Executive Summary

EPS of $0.88 rose 33% year over year and 14% sequentially as net interest margin expanded 22 bps q/q to 3.89% and the efficiency ratio improved to 62.32% .
Net income increased to $6.1M (+31.8% y/y; +13.3% q/q), driven by higher net interest income and lower deposit costs (average cost of deposits fell to 2.35% from 2.44% in Q1) .
Balance sheet contracted modestly q/q: loans (-0.5%) and deposits (-1.7%); noninterest-bearing demand deposits held at 27.7%, supporting margin resilience .
Asset quality remains solid; NPAs/loans rose to 0.35% q/q due to moving a closed operations center to OREO; net charge-offs were de minimis (0.01% annualized) .
No S&P Global consensus estimates were published for Q2 2025 EPS or revenue, so we cannot assess beat/miss versus the Street. The company maintained a $0.20 quarterly dividend and expanded its buyback authorization to $10M in June (with $9.0M remaining at quarter-end) .

What Went Well and What Went Wrong

What Went Well
- Net interest margin rose to 3.89% (from 3.67% in Q1), reflecting lower deposit costs and stable asset yields; efficiency ratio improved to 62.32% (from 66.64%) .
- Earnings strength: net income of $6.1M (+31.8% y/y; +13.3% q/q) and ROAA/ROCE of 1.36%/15.85% as NII increased (+$0.8M q/q; +$2.0M y/y) .
- Management focus and tone: “Managing our net interest margin in highly competitive markets and controlling expenses were top initiatives during the quarter. Our strong results reflect the focus on these areas.” — CEO Brent M. Giles .
What Went Wrong
- Modest balance-sheet contraction: loans -$7.4M (-0.5%) and deposits -$25.9M (-1.7%) q/q amid competitive markets .
- Non-interest income declined 11.3% y/y; YoY decline partially offset by higher NII and lower deposit costs .
- NPAs/loans increased to 0.35% from 0.21% q/q due to reclassifying a closed operations center into OREO, though overall credit costs remained minimal .

Metric	Q2 2024	Q1 2025	Q2 2025
Total Revenue (NII + Non-Interest + Securities Gains/Losses) ($USD Millions)	$18.15	$18.76	$19.69
Net Interest Income ($USD Millions)	$14.17	$15.29	$16.14
Non-Interest Income ($USD Millions)	$4.00	$3.46	$3.55
Investment Securities Gains/(Losses) ($USD Millions)	-$0.02	-$0.00	-$0.00
Pre-Tax Income ($USD Millions)	$5.66	$6.60	$7.47
Net Income ($USD Millions)	$4.63	$5.38	$6.10
Diluted EPS ($)	$0.66	$0.77	$0.88
Net Interest Margin (FTE, %)	3.33%	3.67%	3.89%
Efficiency Ratio (%)	66.24%	66.64%	62.32%

Balance Sheet & KPIs	Q2 2024	Q1 2025	Q2 2025
Loans Held for Investment ($USD Millions)	$1,498.50	$1,470.32	$1,462.90
Deposits ($USD Millions)	$1,550.25	$1,543.89	$1,517.99
Investment Securities ($USD Millions)	$191.16	$226.58	$229.39
Total Assets ($USD Millions)	$1,847.81	$1,883.42	$1,877.42
Book Value Per Share ($)	$19.71	$21.97	$22.53
Average Cost of Deposits (%)	2.69%	2.44%	2.35%
Loan Yield (FTE, %)	5.75%	5.89%	5.98%
Non-Interest-Bearing DD (% of Deposits)	25.9%	27.7%	27.7%

Asset Quality	Q2 2024	Q1 2025	Q2 2025
NPAs to Loans (%)	0.54%	0.21%	0.35%
NPLs to Total Loans (%)	0.30%	0.17%	0.19%
ACL to Total Loans (%)	1.47%	1.48%	1.47%
Net Charge-Offs to Avg Loans (Annualized, %)	0.53%	0.00%	0.01%

Note: Hawthorn does not report segment results; the company presents consolidated financials .

