Shares of Hawthorn Bancshares, Inc. HWBK have lost 1.4% since the company reported results for the quarter ended March 31, 2026, against the S&P 500 Index’s 2.3% gain over the same period. Over the past month, however, the stock advanced 3.7%, trailing the S&P 500’s 10.8% increase.
Hawthorn Bancshares’ Earnings Snapshot
Hawthorn Bancshares reported first-quarter 2026 net income of $6.8 million, up 25.9% from $5.4 million in the year-ago quarter, while diluted earnings per share increased 27.3% to $0.98 from $0.77. Net interest income rose 11.8% year over year to $17.1 million from $15.3 million in the year-ago quarter, supported by improved asset yields and lower funding costs.
HWBK’s efficiency ratio improved to 60.46% from 66.64% a year earlier. Total loans held for investment declined from $1.47 billion as of March 31, 2025, to $1.45 billion as of March 31, 2026, while deposits fell to $1.52 billion from $1.54 billion during the same time. Investment securities decreased year over year to $210.8 million from $226.6 million.
HWBK’s NIM Strength Supports Profitability
Hawthorn Bancshares’ fully taxable equivalent (FTE) net interest margin (NIM) improved to 4.07% in the first quarter from 3.67% in the prior-year quarter and remained relatively stable compared with 4.03% in the fourth quarter of 2025. Management attributed the year-over-year increase in net interest income primarily to higher rates earned on earning assets and lower costs on deposits and borrowings.
Interest income totaled $24.4 million, rising 3.9% from $23.5 million a year earlier, while interest expense declined 10.7% to $7.3 million from $8.2 million. The yield on average loans held for investment, on an FTE basis, improved to 6.11% from 5.89% in the prior-year quarter. Meanwhile, the average cost of deposits decreased to 2.15% from 2.44% a year ago, reflecting easing funding pressures. Non-interest-bearing demand deposits represented 28% of total deposits at quarter-end compared with 27.7% a year earlier.
Hawthorn Bancshares, Inc. Price, Consensus and EPS Surprise
Hawthorn Bancshares, Inc. price-consensus-eps-surprise-chart | Hawthorn Bancshares, Inc. Quote
Hawthorn Bancshares’ Expense Discipline and Fee Income Growth
Hawthorn Bancshares benefited from stronger fee-based revenue and controlled operating costs during the quarter. Non-interest income increased 21% sequentially and 25.3% year over year to $4.4 million from $3.5 million in the year-ago quarter. At the same time, non-interest expense declined 2.2% from the prior quarter and rose 3.7% to $12.9 million from $12.5 million in the prior-year period.
The efficiency ratio improved year over year to 60.46% from 66.64%, aided by higher NIM and increased non-interest income. Return on average assets rose to 1.49% from 1.20% in the year-ago quarter, while return on average common equity improved to 15.41% from 14.29%.
HWBK’s Credit Quality Remains Stable
HWBK reported stable credit quality metrics during the quarter, although non-performing assets remained above year-ago levels. Non-performing assets to loans were 0.47% as of March 31, 2026, compared with 0.21% a year earlier. Non-performing assets totaled $6.9 million as of March 31, 2026, compared with $3.1 million as of March 31, 2025.
Management said the increase from the prior-year quarter was mainly driven by higher non-accrual residential real estate loans, partly offset by lower other real estate owned. Net loan charge-offs were minimal at $0.06 million, or 0.02% annualized average loans, improving significantly from $1.1 million in the previous quarter.
The provision for credit losses totaled $0.1 million compared with a $0.4 million provision in the prior quarter. The allowance for credit losses stood at $20.9 million as of March 31, 2026, representing 1.44% of total loans and 308.25% of non-performing loans.
Hawthorn Bancshares’ Capital Position Remains Strong
Hawthorn Bancshares maintained capital ratios above regulatory well-capitalized thresholds. The total risk-based capital ratio was 15.91% as of March 31, 2026, compared with 14.94% a year earlier. Common equity tier 1 capital ratio improved to 11.61% from 10.64%.
Book value per share increased year over year to $25.58 from $21.97. HWBK also repurchased 12,000 common shares during the first three months of 2026 at an average cost of $32.68 per share, totaling $0.4 million. Approximately $8 million remained available under the repurchase authorization as of quarter-end.
HWBK’s Other Developments
The board of directors approved a quarterly cash dividend of $0.21 per common share, payable on July 1, 2026, to shareholders of record as of June 15, 2026. HWBK did not disclose any acquisitions, divestitures or restructuring activities during the quarter. However, the company continued executing its existing share repurchase program, which was expanded in June 2025 to authorize up to $10 million in buybacks.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
Hawthorn Bancshares, Inc. (HWBK): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.
