8-K: Hawthorn Bancshares Boosts Dividend, Reports Strong 2025 Earnings

Hawthorn Bancshares announced a 5% increase in its quarterly cash dividend to $0.21 per share, alongside robust fourth-quarter and full-year 2025 financial results.

Summary

• Reported fourth-quarter 2025 net income of $6.2 million, or $0.90 per diluted share, an improvement from $6.1 million ($0.88 EPS) in Q3 2025 and $4.6 million ($0.66 EPS) in Q4 2024.
• Full-year 2025 net income reached $23.8 million, or $3.43 per diluted share, a 30.4% increase from $18.3 million ($2.61 EPS) in 2024.
• The Board of Directors approved a quarterly cash dividend of $0.21 per common share, a 5% increase from the previous dividend, payable on April 1, 2026, to shareholders of record on March 15, 2026.
• Net interest margin (FTE) improved to 4.03% in Q4 2025 from 3.97% in Q3 2025, and to 3.89% for the full year 2025 from 3.41% in 2024.
• Efficiency ratio improved to 63.41% for the full year 2025, a 451 basis point improvement from 67.92% in 2024.
• Loans decreased by $27.2 million (1.8%) in Q4 2025 to $1.49 billion but increased by $20.6 million (1.4%) for the full year 2025.
• Deposits increased by $28.2 million (1.9%) in Q4 2025 to $1.55 billion and by $21.0 million (1.4%) for the full year 2025.
• Book value per share increased by 17.6% to $25.13 at year-end 2025 from $21.36 in 2024.
• Maintained a "well capitalized" regulatory capital position with total risk-based capital of 15.49% at December 31, 2025.
• Repurchased 100,358 common shares during 2025, with $8.4 million remaining available under the repurchase plan.

Sentiment

Score: 8

Explanation: The company reported strong financial results for both the fourth quarter and the full year 2025, with significant increases in net income, improved net interest margin, and a notable enhancement in its efficiency ratio. The 5% dividend increase and continued share repurchase program underscore confidence. While non-performing assets increased year-over-year and Q4 loans slightly decreased, the overall financial health and capital position remain robust.

Positives

• Increased quarterly cash dividend by $0.01 per common share, or 5%, to $0.21.
• Net income for Q4 2025 improved to $6.2 million ($0.90 diluted EPS) from $6.1 million ($0.88 diluted EPS) in Q3 2025 and $4.6 million ($0.66 diluted EPS) in Q4 2024.
• Full-year 2025 net income increased by $5.5 million, or 30.4%, to $23.8 million ($3.43 diluted EPS) from $18.3 million ($2.61 diluted EPS) in 2024.
• Net interest margin (FTE) improved to 4.03% in Q4 2025 and 3.89% for the full year 2025, up from 3.97% and 3.41% respectively.
• Return on average assets improved to 1.30% for the full year 2025 from 1.00% in 2024.
• Return on average equity improved to 14.95% for the full year 2025 from 13.04% in 2024.
• Efficiency ratio improved by 451 basis points to 63.41% for the full year 2025 from 67.92% in 2024.
• Deposits increased by $28.2 million (1.9%) in Q4 2025 and $21.0 million (1.4%) for the full year 2025.
• Book value per share increased by $3.77, or 17.6%, to $25.13 at year-end 2025.
• Maintained a "well capitalized" regulatory capital position with strong capital ratios (Total risk-based capital 15.49%, Tier 1 risk-based 14.24%, Tier 1 leverage 12.12%, Common equity to assets 9.19%).
• Net loan charge-offs for 2025 decreased to $1.2 million (0.08% of average loans) from $2.7 million (0.18%) in 2024.
• Provision for credit losses for 2025 decreased to $0.4 million from $1.0 million in 2024.
• Non-performing assets decreased to $7.0 million at December 31, 2025, from $7.3 million at September 30, 2025.
• Interest expense decreased by $0.4 million (5.3%) in Q4 2025 from Q3 2025 and by $5.0 million (13.5%) for the full year 2025 from 2024.
• Average cost of deposits decreased to 2.23% in Q4 2025 from 2.36% in Q3 2025 and to 2.35% for the full year 2025 from 2.63% in 2024.

Negatives

• Loans held for investment decreased by $27.2 million, or 1.80%, in Q4 2025 to $1.49 billion from $1.51 billion at September 30, 2025.
• Investment securities decreased by $10.1 million, or 4.5%, in Q4 2025 to $215.9 million from $226.0 million at September 30, 2025.
• Non-performing assets increased to $7.0 million at December 31, 2025, from $4.2 million at December 31, 2024.
• Non-performing assets to total loans increased to 0.47% at December 31, 2025, from 0.29% at December 31, 2024.
• Net loan charge-offs in Q4 2025 increased significantly to $1.1 million (0.30% of average loans) from $41,000 (0.01%) in Q3 2025, primarily due to one commercial relationship charge-off.
• Allowance for credit losses to non-performing loans decreased to 307.52% at December 31, 2025, from 802.48% at December 31, 2024, indicating a lower coverage ratio for non-performing loans.
• Non-interest income for the fourth quarter decreased by $0.1 million, or 3.5%, from the prior quarter.
• Non-interest expense for the fourth quarter increased by $0.4 million, or 3.4%, from the prior quarter, primarily due to an increase in other non-interest expense.
• Non-interest bearing demand deposits as a percent of total deposits decreased to 27.3% at December 31, 2025, from 27.8% at September 30, 2025.

Risks

• Actual results could differ materially from those projected in 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.

Future Outlook

The company's press release includes standard forward-looking statements, noting that actual results could differ materially from projections. No specific quantitative guidance or future targets were provided beyond the dividend announcement.

Management Comments

• The Board of Directors approved a quarterly cash dividend of $0.21 per common share, an increase of $0.01 per common share, or 5%, from the previous quarterly dividend.
• 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 December 31, 2025.

Industry Context

The filing does not provide explicit industry context or comparisons to broader industry trends. The results reflect the performance of a regional bank operating in Missouri, with improvements in net interest margin and efficiency ratio, which could be indicative of effective interest rate management in the current economic environment.

Stakeholder Impact

• Shareholders will receive an increased quarterly cash dividend of $0.21 per share.
• Shareholders benefit from increased book value per share and the ongoing share repurchase program.
• Hawthorn Bank continues to serve families and businesses in its operating regions.
• Salaries and employee benefits increased by $1.3 million, or 4.8%, for the full year 2025, indicating potential positive impact for employees.

Next Steps

• The quarterly cash dividend is payable on April 1, 2026, to shareholders of record on March 15, 2026.
• The company will file its Annual Report on Form 10-K, which will contain final, audited results.
• Management has discretion to determine the number, pricing, and timing of future share repurchases under the existing plan, with $8.4 million remaining available.

Key Dates

Recommendation

The company demonstrates strong financial performance with significant year-over-year growth in net income and EPS, coupled with improved profitability metrics like net interest margin and efficiency ratio. The 5% dividend increase signals management's confidence and commitment to shareholder returns. While there was a slight increase in non-performing assets year-over-year and a quarterly decrease in loans, the overall capital position remains 'well capitalized' and the allowance for credit losses is deemed commensurate with risks. The ongoing share repurchase program further supports shareholder value. These factors suggest a positive outlook for investors.

Keywords

Hawthorn Bancshares, HWBK, Bank Holding Company, Financial Results, Earnings Report, Dividend Increase, Net Income, EPS, Net Interest Margin, Efficiency Ratio, Loan Portfolio, Deposits, Capital Ratios, Share Repurchase, Banking Industry, Missouri Banking