20 th Annual D.A. Davidson Financial Institutions Conference May 9-10, 2018

Transcription

1 20 th Annual D.A. Davidson Financial Institutions Conference May 9-10, 2018 NASDAQ: HWBK

2 Forward-Looking Statements Statements made at the meeting that suggest our Company's or management's intentions, hopes, beliefs, expectations, or predictions of the future include "forward-looking statements" within the meaning of Section 21E of the Securities and Exchange Act of It is important to note that actual results could differ materially from those projected in such forwardlooking statements. Additional information concerning factors that could cause actual results to differ materially from those projected in such forward-looking statements is contained from time to time in our Company's quarterly and annual reports filed with the Securities and Exchange Commission. 2

3 Geographic Presence 3

4 Timeline Founded Union State Bank & Trust Clinton, MO Denovo Branch, Branson, MO Denovo Branch, Lee s Summit, MO Bank 10 Belton, MO Closed, Tipton, MO Closed, Raymore, MO Closed, Collins, MO Osage Valley Bank Citizens Bank of Calhoun City National Savings Bank Denovo Branch, Columbia, MO Merger of Charter & name changed to Hawthorn Bank Missouri State Bank (Branch) Springfield, MO LPO, Liberty, MO LPO, Columbia, MO

5 Business Updates Tax Reform Impact REIT Impact Efficiency Ratio Improvement Strategy Loan Funding Sources Capital Adequacy 5

6 Tax Reform Impact Impact of 2017 Tax Reform Legislation 4 th Quarter 2017 deferred tax write down of $4.1 million Estimated 2018 normalized effective tax rate: 16% - 18% (reduction from 34%) Elimination of 6% State and Bank Franchise Tax 6

7 REIT Impact Established 2018 Estimated elimination of Missouri State & Bank Franchise Tax: 6%. If implemented 2017: $323k impact 7

8 Efficiency Ratio Improvement Strategy 2017 ER: 75% Won t grow out of ER through increased income In process of identifying cost saving measures 8

9 Loan Funding Sources Strong organic loan growth last 2 years Funded via deposit specials Effective in rising rate environment Get out ahead of FRB rate increases to attract deposits These deposits eventually become core 9

10 Total Loans ($ in millions) Strong Organic Growth $1,200 $1,100 $1,000 $900 $800 $700 $600 $ ,

11 Total Deposits ($ in millions) Strong Organic Growth $1,200 Core Non-Core 1,126 $1,100 $1,000 $ , $800 $ ,013 $600 $

12 Capital Adequacy 2017 TCE: 6.39% Capital ratios benefit from inclusion of trust preferred securities 12

13 13

14 14 Supplemental Information

15 Total Assets ($ in millions) $1,500 $1,300 1,140 1,170 1,201 1,287 1,429 $1,100 $900 $700 $

16 Deposits by Region 3/31/18 ($ in thousands) Central Region $ 579,683 West Central Region 336,131 Northwest Region 229,418 Southwest Region 36,690 $1,181,922 16

17 Net Income ($ in thousands) $10,000 $8,000 7,654 8,599 7,282 $6,000 4,974 $4,000 3,414 $2,000 $

18 Comparative Income Statements ($ in thousands) Change Net Interest Income $ 42,928 $ 40,347 $ 2,581 Provision for Loan Losses 1,765 1, Non-Interest Income 8,955 8, Non-Interest Expense 38,802 36,807 1,995 Income Before Income Taxes 11,316 11, Income Taxes 3,797 3, Deferred Tax Adjustment 4, ,105 Net Income $ 3,414 $ 7,282 $ (3,868)

19 Return on Assets Comparison to Peer Hawthorn Peer % Information from FFIEC report 19

20 Net Interest Margin Compared to Peer Hawthorn Peer % Information from FFIEC report 20

21 Non-Interest Income ($ in thousands) Q 2018 Total $10,866 $8,749 $9,166 $8,917 $8,955 $2,301 Significant Items Service Charges & Other Fees 4,165 3,743 3,477 3,400 3, Bank Card Income & Fees 2,200 2,368 2,455 2,547 2, Trust Department , Real Estate Servicing Fees, net Gains on Mtg Loan Sales 1,944 1,093 1,

22 Non-Interest Expense ($ in thousands) Q 2018 Total $40,763 $36,507 $36,494 $36,807 $38,802 $10,254 Significant Items Salaries & Employee Benefits 19,542 20,377 20,792 20,850 21,779 6,057 Occupancy/Furn. & Equip. 4,637 4,483 4,636 4,534 5,465 1,337 Processing expense, network and bank card expense Legal, examination & professional fees 3,668 3,203 3,363 3,309 3, ,159 1,321 1,301 1, FTEs

23 Provision for Loan Losses ($ in thousands) $5,000 $4,000 $3,000 $2,000 2,030 1,425 1,765 $1, $ Q

24 Other Real Estate & Repossessions ($ in thousands) $25,000 $20,000 $15,000 14,867 11,885 15,992 14,162 13,182 13,239 $10,000 $5,000 $ Q

25 Efficiency Ratios 100 Hawthorn Peer % Information from FFIEC report 25

26 Loan Diversification (12/31/17) Agricultural 9% Commercial Land Development 9% Consumer 3% Residential Construction 2% Commercial Real Estate (Non-Owner Occupied) 26% Commercial Real Estate (Owner Occupied) 12% Commercial 16% Residential 23% 26

27 Asset Quality Q 2018 Nonperforming Loans/Total Loans Including performing TDRs 4.21% 4.18% 1.19% 0.95% 1.00% 0.93% Excluding performing TDRs 2.85% 2.13% 0.51% 0.36% 0.53% 0.51% Nonperforming Assets/ Loans & Foreclosed Assets 5.87% 5.49% 2.98% 2.37% 2.21% 2.13% Loan Loss Reserve/ Total Loans 1.63% 1.06% 0.99% 1.01% 1.02% 1.01% 27

28 E-Banking Trends Thousands 25 # Online Banking Users (thousands) 20 # Mobile Banking Users (thousands) # Debit/ATM Transactions (millions) $600 $ Debit/ATM Transactions (millions) $500 $400 $ $200 $ $

29 Thousands Thousands Thousands Credit Quality Trends Continue to Improve $20 $15 $10 $5 $0 $20 $15 $10 Net Charge-offs ($ in millions) Past Dues & Non-accruals ($ in millions) $60 $ $ $ Allowance for Loan Losses ($ in millions) $ $ $10 Provision for Loan Losses ($ in millions) $5 $ $5 $

30 NPAs to Total Loans & Foreclosed Assets Q

31 Index Value Total Return Performance Hawthorn Bancshares, Inc. SNL Bank $1B-$5B HWBK Stock Price $25 $ $ $10 Stock Price $5 100 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 $0 31

32 Earnings Per Share $ $ $ Q

33 Stock Repurchase & Dividend History Stock Repurchase Program Repurchased 92,509 common shares to date $17.80 cost/share Repurchased 5,468 common shares 1Q 2018 Dividends (2016) $.05/share per quarter & 4% stock dividend Dividends (2017) $.06/share 1Q & 2Q; $.07/share 3Q & 4Q 4% stock dividend declared 3Q Dividends (2018) $.07/share 1Q & 2Q 33