Hawthorn Bancshares Reports Fourth Quarter and Full Year 2020 Results
Hawthorn Bancshares reported a net income of $14.3 million for 2020, or $2.20 per diluted share, down from $16.1 million in 2019. The fourth quarter net income was $5.2 million, representing an increase from the third quarter but a decrease in EPS from prior year. Key metrics include a net interest margin of 3.48% for 2020 and 3.40% for the fourth quarter. Total deposits rose by 4.3% quarter-over-quarter, amounting to $1.4 billion. Non-performing loans surged to $34.6 million, marking a significant increase. A quarterly dividend of $0.13 per share has been declared for Q1 2021.
- Pre-tax pre-provision income increased by 10% to $23.3 million for 2020.
- Deposits increased by $56.9 million (4.3%) from the linked quarter to $1.4 billion.
- Noninterest income for 2020 grew by 63.9% year-over-year, primarily due to mortgage loan sales.
- Net income decreased from $16.1 million in 2019 to $14.3 million in 2020.
- Non-performing loans increased significantly to $34.6 million, up from $5.8 million in the linked quarter.
- Net interest income declined by $0.3 million from the linked quarter.
2020 Highlights
- Net income of
$14.3 million , or$2.20 per diluted share - Record pre-tax and pre-provision income of
$23.3 million increased$2.2 million , or10% from the prior year - Net interest margin, fully taxable equivalent (“FTE”) of
3.48% - Return on average assets and equity of
0.88% and11.71% , respectively
Fourth Quarter Highlights
- Net income of
$5.2 million , or$0.80 per diluted share - Net interest margin, fully taxable equivalent (“FTE”) of
3.40% - Return on average assets and equity of
1.21% and16.15% , respectively - Deposits increased
$56.9 million , or4.3% , compared to prior linked quarter
JEFFERSON CITY, Mo., Jan. 27, 2021 (GLOBE NEWSWIRE) -- Hawthorn Bancshares Inc. (NASDAQ: HWBK), (the “Company” or “HWBK”) reported net income of
The Company reported net income of
Cash dividends paid in 2020 of
Chairman David T. Turner commented, “We’re very excited to be moving forward into 2021 but before doing so completely we need to reflect on some of the more significant positive things we accomplished in what have been unprecedented times. The COVID-19 pandemic continued to challenge our customers and small business owners in the communities we served throughout 2020. Our bankers have responded very well through these troubling times, and we appreciate the trust and confidence our customers place in us as we journey together.
We assisted borrowers through numerous government-assisted lending programs, including the SBA Paycheck Protection Program (“PPP”) and the Main Street Lending Program (“MSLP”) to secure funding during the pandemic.
In the fourth quarter we found it prudent to move some of our borrower loan relationships most impacted by the pandemic to a non-accrual status, totaling approximately
Turner continued, “Despite these challenges, we continued to deliver strong financial results in 2020. Our results in the fourth quarter surpassed what we felt were exceedingly strong results in the third quarter. For the full year 2020, we delivered
I’m very proud of each and every banker and all that we accomplished together. Unprecedented times call for unprecedented performance, and I saw that across every team in our bank in 2020.
Welcome 2021!”
