dell'anno precedente. La società di controllo bancario ha visto miglioramenti nel reddito netto, nell'efficienza e nel margine. I prestiti, gli investimenti e i depositi sono diminuiti, mentre i prestiti non performanti sono rimasti bassi. La società mantiene una posizione regolatoria di 'ben capitalizzata', riacquistando azioni e aumentando i dividendi.
Hawthorn Bancshares, Inc. reportó un fuerte primer trimestre de 2024 con un ingreso neto de $4.5 millones y un EPS de $0.63, mostrando un incremento del 34.0% en comparación con el trimestre del año anterior. La compañía bancaria registró mejoras en ingreso neto, eficiencia y margen. Los préstamos, inversiones y depósitos disminuyeron, mientras que los préstamos no productivos se mantuvieron bajos. La Compañía conserva una posición regulatoria de 'bien capitalizada', recomprando acciones y aumentando los dividendos.
Hawthorn Bancshares, Inc.는 2024년 첫 분기에 순이익 $450만과 주당순이익 $0.63을 기록하며 전년도 같은 분기 대비 34.0% 증가를 보였습니다. 이 은행 지주 회사는 순이익, 효율성 및 마진에서 개선을 보였습니다. 대출, 투자 및 예금은 감소했으나, 부실 대출은 낮게 유지되었습니다. 회사는 '잘 자본화된' 규제 위치를 유지하며 주식을 재매입하고 배당금을 증가시키고 있습니다.
Hawthorn Bancshares, Inc. a rapporté un solide premier trimestre 2024 avec un bénéfice net de 4,5 millions de dollars et un BPA de 0,63 $, affichant une augmentation de 34,0 % par rapport au trimestre de l'année précédente. La société de portefeuille bancaire a constaté des améliorations dans le bénéfice net, l'efficacité et la marge. Les prêts, les investissements et les dépôts ont diminué, tandis que les prêts non performants sont restés faibles. L'entreprise maintient une position réglementaire 'bien capitalisée', rachetant des actions et augmentant les dividendes.
Hawthorn Bancshares, Inc. berichtete über ein starkes erstes Quartal 2024 mit einem Nettogewinn von $4,5 Millionen und einem EPS von $0,63, was einem Anstieg von 34,0% gegenüber dem Vorjahresquartal entspricht. Das Bankenholdingunternehmen verzeichnete Verbesserungen bei Nettogewinn, Effizienz und Marge. Darlehen, Investitionen und Einlagen verringerten sich, während notleidende Kredite niedrig blieben. Das Unternehmen behält eine 'gut kapitalisierte' regulatorische Position bei, kauft Aktien zurück und erhöht die Dividenden.
Positive
Strong net income of $4.5 million and EPS of $0.63 in the first quarter 2024.
34.0% increase in EPS compared to the prior year quarter.
Improvements in net income, efficiency, and margin over the same quarter last year.
Decreases in loans, investments, and deposits, with an increase in other borrowings.
Low non-performing loans to total loans ratio at 0.56%.
Maintains a 'well capitalized' regulatory position with strong capital ratios.
Repurchased 20,995 common shares and increased dividends by 11.8% from the prior year quarter.
Negative
None.
Insights
Hawthorn Bancshares' first quarter 2024 financials report a robust year-over-year increase in net income by 36.2% and a similar rise in EPS by 34.0%. This performance could be attributed to higher yields on interest-earning assets despite a slight dip in net interest margin to 3.39%. Observing the decrease in loans and deposits, one could infer shifting consumer behavior or a strategic change in the company’s portfolio management. The reduction in public fund exposure could be both a risk-averse move and a way to stabilize funding costs. The buyback of shares at an average price lower than the current market price reflects management's confidence in the company's intrinsic value. These actions, combined with a dividend increase of 11.8%, suggest a company that's navigating market conditions adeptly, potentially fostering investor confidence.
The company's asset quality metrics are worthy of attention, with non-performing loans accounting for only 0.56% of total loans, which is a healthy signal. It is interesting to see that the allowance for credit losses stands at 1.56% of outstanding loans and an impressive 276.93% of non-performing loans, the latter being notably above industry norms. This conservative approach to provisioning indicates strong risk management practices. However, investors should be aware that an increase in non-performing loans from the linked quarter could be indicative of emerging headwinds in loan quality. Also, the decision to release $0.2 million as provision for credit losses could reflect an expectation of sustained loan quality or an economic forecast that is less uncertain.
