Hawthorn Bancshares (HWBK) Financials

Hawthorn Bancshares (NASDAQ: HWBK) posted another profitable quarter in Q1 2026, with earnings supported by stable net interest income and solid fee income. Over the last four years, the bank has shown resilience, but the trend in balance sheet growth, funding costs, and capital structure suggests a business that is steady rather than rapidly expanding.

What stands out most: HWBK continues to generate consistent earnings, but its balance sheet has become more leveraged, loan growth has slowed versus prior periods, and deposit/borrowing dynamics have been somewhat volatile. That said, credit quality appears manageable based on the low quarterly provision in Q1 2026.

• Profitability remained intact in Q1 2026. Net income was $5.7 million, or $0.83 per share, up from $5.4 million in Q1 2025 and well above the loss reported in Q4 2023.
• Net interest income was solid at $17.1 million. This is the core driver for a bank like Hawthorn, and it remained healthy despite higher funding costs compared with earlier periods.
• Non-interest income improved meaningfully year over year. Q1 2026 non-interest income reached $3.1 million, helped by service charges and other fee-based revenue.
• Credit costs were very modest in Q1 2026. The provision for credit losses was only $73,000 in the income statement, suggesting currently contained loan-loss pressure.
• Retained earnings have climbed over time. Retained earnings rose to $112.2 million in Q1 2026 from $79.7 million in Q1 2024, reflecting continued profitability and capital retention.
• Revenue has been relatively stable, not fast-growing. Total revenue in Q1 2026 was $20.2 million, versus $18.8 million in Q1 2025 and $17.8 million in Q1 2024, indicating gradual improvement rather than breakout growth.
• Loan balances have been uneven. Net loans were $1.43 billion in Q1 2026, below the $1.49 billion seen in Q3 2025 and similar to the prior year range, suggesting limited loan expansion recently.
• Deposits were lower quarter over quarter in Q1 2026. Total deposits declined versus Q4 2025, and the cash flow statement showed a $35.8 million decrease in deposits during the quarter.
• The bank still relies on debt funding. Long-term debt was $143.9 million in Q1 2026, and the cash flow statement shows substantial borrowing and repayment activity, which adds funding complexity.
• Tangible cash flow remained positive, but financing was the swing factor. Operating cash flow was $7.97 million in Q1 2026, while overall cash declined due to financing outflows and investment activity.
• Net interest margin pressure remains a risk. Interest expense has been high in recent quarters, especially on deposits and debt, which can squeeze bank profitability if asset yields do not keep up.
• Other operating expenses remain elevated. Q1 2026 other operating expenses were $4.2 million, and compensation costs also remain a major expense line.
• Equity capital is modest relative to assets. Total common equity was $175.4 million against $1.86 billion of assets, reflecting a fairly leveraged bank balance sheet.
• AOCI has been a drag on equity. Accumulated other comprehensive income remained negative at $(6.5) million in Q1 2026, though this is less severe than some prior quarters.

Bottom line: Hawthorn Bancshares looks like a consistently profitable community bank with improving earnings momentum since the weak period in late 2023. The key watch items are deposit trends, funding costs, and whether loan growth can reaccelerate without pressuring credit quality. For retail investors, HWBK appears financially stable, but not especially fast-growing.