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Hawthorn Bancshares Stock Gains Post Q3 Earnings, NIM Expands

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Shares of Hawthorn Bancshares, Inc. (HWBK - Free Report) have gained 0.9% since the company reported earnings for the quarter ended Sept. 30, 2026, outperforming the S&P 500 Index, which rose 0.2% over the same period. Over the past month, HWBK shares gained 3.9%, while the S&P 500 fell 2.3%.

Hawthorn Bancshares’ Earnings Snapshot

Hawthorn Bancshares reported third-quarter 2026 net income of $7.1 million, up 15.2% from $6.1 million in the year-ago quarter. Diluted earnings per share (EPS) rose 14.8% to $1.01 from $0.88. Adjusted net income was $8.6 million, while adjusted diluted EPS increased 38.2% to $1.23.

Net interest income increased 14.4% to $19.3 million from $16.9 million a year earlier, supported by higher rates on earning assets and lower deposit costs. Non-interest income was $3.7 million, unchanged year over year, while non-interest expense increased 16.6% to $14.9 million.

HWBK does not report separate operating business segments.

HWBK’s Margin and Returns

Net interest margin (NIM) on a fully taxable-equivalent (FTE) basis improved to 4.41% from 3.97% in the prior-year quarter. The yield on average loans held for investment increased to 6.42%, on an FTE basis, from 6.12%, while the average cost of deposits declined to 2.13% from 2.36%. Non-interest-bearing demand deposits represented 26.6% of total deposits as of Sept. 30, 2026, compared with 27.8% a year earlier.

Return on average assets increased to 1.48% from 1.33%, while return on average common equity was 14.91% compared with 15.21%. On an adjusted basis, return on average assets reached 1.80% and return on average common equity was 18.17%. The adjusted efficiency ratio improved to 55.64% from 62.30%, although the reported efficiency ratio rose to 65% from 62.30%.

Hawthorn Bancshares, Inc. Price, Consensus and EPS Surprise

Hawthorn Bancshares, Inc. Price, Consensus and EPS Surprise

Hawthorn Bancshares, Inc. price-consensus-eps-surprise-chart | Hawthorn Bancshares, Inc. Quote

Hawthorn Bancshares’ Balance Sheet

Loans held for investment increased from $1.51 billion at the year-earlier period to $1.69 billion as of Sept. 30, 2026, while investments increased to $277.9 million from $226 million during the same period.

Deposits rose to $1.79 billion as of Sept. 30, 2026, from $1.53 billion as of Sept. 30, 2025. HWBK attributed much of the growth in loans, investments and deposits to the acquisition of FSC Bancshares.

Book value per share increased 14.9% from the prior-year quarter to $27.29. Tangible book value per common share was $23.58.

HWBK’s Credit and Capital

Non-performing assets totaled $9.9 million as of Sept. 30, 2026, compared with $7.3 million a year earlier. Non-performing assets represented 0.59% of total loans compared with 0.48% in the prior-year period, with the increase attributed to higher non-accrual loans in the commercial loan segment.

The provision for credit losses was $0.3 million compared with $0.4 million a year earlier. The allowance for credit losses was $24.4 million, or 1.45% of outstanding loans, compared with $21.9 million and the same 1.45% ratio a year earlier. HWBK said the higher allowance balance primarily reflected the Day 1 allowance recorded in connection with the FSC acquisition.

Hawthorn Bancshares remained well capitalized, with a total risk-based capital ratio of 14.29%, Tier 1 risk-based capital ratio of 13.04% and common equity Tier 1 ratio of 10.15%.

Hawthorn Bancshares’ Earnings Drivers

Third-quarter 2026 results were affected by $1.9 million of acquisition-related expenses, up from $0.6 million at the end of the prior quarter, with no such expense in the year-ago quarter.

Income tax expense declined 42.2% year over year to $0.8 million, reflecting a 10% effective tax rate. HWBK attributed the lower rate to federal income tax credits purchased at a discount.

HWBK’s Other Developments

Hawthorn Bancshares completed its acquisition of FSC Bancshares on Sept. 3, 2026, paying $17 million in cash and issuing 413,042 HWBK shares. The transaction also brought nine full-service branches in northern Missouri.

Farmers State Bank’s results were included in HWBK’s consolidated results beginning Sept. 3. It expects Farmers State Bank, currently operating as a separate division, to merge into Hawthorn Bank in March 2027.

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