Hawthorn Bancshares, Inc. reported net income of $5.4 million for the first quarter of 2025, an increase of 20.8% from the prior year quarter. Earnings per diluted share rose to $0.77, up from $0.63 in the first quarter of 2024. This strong performance aligns with the company's focus on growing core relationships and improving financial results.
Net interest income for the quarter was $15.3 million, contributing to a net interest margin on a fully taxable equivalent basis of 3.67%. This represents an expansion from 3.39% in the prior year quarter, driven by an increase in the yield on average loans held for investment to 5.89% and a decrease in the average cost of deposits to 2.44%. Non-interest income increased by $0.4 million, or 14.7%, from the prior year quarter, primarily due to higher earnings on bank-owned life insurance.
Total non-interest expense decreased by $0.1 million, or 0.6%, from the prior year quarter to $12.5 million. The efficiency ratio improved to 66.64% for the quarter, reflecting sound cost control. Loans held for investment increased by $4.2 million, or 1.2% annualized, to $1.5 billion, while total deposits increased by $10.7 million, or 2.8% annualized, to $1.5 billion.
Asset quality continued to improve significantly, with non-performing assets decreasing to $3.1 million, representing a low 0.21% of total loans. This is a substantial reduction from $10.5 million, or 0.69% of total loans, in the prior year quarter. The company released $0.3 million from its provision for credit losses, indicating confidence in the loan portfolio's quality.
The allowance for credit losses stood at $21.8 million, or 1.48% of outstanding loans, providing robust coverage of 885.01% of non-performing loans. Hawthorn Bancshares maintained its "well capitalized" regulatory capital position, with a total risk-based capital ratio of 14.94%. The Board of Directors approved an increase in the quarterly cash dividend to $0.20 per common share, representing a 5.3% increase from the prior year quarter's dividend.
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