From a market perspective, the performance of Hawthorn Bancshares' stock could be driven by the underlying earnings growth and capital strategies. The company's proactive balance sheet repositioning by selling lower-yielding securities, even at a loss, demonstrates a strategy to enhance asset yields in a changing interest rate environment. Stock repurchases under the repurchase plan at an average cost of $19.73, while the market price per share is higher, may signal to investors a perception of undervaluation. Furthermore, an increase in the quarterly cash dividend underlines the company's commitment to returning value to shareholders and could be a positive signal for market sentiment. The current and prospective investors might see these capital allocation decisions as indicators of management’s confidence in the firm’s future performance.
JEFFERSON CITY, Mo., April 24, 2024 (GLOBE NEWSWIRE) -- Hawthorn Bancshares, Inc. (NASDAQ: HWBK), (the “Company”), the bank holding company for Hawthorn Bank, reported first quarter 2024 net income of $4.5 million and earnings per diluted share (“EPS”) of $0.63.
First Quarter 2024 Results
Net income of $4.5 million, or $0.63 per diluted share, an increase of 34.0% per diluted share from the first quarter 2023 (the "prior year quarter")
Net interest margin, fully taxable equivalent ("FTE") of 3.39%
Return on average assets and equity of 0.97% and 13.12%, respectively
Loans decreased$20.3 million, or 1.3%, compared to fourth quarter 2023(“linked quarter”)
Investments decreased$5.3 million, or 2.7%, compared to the linked quarter
Deposits decreased$43.0 million, or 2.7%, compared to the linked quarter, while other borrowings increased$2.0 million, or 1.3%, compared to the linked quarter
Credit quality remained strong with non-performing loans to total loans of 0.56%
Brent Giles, Chief Executive Officer of Hawthorn Bancshares, Inc. commented, “We are pleased with our first quarter results as we posted improvement in net income, efficiency and margin over the same quarter last year. These results reflect our focus on improving profitability from our core businesses while also managing expenses."
Financial Summary
(unaudited) $000, except per share data
March 31,
December 31,
March 31,
2024
2023
2023
Balance sheet information:
Total assets
$
1,833,760
$
1,875,350
$
1,895,821
Loans held for investment
1,518,853
1,539,147
1,542,074
Investment securities
189,741
195,042
265,893
Deposits
1,527,874
1,570,844
1,608,012
Total stockholders’ equity
$
136,620
$
136,085
$
128,352
Key ratios and per share data:
Book value per share
$
19.43
$
19.33
$
18.23
Market price per share
$
20.43
$
25.37
$
22.27
Diluted earnings (loss) per share (QTR)
$
0.63
$
(1.05
)
$
0.47
Net interest margin (FTE) (QTR)
3.39
%
3.48
%
3.16
%
Efficiency ratio (QTR)
70.78
%
81.06
%
72.84
%
Financial Results for the First Quarter 2024
Earnings
Net income for the first quarter 2024 was $4.5 million, an increase of $11.9 million, or 159.9%, from the linked quarter, and an increase of $1.2 million, or 36.2%, from the prior year quarter. EPS was $0.63 for the first quarter 2024 compared to $(1.05) for the linked quarter, and $0.47 for the prior year quarter.
Net Interest Income and Net Interest Margin
Net interest income for the first quarter 2024 was $14.7 million, a decrease of $1.1 million from the linked quarter, and an increase of $0.8 million from the prior year quarter.
Interest income increased $3.1 million in the current quarter compared to the prior year quarter, driven primarily by higher yields on interest earning assets, while interest expense increased $2.3 million. Net interest margin, on an FTE basis, was 3.39% for the current quarter, compared to 3.48% for the linked quarter, and 3.16% for the prior year quarter.
The yield earned on average loans held for investment was 5.75%, on an FTE basis, for the first quarter 2024, compared to 5.93% for the linked quarter and 5.03% for the prior year quarter. The decrease in yield for the first quarter 2024 compared to the linked quarter was due to interest accreted into income on three loans returning to accruing status in the linked quarter.
The average cost of deposits was 2.61%, on an FTE basis, for the first quarter 2024, compared to 2.58% for the linked quarter and 1.91% for the prior year quarter. Non-interest bearing demand deposits as a percent of total deposits was 25.7% as of March 31, 2024, compared to 25.6% and 27.6% at December 31, 2023 and March 31, 2023, respectively.
