Hawthorn in Missouri Reports Robust 2Q After Exiting Tarp

Hawthorn Bancshares (HWBK) reported higher earnings in the second quarter after exiting the Troubled Asset Relief Program.

The Jefferson City, Mo., company had a profit of $1.5 million, or 30 cents a share. It reported earnings of $48,000, or one cent per share, during the same period last year.

The $1.2 billion-asset company's higher profits were largely driven by a 29% increase in noninterest income. It rose to $3.1 million, thanks to increases in the fair value of mortgage servicing rights, growing refinancing activity, and gains from the sale of investment securities.

Noninterest expenses fell 8% to $9.3 million, reflecting a decrease in processing expenses and real estate sold at a gain.

Hawthorn's second quarter included expenses from completing its Tarp exit. In May, Hawthorn redeemed $18.3 million worth of preferred shares and accrued dividends that it had issued to the Treasury Department in December 2008. It finished repaying Tarp funds in June with a $540,000 payment to repurchase the warrant it issued to the Treasury Department. Hawthorn borrowed a total of $30.2 million in December 2008.

Lower loan balances and sinking interest rates caused net interest income to fall 3.5% to $9.8 million. The net interest margin fell by 11 basis points to 3.66%.

Loan-loss provisions fell by a third to $1 million, while charge-offs declined 75% to $0.2 million.