Highlights
- Earnings – Net income for the full year 2020 was
$14.3 million and EPS was$2.20 , compared to net income of$16.1 million and EPS of$2.47 for the prior year. Pre-tax and pre-provision income (“PTPP”) of$23.3 million for the full year increased$2.2 million , or10% , from the prior year. Net income in the fourth quarter 2020 was$5.2 million and EPS was$0.80 . PTPP of$6.7 million for the fourth quarter decreased$0.6 million , or8% from the linked quarter, and increased$1.4 million , or26% , from the fourth quarter 2019. - Net interest income and net interest margin – Net interest income for the full year 2020 was
$53.3 million and net interest margin, on a FTE basis, was3.48% compared to net interest income of$48.7 million and net interest margin of3.51% for the prior year. Net interest income of$13.6 million for the fourth quarter 2020, decreased$0.3 million from the linked quarter, and increased$1.0 million from the fourth quarter 2019. Net interest margin, on a FTE basis, was3.40% for the fourth quarter, a decrease from3.50% for the linked quarter, and a reduction from3.63% for the fourth quarter of 2019. - Loans – Loans held for investment increased by
$7.8 million , or0.6% , equal to$1.3 billion as of December 31, 2020 as compared to the linked quarter. Year-over-year, loans grew$118 million , or10.1% , from$1.2 billion as of December 31, 2019. Year-over-year growth in loans was primarily due to an increase in commercial loans for customers who participated in the PPP. - Asset quality – Non-performing loans totaled
$34.6 million at December 31, 2020, an increase of$28.8 million from$5.8 million at the end of the linked quarter primarily due to placing on non-accrual several loans described in more detail below. The allowance for loan losses to total loans was1.41% at December 31, 2020, compared to1.39% at September 30, 2020 and1.07% at December 31, 2019. - Deposits – Total deposits increased by
$56.9 million , or4.3% , equal to$1.4 billion as of December 31, 2020 as compared to the linked quarter. Year-over-year deposits grew$197.1 million , or16.6% , from$1.2 billion as of December 31, 2019. - Capital – Total shareholder’s equity was
$130.6 million and the tangible common equity to tangible assets ratio was7.53% at December 31, 2020 as compared to7.45% and7.71% from the linked quarter and fourth quarter of 2019, respectively. Regulatory capital ratios remain “well-capitalized”, with tier 1 leverage ratio of10.19% and a total risk-based capital ratio of14.97% . - Share Repurchase Program In the third quarter of 2020, the Company’s Board of Directors authorized the purchase of up to
$2.5 million market value of the Company’s common stock. Management was given discretion to determine the number and pricing of the shares to be purchased, as well as, the timing of any such purchases. As of December 31, 2020,$2.4 million remained for share repurchase pursuant to that authorization.
Net Interest Income and Net Interest Margin
Net interest income for the full year 2020 was
Loans
Loans held for investment increased by
The yield earned on average loans held for investment was
Asset Quality
Non-performing loans totaled
At December 31, 2020,
In the fourth quarter 2020, the Company had net loan charge-offs of
The allowance for loan losses at December 31, 2020 was
Deposits
Total deposits at December 31, 2020 were
Core deposits, defined as total deposits excluding time deposits, were
Noninterest Income
Total noninterest income for 2020 was
For the quarter ended December 31, 2020, total noninterest income was
Noninterest Expense
Noninterest expense for 2020 was
The fourth quarter 2020 noninterest expense was
Capital
The Company maintains its “well capitalized” regulatory capital position. At the end of the fourth quarter 2020, capital ratios were as follows: total risk-based capital to risk-weighted assets
[Tables follow]
FINANCIAL SUMMARY
(unaudited)
| Three Months Ended | |||||||||
| December 31, | September 30, | December 31, | |||||||
| Statement of income information: | 2020 | 2020 | 2019 | ||||||