Non-interest Income
Total non-interest income for the first quarter 2024 was $3.0 million, an increase of $0.9 million, or 40.3%, from the linked quarter, and a decrease of $0.2 million, or 5.1%, from the prior year quarter. The increase in the current quarter compared to the linked quarter was primarily due to the recognition of a $1.1 million mortgage servicing rights valuation write-down in the linked quarter as a result of the sale of the servicing portfolio.
Non-interest Expense
Total non-interest expense for the first quarter 2024 was $12.6 million, a decrease of $2.0 million, or 13.8%, from the linked quarter, and an increase of $0.10 million, or 0.8%, from the prior year quarter. The first quarter efficiency ratio was 70.8% compared to 81.1% and 72.8% for the linked quarter and prior year quarter, respectively. The decrease in the current quarter compared to the linked quarter was primarily due to severance payments, payroll accruals, and a strategic decision to write off costs related to development of an account acquisition project in the linked quarter.
Loans
Loans held for investment decreased $20.3 million, or 1.3%, to $1.5 billion as of March 31, 2024 as compared to December 31, 2023 and decreased $23.2 million, or 1.5%, from March 31, 2023.
Investments
Investments decreased $5.3 million, or 2.7%, to $189.7 million as of March 31, 2024 compared to December 31, 2023 and decreased by $76.2 million, or 28.6%, from March 31, 2023.
The Company elected a strategy to reposition its balance sheet during the fourth quarter of 2023 by selling $83.7 million in book value of investment securities, with an average yield of 1.57%, for an after-tax realized loss of $9.1 million. Proceeds from the sale of investments were reinvested into the securities portfolio and bank-owned life insurance.
Asset Quality
Non-performing loans totaled $8.5 million at March 31, 2024, an increase from $6.4 million at December 31, 2023, and a decrease of $11.1 million from $19.6 million at March 31, 2023. The decrease in non-performing loans in the current quarter compared to the prior year quarter is primarily due to three large non-accrual loan relationships returning to accruing status. Non-performing loans to total loans was 0.56% at March 31, 2024, compared to 0.42% and 1.27% at December 31, 2023 and March 31, 2023, respectively.
In the first quarter 2024, the Company had net loan charge-offs of $69 thousand compared to net loan charge-offs of $268 thousand and $52 thousand in the linked quarter and the prior year quarter, respectively.
The Company recorded a $0.2 million release of provision for credit losses on loans and unfunded commitments for the first quarter 2024 compared to a provision expense for credit losses on loans and unfunded commitments of $1.6 million and $0.7 million for the linked quarter and for the prior year quarter, respectively.
The allowance for credit losses at March 31, 2024 was $23.7 million, or 1.56% of outstanding loans, and 276.93% of non-performing loans. At December 31, 2023, the allowance for credit losses was $23.7 million, or 1.54% of outstanding loans, and 370.25% of non-performing loans. At March 31, 2023, the allowance for credit losses was $22.0 million, or 1.43% of outstanding loans, and 112.14% of non-performing loans. The allowance for credit losses represents management’s best estimate of expected losses inherent in the loan portfolio and is commensurate with risks in the loan portfolio as of March 31, 2024 as determined by management.
Deposits
Total deposits at March 31, 2024 were $1.5 billion, a decrease of $43.0 million, or 2.7%, from December 31, 2023, and a decrease of $80.1 million, or 5.0%, from March 31, 2023. The decrease in deposits at March 31, 2024 as compared to December 31, 2023 was primarily a result of a decrease in public funds. The decrease in deposits at March 31, 2024 as compared to March 31, 2023 was primarily a result of the Company's strategy to reduce exposure to public funds. In addition, the Company elected to discontinue the repurchase agreement product during 2023 and began migrating accounts to reciprocal deposit products within the Company's deposit mix.
Capital
The Company maintains its “well capitalized” regulatory capital position. At March 31, 2024, capital ratios were as follows: total risk-based capital to risk-weighted assets 13.76%; tier 1 capital to risk-weighted assets 12.51%; tier 1 leverage 10.71%; and common equity to assets 7.45%.
Pursuant to the Company's 2019 Repurchase Plan, management is given discretion to determine the number and pricing of the shares to be purchased under the plan, as well as the timing of any such purchases. The Company repurchased 20,995 common shares under the repurchase plan during the first quarter of 2024 at an average cost of $19.73 per share totaling $0.4 million. As of March 31, 2024, $4.6 million remains available for share repurchases pursuant to the plan.
