Hawthorn Bancshares Reports Results for First Quarter 2021

Rhea-AI Summary

Hawthorn Bancshares (NASDAQ: HWBK) reported a robust net income of $5.8 million, or $0.92 per diluted share for Q1 2021, marking significant growth from $0.80 in Q4 2020 and $0.13 in Q1 2020. The company achieved a net interest margin of 3.62% and successfully closed over $40 million in PPP loans. While total loans decreased by 0.8% to $1.3 billion quarter-over-quarter, year-over-year figures showcased a healthy growth of 8.1%. The bank's asset quality remains strong, with a minimal decline in non-performing loans.

Positive

• Net income of $5.8 million for Q1 2021, up from $0.80 in Q4 2020 and $0.13 in Q1 2020.
• Net interest income increased to $14.4 million, a year-over-year rise of $1.9 million.
• Successful closure of over $40 million in PPP loans during Q1 2021.
• Total deposits grew by $10.4 million quarter-over-quarter, up 18.2% year-over-year.

Negative

• Total loans decreased by $10.8 million, or 0.8%, compared to the previous quarter.

First Quarter 2021 Results

• Net income of $5.8 million, or $0.92 per diluted share
• Net interest margin, fully taxable equivalent ("FTE") of 3.62%
• Return on average assets and equity of 1.38% and 18.03%, respectively
• Closed over $40 million in SBA Paycheck Protection Program Loans ("PPP")

JEFFERSON CITY, Mo., April 28, 2021 (GLOBE NEWSWIRE) -- Hawthorn Bancshares Inc. (NASDAQ: HWBK), (the “Company” or “HWBK”) reported net income of $5.8 million for the first quarter 2021, an increase of $0.6 million compared to the linked fourth quarter 2020 (“linked quarter”) and an increase of $5.0 million from the first quarter 2020 (the “prior year quarter”). Earnings per diluted share (“EPS”) was $0.92 for the first quarter 2021 compared to $0.80 and $0.13 for the linked quarter and prior year quarter, respectively. Net income and EPS for the current quarter increased from the linked quarter due to higher net interest income in addition to lower provision expense, partially offset by a decrease in non-interest income, described in more detail below.

Chairman David T. Turner commented, “In the first quarter of the new year we continued to build momentum as we have done consistently in recent quarters impacted by the pandemic. While the pandemic is still influencing our focus and operations, we are more confident in our ability to anticipate and deliver banking services to address the needs of our borrowers and customers. While in some instances traditional loan demand has been reduced, we have been extremely successful in closing over $40 million in PPP Round 2 loans during the first quarter, and this is in addition to over $88 million of PPP lending we accomplished during Round 1 in year 2020. Approximately 78% of the PPP Round 1 loans were forgiven by the end of the first quarter. Our bankers have continued to adapt and respond very well.”

Turner continued, “Despite these unprecedented and challenging times, we continue to deliver strong financial results. In the first quarter we earned $5.8 million in net income, which translates into $0.92 per share, and an ROA and ROE of 1.38% and 18.03%, respectively. This level of earnings is an increase of $0.6 million as compared to the previous quarter, and an increase of $5.0 million compared to first quarter of 2020. We are continuing to see quarter-over-quarter growth in net interest income, which has been positively impacted by the recognition of fee income as PPP loans have been forgiven. Our overall asset quality remains very strong. We continue to closely monitor our portfolio of non-performing loans which we saw spike last year as a result of the pandemic.

We remain very excited about the future.”

Highlights

• Earnings – Net income in the first quarter 2021 was $5.8 million and EPS was $0.92. Pre-tax pre-provision income (“PTPP”) of $7.2 million for the first quarter increased $0.5 million, or 7%, from the linked quarter, and increased $2.9 million, or 66%, from the prior year quarter.
• Net interest income and net interest margin – Net interest income of $14.4 million for the first quarter 2021, increased $0.8 million from the linked quarter, and increased $1.9 million from the prior year quarter. Contributing to the year-over-year increase in net interest income was the recognition of $1.4 million of PPP loan-related fees during the current quarter. Net interest margin, on a FTE basis, was 3.62% for the first quarter 2021, an increase from 3.40% for the linked quarter, and an increase from 3.55% for the prior year quarter.
• Loans – Loans held for investment totaled $1.3 billion as of March 31, 2021, a decrease of $10.8 million, or 0.8%, as compared to the end of the linked quarter. Year-over-year, loans grew $95.7 million, or 8.1%, from $1.2 billion as of March 31, 2020. 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 $34.2 million at March 31, 2021, a decrease of $0.4 million from $34.6 million at the end of the linked quarter. The allowance for loan losses to total loans was 1.44% at March 31, 2021, compared to 1.41% at December 31, 2020 and 1.33% at March 31, 2020.
• Deposits – Total deposits increased by $10.4 million, or 0.8%, equal to $1.4 billion as of March 31, 2021 as compared to the end of the linked quarter. Year-over-year deposits grew $214.4 million, or 18.2%, from $1.2 billion as of March 31, 2020. Growth in deposits over prior year quarter was positively impacted in part by customers who deposited both economic impact payments and PPP loan proceeds into demand deposit accounts, in addition to an increase in interest bearing deposits.
• Capital – Total shareholder’s equity was $130.7 million and the tangible common equity to tangible assets ratio was 7.55% at March 31, 2021 as compared to 7.53% and 7.64% from the end of the linked quarter and prior year quarter, respectively. Regulatory capital ratios remain “well-capitalized”, with tier 1 leverage ratio of 10.22% and a total risk-based capital ratio of 14.80%.

The Company's 2019 Repurchase Plan authorized the purchase of up to $4.2 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. During the three months ended March 31, 2021 the Company repurchased 117,632 shares at an average cost of $18.26 per share totaling $2.1 million. As of March 31, 2021, $1.9 million remained for share repurchase pursuant to that authorization.

During the current quarter, the Company’s Board of Directors approved a quarterly cash dividend of $0.13 per common share, payable April 1, 2021 to shareholders of record at the close of business on March 15, 2021.

Net Interest Income and Net Interest Margin

Net interest income of $14.4 million for the first quarter 2021, increased $0.8 million from the linked quarter, and increased $1.9 million from the first quarter 2020. Net interest margin, on a FTE basis, was 3.62% for the first quarter 2021, compared to 3.40% for the linked quarter, and 3.55% for the first quarter of 2020.

Loans

Loans held for investment decreased by $10.8 million, or 0.8%, to $1.3 billion as of March 31, 2021 as compared to the end of the linked quarter. Year-over-year loans grew $95.7 million, or 8.1%. Although $40.2 million in loans closed during the current quarter related to PPP Round 2, $48.0 million in loans were forgiven related to PPP Round 1, which resulted in a quarter-over-quarter reduction in loans. Growth in loans over the prior year quarter was primarily due to an increase in commercial loans for customers who participated in the PPP.

The yield earned on average

FAQ

What were the earnings per share for HWBK in Q1 2021?

Hawthorn Bancshares reported earnings per diluted share of $0.92 for Q1 2021.

How much net income did HWBK generate in the first quarter of 2021?

Hawthorn Bancshares generated a net income of $5.8 million in Q1 2021.

What is the net interest margin reported by HWBK for Q1 2021?

The net interest margin for Hawthorn Bancshares in Q1 2021 was 3.62%.

How much did HWBK close in PPP loans during Q1 2021?

Hawthorn Bancshares closed over $40 million in Paycheck Protection Program loans during Q1 2021.

What was the change in total deposits for HWBK in Q1 2021?

Hawthorn Bancshares' total deposits increased by $10.4 million, or 0.8%, in Q1 2021.