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HAWTHORN BANCSHARES, INC. (HWBK)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered stable profitability with net income of $4.6M and diluted EPS of $0.66; net interest margin (FTE) expanded sequentially to 3.55% from 3.36% (Q3), while the efficiency ratio ticked up to 68.5% from 66.2% on higher non-interest expense .
  • Deposits grew $29.7M (+2.0% q/q), investments increased $14.8M (+7.1% q/q), and asset quality improved materially as non-performing assets fell to $4.2M (0.23% of total assets) from $8.5M in Q3 .
  • Management maintained the quarterly dividend at $0.19 per share and highlighted operational efficiency gains and new market expansion (Overland Park, KS opening in Feb-2025) as strategic priorities .
  • Wall Street consensus (S&P Global) was unavailable; no beat/miss assessment vs estimates can be provided at this time (see Estimates Context) [GetEstimates error: S&P Global daily limit exceeded].

What Went Well and What Went Wrong

What Went Well

  • Net interest margin (FTE) improved q/q to 3.55%, supported by lower deposit costs (2.49% vs 2.74% in Q3); ROAA/ROAE held at 1.00%/12.49% .
  • Asset quality strengthened: non-performing assets declined to $4.2M (0.23% of assets) and allowance coverage rose to 802% of NPLs; Q4 net charge-offs were de minimis ($0.04M) .
  • Strategic execution: approval to open Overland Park, KS banking center in Feb-2025; management emphasized “improving core operational efficiency and income” and “creating synergies” .

What Went Wrong

  • Efficiency ratio worsened sequentially to 68.5% (from 66.2% in Q3) as non-interest expense rose $0.9M q/q; though still better y/y (Q4’23: 81.1%) .
  • Net interest income ($15.3M) remained below Q4’23 ($15.8M) as lower average earning assets reduced interest income y/y, partially offset by lower interest expense .
  • Loans were flat q/q and −4.7% y/y, reflecting balance sheet repositioning and soft loan demand; deposits remained −2.4% y/y despite the q/q increase .

Financial Results

Quarterly Income Statement Snapshot ($USD Thousands)

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total interest income25,220 23,556 23,819 23,924
Total interest expense9,376 9,384 9,492 8,578
Net interest income15,844 14,172 14,327 15,346
Provision for credit losses1,550 456 500 300
Non-interest income2,152 3,995 3,783 3,522
Investment securities gains (losses), net(11,565) (15) 8 3
Non-interest expense14,587 12,034 11,994 12,921
Pre-tax income (loss)(9,706) 5,662 5,624 5,650
Income taxes (benefit)(2,263) 1,033 1,050 1,053
Net income (loss)(7,443) 4,629 4,574 4,597
Diluted EPS ($)(1.05) 0.66 0.66 0.66

Key Profitability Ratios

MetricQ4 2023Q2 2024Q3 2024Q4 2024
ROAA (%)(1.57)% 1.02% 1.00% 1.00%
ROAE (%)(24.54)% 13.75% 12.87% 12.49%
Net interest margin (FTE) (%)3.48% 3.33% 3.36% 3.55%
Efficiency ratio (%)81.06% 66.24% 66.23% 68.48%

Balance Sheet and Asset Quality

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total assets ($000)1,875,350 1,847,810 1,809,769 1,825,185
Loans HFI ($000)1,539,147 1,498,504 1,466,751 1,466,160
Investment securities ($000)195,042 191,159 209,019 223,801
Deposits ($000)1,570,844 1,550,250 1,503,504 1,533,182
Stockholders’ equity ($000)136,085 138,241 146,474 149,547
Book value per share ($)19.33 19.76 20.91 21.36
NPLs / total loans (%)0.42% 0.30% 0.28% 0.19%
NPAs / loans (%)0.53% 0.54% 0.58% 0.29%
NPAs / total assets (%)0.43% 0.44% 0.47% 0.23%
ACL on loans / NPLs (%)370.25% 495.38% 539.52% 802.48%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ1 2025 payable Apr 1, 2025$0.19 (Q4 2024 dividend payable Jan 1, 2025) $0.19 per share; record date Mar 15, 2025, payable Apr 1, 2025 Maintained
Branch expansionFeb 2025N/AApproval to open Overland Park, KS banking center in Feb 2025 New

No formal revenue/EPS/OpEx/OI&E/tax guidance was provided in the Q4 materials .

