Shares of Hawthorn Bancshares, Inc. (HWBK Quick QuoteHWBK - Free Report) have gained 8.7% since the company reported its earnings for the quarter ended Dec. 31, 2025. This compares to the S&P 500 Index’s 0.4% loss over the same time frame. Over the past month, the stock gained 4.8% compared with the S&P 500’s 0.9% growth.

HWBK’s Earnings Snapshot

For the fourth quarter of 2025, Hawthorn Bancshares reported net income of $6.2 million, or $0.90 per diluted share, compared with $4.6 million, or $0.66 per diluted share, in the year-ago quarter, reflecting a 34.5% increase in net income and a 36.4% rise in earnings per share (EPS). On a full-year basis, net income rose to $23.8 million, or $3.43 per diluted share, from $18.3 million, or $2.61 per diluted share, in 2024, representing a 30.4% increase in net income and a 31.4% increase in EPS.

Revenue performance was driven primarily by higher net interest income, which increased 14.6% year over year to $17.6 million in fourth-quarter 2025 from $15.3 million. HWBK does not report separate operating segments, as results are largely generated through its community banking operations, but balance sheet trends showed loans held for investment rising to $1.49 billion as of Dec. 31. 2025, from $1.47 billion as of Dec. 31, 2024, while deposits increased to $1.55 billion from $1.53 billion during the same time.

Hawthorn Bancshares’ Other Key Business Metrics

Profitability metrics showed continued improvement compared with the prior year. Return on average assets was 1.33% in the fourth quarter, up from 1.00% in the year-ago period, while return on average equity improved to 14.47% from 12.49%. Net interest margin on a fully taxable equivalent basis expanded to 4.03% from 3.55% a year earlier, reflecting higher asset yields and lower funding costs.

For the full year, net interest margin increased to 3.89% from 3.41% in 2024. The efficiency ratio for the full year improved by 451 basis points to 63.41% from 67.92%, indicating better cost management relative to revenue growth. For the full year, return on average assets rose to 1.30% from 1.00%, and return on average equity improved to 14.95% from 13.04%. Book value per share increased 17.6% to $25.13 as of Dec. 31, 2025, from $21.36 per share as of Dec. 31. 2024, supported by earnings growth and retained capital.

HWBK’s Management Commentary and Operational Drivers

Management attributed the improvement in earnings primarily to stronger net interest income and margin expansion, supported by an increase in average interest-earning assets and a decline in interest expense. Interest income rose 5.7% year over year in the fourth quarter, while interest expense declined 10.2%, aided by a lower average cost of deposits, which fell to 2.23% from 2.49% in the prior-year quarter. Non-interest income remained relatively stable, increasing 1.8% year over year in the quarter, while non-interest expense rose 2.6%, largely due to higher salaries and employee benefits.

Factors Influencing Hawthorn Bancshares’ Headline Results

Credit quality metrics were mixed during the quarter. Non-performing assets totaled $6.9 million as of Dec. 31, 2025, compared with $4.2 million a year earlier, though they declined modestly from the prior quarter. Net loan charge-offs increased to $1.1 million in the fourth quarter, or 0.30% of average loans, primarily due to a single commercial relationship that had been previously reserved for. Despite this, full-year net charge-offs declined to $1.2 million from $2.7 million in 2024.

The allowance for credit losses remained at 1.42% of outstanding loans as of Dec. 31, 2025, and management noted that reserve levels were commensurate with portfolio risks.

HWBK’s Guidance and Capital Actions

Hawthorn Bancshares did not provide formal earnings guidance. However, management highlighted its continued “well capitalized” regulatory position, with a total risk-based capital ratio of 15.49% at year-end, up from 14.79% a year earlier. Capital strength supported ongoing shareholder returns, including share repurchases and a higher dividend.

Hawthorn Bancshares’ Other Developments

During 2025, Hawthorn Bancshares repurchased 100,358 common shares under its existing repurchase plan, with $8.4 million remaining available for future buybacks as of Dec. 31, 2025. Subsequent to quarter-end, on Jan. 28, 2026, the board approved a quarterly cash dividend of $0.21 per common share, representing a 5% increase from the prior dividend and payable on April 1, 2026.

No acquisitions, divestitures, or major restructuring activities were reported for the quarter.