Metric	Period	Previous Guidance/Action	Current Guidance/Action	Change
Quarterly Dividend per Share	Next payment (Q3 calendar 2025)	$0.20 declared Apr 30, 2025; payable Jul 1, 2025	$0.20 declared Jul 30, 2025; payable Oct 1, 2025	Maintained
Share Repurchase Authorization	Ongoing	~$3.5M remaining under prior plan as of Mar 31, 2025	New $10.0M authorization approved Jun 3, 2025; $9.0M remaining at Jun 30, 2025	Raised

No quantitative revenue, margin, expense, OI&E, or tax-rate guidance was provided in Q2 materials .

No Q2 2025 earnings call transcript or slides were available; themes reflect management’s Q2 press release and prior-quarter releases .

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Net Interest Margin & Deposit Pricing	Q4: NIM 3.55%; cost of deposits 2.49% . Q1: NIM 3.67%; cost of deposits 2.44% .	NIM 3.89%; cost of deposits 2.35%; focus on NIM in competitive markets .	Improving
Expense Discipline/Efficiency	Q4 efficiency 68.48%; FY non-interest expense -5.4% y/y . Q1 efficiency 66.64% .	Efficiency 62.32%; CEO highlights expense control .	Improving
Asset Quality	Q4 NPAs/loans 0.29%, NPL/loans 0.19% . Q1 NPAs/loans 0.21%, NCOs ~0% .	NPAs/loans 0.35% (OREO from closed ops center); NCOs 0.01% annualized .	Stable/benign with OREO-driven uptick
Capital & Shareholder Returns	Q4 TRBC 14.79%; $3.9M buyback capacity; dividend $0.19 . Q1 TRBC 14.94%; dividend raised to $0.20; $3.5M buyback remaining .	TRBC 15.12%; new $10M authorization; $9.0M remaining; $0.20 dividend declared .	Increasing capital deployment
Balance Sheet Growth	Q4: Deposits +$29.7M q/q; loans -$0.6M q/q . Q1: Loans +$4.2M (annualized); deposits +$10.7M (annualized) .	Loans -$7.4M q/q; deposits -$25.9M q/q .	Mixed; slight contraction in Q2

“Managing our net interest margin in highly competitive markets and controlling expenses were top initiatives during the quarter. Our strong results reflect the focus on these areas.” — Brent M. Giles, CEO .
On asset quality classification: NPAs increased q/q due to closing an operational center and moving the property to OREO; credit costs remained minimal .
Capital return posture: New $10.0M buyback (with $9.0M remaining at quarter-end) and $0.20 dividend declared for October 1, 2025 .

No Q2 2025 earnings call transcript was available; therefore, no Q&A highlights or clarifications to report .

S&P Global shows no published Wall Street consensus for Q2 2025 EPS or revenue for HWBK; as a result, we cannot determine beat/miss versus consensus in this quarter. Values retrieved from S&P Global.*
Actuals: Diluted EPS $0.88 and revenue net of interest expense (NII + non-interest income + securities gains/losses) $19.69M, both from company-reported financials .

Metric	Q2 2025 Consensus	Q2 2025 Actual
Primary EPS Consensus Mean	N/A*	$0.88
Revenue Consensus Mean	N/A*	$19.69M

*Values retrieved from S&P Global.

Margin-led EPS upside: Sequential NIM expansion to 3.89% and a better efficiency ratio (62.32%) were the primary earnings drivers this quarter .
Deposit dynamics supportive of NIM: Average deposit cost fell to 2.35% with NIB mix steady at 27.7%, mitigating competitive funding headwinds .
Watch balance-sheet trends: Loans (-0.5%) and deposits (-1.7%) declined q/q; sustaining NIM while stabilizing balances is the key execution risk near term .
Credit benign, classification noise: NPAs/loans rose to 0.35% due to OREO related to a closed operations center; core credit costs remain minimal (0.01% NCOs) .
Capital deployment is a support: 15.12% total risk-based capital, active buyback ($9.0M remaining) and a maintained $0.20 dividend provide downside support to the equity story .
No Street consensus this quarter: With no S&P Global consensus, positioning hinges more on company-reported trends (NIM, expenses, credit) than on beat/miss optics .
Medium term: If lower funding costs and expense control persist while balances stabilize, operating leverage could continue to support ROA/ROE and book value accretion .