| Total interest income | $ | 15,498 | $ | 15,958 | $ | 15,946 | |||
| Total interest expense | 1,942 | 2,116 | 3,355 | ||||||
| Net interest income | 13,556 | 13,842 | 12,591 | ||||||
| Provision for loan losses | 400 | 1,200 | 300 | ||||||
| Noninterest income | 4,693 | 5,075 | 2,300 | ||||||
| Investment securities gains, net | 43 | 12 | — | ||||||
| Noninterest expense | 11,586 | 11,616 | 9,582 | ||||||
| Pre-tax income | 6,306 | 6,113 | 5,009 | ||||||
| Income taxes | 1,123 | 1,153 | 941 | ||||||
| Net income | $ | 5,183 | $ | 4,960 | $ | 4,068 | |||
| Earnings per share: | |||||||||
| Basic: | $ | 0.80 | $ | 0.77 | $ | 0.62 | |||
| Diluted: | $ | 0.80 | $ | 0.77 | $ | 0.62 | |||
| For the Years Ended | |||||||
| December 31, | |||||||
| Statement of income information: | 2020 | 2019 | |||||
| Total interest income | $ | 62,985 | $ | 63,970 | |||
| Total interest expense | 9,722 | 15,232 | |||||
| Net interest income | 53,263 | 48,738 | |||||
| Provision for loan losses | 5,800 | 1,150 | |||||
| Noninterest income | 14,649 | 8,937 | |||||
| Investment securities gains (losses), net | 61 | (40 | ) | ||||
| Gain on sale of branch, net | — | 2,183 | |||||
| Noninterest expense | 44,697 | 38,731 | |||||
| Pre-tax income | 17,476 | 19,937 | |||||
| Income taxes | 3,183 | 3,823 | |||||
| Net income | $ | 14,293 | $ | 16,114 | |||
| Earnings per share: | |||||||
| Basic: | $ | 2.20 | $ | 2.47 | |||
| Diluted: | $ | 2.20 | $ | 2.47 | |||
FINANCIAL SUMMARY (continued)
(unaudited)
| December 31, | September 30, | December 31, | |||||||
| Key financial ratios: | 2020 | 2020 | 2019 | ||||||
| Return on average assets (YTD) | 0.88 | % | 0.76 | % | 1.09 | % | |||
| Return on average common equity (YTD) | 11.71 | % | 10.15 | % | 14.77 | % | |||
| December 31, | September 30, | December 31, | |||||||
| 2020 | 2020 | 2019 | |||||||
| Asset Quality Ratios | |||||||||
| Allowance for loan losses to total loans | 1.41 | % | 1.39 | % | 1.07 | % | |||
| Non-performing loans to total loans (a) | 2.69 | % | 0.45 | % | 0.43 | % | |||
| Non-performing assets to loans (a) | 3.64 | % | 1.44 | % | 1.53 | % | |||
| Non-performing assets to assets (a) | 2.70 | % | 1.10 | % | 1.20 | % | |||
| Performing TDRs to loans (a) | 0.22 | % | 0.19 | % | 0.22 | % | |||
| Allowance for loan losses to | |||||||||
| non-performing loans (a) | 52.39 | % | 305.49 | % | 246.09 | % | |||
| Capital Ratios | |||||||||
| Average stockholders' equity to average total assets (YTD) | 7.48 | % | 7.47 | % | 7.38 | % | |||
| Period-end stockholders' equity to period-end assets (YTD) | 7.53 | % | 7.45 | % | 7.71 | % | |||
| Total risk-based capital ratio | 14.97 | % | 15.05 | % | 14.89 | % | |||
| Tier 1 risk-based capital ratio | 13.37 | % | 13.28 | % | 13.04 | % | |||
| Common equity Tier 1 capital | 10.00 | % | 9.97 | % | 9.86 | % | |||
| Tier 1 leverage ratio | 10.19 | % | 9.99 | % | 10.73 | % | |||
(a) Non-performing loans include loans 90 days past due and accruing and nonaccrual loans.
| December 31, | September 30, | December 31, | ||||||||
| Balance sheet information: | 2020 | 2020 | 2019 | |||||||
| Total assets | $ | 1,733,731 | $ | 1,669,770 | $ | 1,492,962 | ||||
| Loans held for investment | 1,286,967 | 1,279,165 | 1,168,797 | |||||||
| Allowance for loan losses | (18,113 | ) | (17,764 | ) | (12,477 | ) | ||||
| Loans held for sale | 5,099 | 7,886 | 428 | |||||||
| Investment securities | 204,383 | 193,175 | 180,901 | |||||||
| Deposits | 1,383,606 | 1,326,752 | 1,186,521 | |||||||
| Total stockholders’ equity | 130,589 | 124,367 | 115,038 | |||||||
| Book value per share | $ | 20.12 | $ | 19.15 | $ | 17.63 | ||||
| Market price per share | $ | 21.90 | $ | 18.94 | $ | 24.52 | ||||
| Net interest spread (FTE) (YTD) | 3.25 | % | 3.27 | % | 3.20 | % | ||||
| Net interest margin (FTE) (YTD) | 3.48 | % | 3.50 | % | 3.51 | % | ||||
| Net interest spread (FTE) (QTR) | 3.21 | % | 3.30 | % | 3.33 | % | ||||
| Net interest margin (FTE) (QTR) | 3.40 | % | 3.50 | % | 3.63 | % | ||||