Earnings Call Themes & Trends

Earnings call transcript for Q4 2024 was not available; themes are derived from the company’s press releases.

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Operational efficiencyFocus on core business; efficiency ratio 66.2%; OpEx down q/q Efficiency 66.23%; OpEx down y/y; fee income expansion Efficiency 68.5%; OpEx up q/q but down y/y; continued efficiency focus Mixed (sequentially softer, y/y better)
Net interest margin and deposit costsNIM (FTE) 3.33%; deposit cost 2.69% NIM (FTE) 3.36%; deposit cost 2.74% NIM (FTE) 3.55%; deposit cost 2.49% Improving
Fee income/non-interest incomeStrong q/q due to BOLI and OREO gains Elevated y/y; q/q slightly lower $3.5M; down q/q; up y/y (BOLI and MSR comp vs prior year) Stable to mixed
Asset qualityNPLs 0.30%; charge-offs $2.0M (one relationship) NPLs 0.28%; NPAs rose on new NPL/foreclosure NPLs 0.19%; NPAs down to $4.2M; net charge-offs $0.04M Improving
Balance sheet mix (loans/investments)Loans −$20.3M q/q; investments +$1.4M Loans −$31.8M q/q; investments +$17.9M Loans flat q/q; investments +$14.8M q/q Stabilizing loans; rising investments
Strategic footprintCore focus; MSR sale; product/service expansion Continued focus on core lines; reduced overhead Approval to open Overland Park, KS banking center Expanding

Management Commentary

  • “We are pleased with our fourth quarter and full-year results as they reflect our commitment to improving core operational efficiency and income… Internally, we have been focused on creating synergies in our operations and building a foundation upon which we can grow.” — Brent Giles, CEO .
  • “We are pleased with the progress we've made on our strategic objectives, and the corresponding financial results. Our focus on core lines of business has resulted in reduced overhead expenses and expansion of our fee income.” — Brent Giles, CEO (Q3 2024) .
  • “We continued to see a positive impact from focusing on the core business of the Bank… we remain committed to expanding our products and services to our core customer base, while managing our operating expenses.” — Brent Giles, CEO (Q2 2024) .

Q&A Highlights

  • Earnings call transcript for Q4 2024 was not available; no Q&A themes could be extracted [ListDocuments: no earnings-call-transcript found for period].

Estimates Context

  • S&P Global consensus EPS and revenue for Q4 2024 were unavailable due to data request limits; therefore, we cannot assess beats/misses vs Street estimates at this time [GetEstimates error: S&P Global daily limit exceeded].
  • Actual results: diluted EPS $0.66; net interest margin (FTE) 3.55%; net income $4.6M; non-interest income $3.5M .
  • Without published consensus, estimate revisions will likely focus on sequential NIM improvement and asset quality gains, offset by slightly higher efficiency ratio in Q4 .

Key Takeaways for Investors

  • Sequential NIM expansion (3.55% vs 3.36%) alongside a lower average cost of deposits (2.49% vs 2.74%) underscores core earnings resilience in Q4 .
  • Asset quality strengthened materially: NPAs fell to $4.2M (0.23% of assets) and NPLs to 0.19%; net charge-offs were minimal at $0.04M, supporting credit cost stability .
  • Non-interest expense increased q/q ($12.9M vs $12.0M), nudging the efficiency ratio higher to 68.5%; watch OpEx discipline as management drives synergies in 2025 .
  • Balance sheet repositioning continues: loans flat q/q and −4.7% y/y, with investments up 7.1% q/q; deposit base improved by $29.7M q/q .
  • Capital remains strong (TRBC 14.79%; Tier 1 leverage 11.46%) and dividend maintained at $0.19 per share, providing support for shareholder returns .
  • Strategic expansion with a new Overland Park, KS location (Feb-2025) aims to support growth and deepen market presence; monitor early traction and deposit mix impacts .
  • With Street estimates unavailable, near-term trading likely keys off sequential margin improvement, improved credit metrics, and dividend stability; medium-term thesis revolves around operational efficiency gains and targeted market expansion .