During the second quarter of 2024, the Company's Board of Directors approved a quarterly cash dividend of $0.19 per common share payable July 1, 2024 to shareholders of record at the close of business on June 15, 2024, which represents an increase of $0.02 per common share, or 11.8%, from the prior year quarter's dividend.
[Tables follow]
FINANCIAL SUMMARY (unaudited) $000, except per share data
Three Months Ended
March 31,
December 31,
March 31,
Statement of income information:
2024
2023
2023
Total interest income
$
24,052
$
25,220
$
20,933
Total interest expense
9,304
9,376
6,985
Net interest income
14,748
15,844
13,948
(Release of) Provision for credit losses on loans and unfunded commitments
(230
)
1,550
680
Non-interest income
3,019
2,152
3,182
Investment securities (losses) gains, net
—
(11,565
)
8
Non-interest expense
12,575
14,587
12,478
Pre-tax income (loss)
5,422
(9,706
)
3,980
Income taxes (benefit)
966
(2,263
)
709
Net income (loss)
$
4,456
$
(7,443
)
$
3,271
Earnings (loss) per share:
Basic:
$
0.63
$
(1.05
)
$
0.47
Diluted:
$
0.63
$
(1.05
)
$
0.47
FINANCIAL SUMMARY (continued)
(unaudited)
March 31,
December 31,
March 31,
2024
2023
2023
Key financial ratios:
Return on average assets (QTR)
0.97
%
(1.57)%
0.70
%
Return on average common equity (QTR)
13.12
%
(24.54)%
10.14
%
Net interest margin (FTE) (QTR)
3.39
%
3.48
%
3.16
%
Efficiency ratio (QTR)
70.78
%
81.06
%
72.84
%
Asset Quality Ratios:
Allowance for credit losses to total loans
1.56
%
1.54
%
1.43
%
Non-performing loans to total loans (a)
0.56
%
0.42
%
1.27
%
Non-performing assets to loans (a)
0.69
%
0.53
%
1.81
%
Non-performing assets to assets (a)
0.57
%
0.43
%
1.47
%
Allowance for credit losses on loans to
non-performing loans (a)
276.93
%
370.25
%
112.14
%
Capital Ratios:
Average stockholders' equity to average total assets (QTR)
7.41
%
6.38
%
6.87
%
Period-end stockholders' equity to period-end assets (QTR)
7.45
%
7.26
%
6.77
%
Total risk-based capital ratio
13.76
%
13.99
%
13.81
%
Tier 1 risk-based capital ratio
12.51
%
12.59
%
12.47
%
Common equity Tier 1 capital
9.68
%
9.73
%
9.77
%
Tier 1 leverage ratio
10.71
%
10.29
%
10.43
%
(a) Non-performing loans include loans 90-days past due and accruing and non-accrual loans.
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, Independence, Columbia, Clinton, Osceola, Warsaw, Belton, Drexel, Harrisonville, and California.
The financial results in this press release reflect preliminary, unaudited results, which are not final until the Company's Quarterly Report on Form 10-Q is filed. Statements made in this press release that suggest the Company's 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 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. These forward-looking statements are made as of the date of this communication, and the Company disclaims any obligation to update any forward-looking statement or to publicly announce the results of any revisions to any of the forward-looking statements included herein, except as required by law.
FAQ
What was Hawthorn Bancshares' net income and EPS in the first quarter of 2024?
Hawthorn Bancshares reported a net income of $4.5 million and earnings per diluted share of $0.63 in the first quarter of 2024.
How did Hawthorn Bancshares' EPS change compared to the prior year quarter?
Hawthorn Bancshares' EPS showed a 34.0% increase from the prior year quarter in the first quarter of 2024.
What was the ratio of non-performing loans to total loans for Hawthorn Bancshares in the first quarter of 2024?
Hawthorn Bancshares had a low ratio of non-performing loans to total loans at 0.56% in the first quarter of 2024.
How did Hawthorn Bancshares' capital ratios look at the end of the first quarter of 2024?
At the end of the first quarter of 2024, Hawthorn Bancshares maintained strong capital ratios, with total risk-based capital ratio at 13.76% and tier 1 leverage ratio at 10.71%.
Did Hawthorn Bancshares repurchase any common shares in the first quarter of 2024?
Hawthorn Bancshares repurchased 20,995 common shares under the repurchase plan during the first quarter of 2024.