| Efficiency ratio (YTD) | 65.82 | % | 66.67 | % | 67.15 | % | ||||
| Efficiency ratio (QTR) | 63.49 | % | 61.41 | % | 64.35 | % | ||||
NON-GAAP FINANCIAL MEASURES
(unaudited)
Use of Non-GAAP Measures
Several financial measures in this press release are non-GAAP, meaning they are not presented in accordance with generally accepted accounting principles (GAAP) in the U.S. The non-GAAP items presented in this press release are non-GAAP net income, non-GAAP basic earnings per share, non-GAAP diluted earnings per share, non-GAAP return on average assets and non-GAAP return on average common equity. These measures include the adjustments to exclude the additional loan loss provision recorded in the periods presented below caused by the impact on current economic conditions due to the COVID-19 pandemic and the impact of the gain on the sale of our Branson branch that closed during the quarter ended March 31, 2019. These are non-recurring and not considered indicative of underlying earnings performance. The Company believes that the exclusion of these items provides a useful basis for evaluating the Company's underlying performance, but should not be considered in isolation and is not in accordance with, or a substitute for, evaluating performance utilizing GAAP financial information. The Company uses non-GAAP measures to analyze its financial performance and to make financial comparisons to prior periods presented on a similar basis. The Company believes that providing such adjusted results allows investors to better understand the Company's comparative operating performance for the periods presented. Non-GAAP measures are not formally defined by GAAP or codified in the federal banking regulations, and other entities may use calculation methods that differ from those used by the Company. The Company has reconciled each of these measures to a comparable GAAP measure below:
| Three Months Ended | |||||||||
| December 31, | September 30, | December 31, | |||||||
| Statement of income information: | 2020 | 2020 | 2019 | ||||||
| Net income – GAAP | $ | 5,183 | $ | 4,960 | $ | 4,068 | |||
| Effect of ALL provision COVID-19 (a) | — | 632 | — | ||||||
| Effect of net gain on branch sale (b) | — | — | — | ||||||
| Net income - non-GAAP | $ | 5,183 | $ | 5,592 | $ | 4,068 | |||
| Earnings per share: | |||||||||
| Basic – GAAP | $ | 0.80 | $ | 0.77 | $ | 0.62 | |||
| Effect of ALL provision COVID-19 (a) | — | 0.10 | — | ||||||
| Effect of net gain on branch sale (b) | — | — | — | ||||||
| Basic - non-GAAP | $ | 0.80 | $ | 0.87 | $ | 0.62 | |||
| Diluted – GAAP | $ | 0.80 | $ | 0.77 | $ | 0.62 | |||
| Effect of ALL provision COVID-19 (a) | — | 0.10 | — | ||||||
| Effect of net gain on branch sale (b) | — | — | — | ||||||
| Diluted - non-GAAP | $ | 0.80 | $ | 0.87 | $ | 0.62 | |||
NON-GAAP FINANCIAL MEASURES (continued)
(unaudited)
| For the Years Ended | |||||||
| December 31, | |||||||
| Statement of income information: | 2020 | 2019 | |||||
| Net income - GAAP | $ |
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FAQ
What were Hawthorn Bancshares' earnings in 2020?
Hawthorn Bancshares reported net income of $14.3 million for the year 2020.
How did the fourth quarter of 2020 perform for HWBK?
In Q4 2020, Hawthorn Bancshares recorded a net income of $5.2 million, or $0.80 per diluted share.
What is the dividend declared by HWBK for Q1 2021?
Hawthorn Bancshares declared a quarterly dividend of $0.13 per share for Q1 2021.
How much did total deposits increase in Q4 2020 for HWBK?
Total deposits increased by $56.9 million, or 4.3%, to $1.4 billion in Q4 2020.
What challenges did HWBK face in 2020 due to the pandemic?
Hawthorn Bancshares faced challenges with borrowers due to the COVID-19 pandemic, leading to an increase in non-performing loans.
Hawthorn Bancshars Inc.
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HWBK Stock Data
212.54M
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Banks - Regional
National Commercial Banks
United States of America
JEFFERSON CITY
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