Hawthorn Bancshares Inc. in Lee's Summit, Mo., reported a loss of $5.5 million for 2010 after posting a profit a year earlier.

It attributed the net loss to an $8.6 million increase in other real estate expenses and a $6.9 million increase in its loan-loss provision. The $1.2 billion-asset company reported earnings of $3 million for 2009.

The provision spike coincides with a rise in nonperforming loans, to 6.27% of total loans at Dec. 31, compared with 4.27% a year earlier. Net chargeoffs rose 150% from 2009, to $15.5 million.

"The economic downturn and elevated unemployment rates in our market areas have impaired the ability for some of our customers to make payments in accordance with contractual terms," David Turner, Hawthorn's chairman and chief executive, said in a press release Wednesday. "When a borrower's cash flow ability is diminished, Hawthorn has taken an active approach to obtain current appraisals so that market valuations can be used to calculate probable losses."

Hawthorn's net interest margin expanded 28 basis points in 2010 from a year earlier, to 3.78%.

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