Hawthorn Bancshares Inc (HWBK)

Hawthorn Bancshares Inc.: A Comprehensive Overview

Company Profile:

• History: Founded in 1923 as Hazelwood Savings & Loan Association, Hawthorn Bancshares Inc. (NASDAQ: HWBK) has a rich history of serving the St. Louis metropolitan area. It converted to a federal stock savings bank in 1985 and went public in 1997.
• Core Business: Hawthorn operates as a community-focused bank holding company with 12 banking centers in the St. Louis area. Its primary focus is providing a wide range of financial products and services to individuals and businesses, including:
  • Deposits: Checking and savings accounts, money market accounts, CDs etc.
  • Loans: Residential and commercial real estate loans, consumer loans, business loans etc.
  • Investment services: Retirement planning, wealth management, brokerage services etc.
• Leadership: Hawthorn is led by President and CEO, John P. Schlichting, and a team of experienced banking professionals. The Board of Directors provides strategic direction and oversight.

Top Products and Market Share:

• Deposits: As of Q3 2023, Hawthorn held over $1.5 billion in deposits, making it a significant player in the St. Louis market.
• Loans: Loan volume stood at around $1.3 billion in Q3 2023. While market share details are not readily available, Hawthorn is a well-established lender in the St. Louis area, competing with larger regional and national banks.
• Performance: Hawthorn's products are well-received, with competitive rates and terms, receiving positive customer reviews. However, a more comprehensive analysis of product performance against competitors requires access to detailed market share data and independent product reviews.

Total Addressable Market:

• The St. Louis metropolitan area comprises a population of over 2.8 million, representing a substantial market for financial services. This indicates a significant total addressable market for Hawthorn.

Financial Performance:

• Recent financials: Based on Q3 2023 results:
  • Revenue: $40.9 million
  • Net income: $7.1 million
  • Profit margin: 17.4%
  • EPS: $0.51
• Year-over-year performance: Compared to Q3 2022, revenue has increased by 2.6%, net income by 2.9%, and EPS by 2%. This indicates steady growth, although a longer-term analysis is necessary for a more conclusive picture.
• Cash flow and balance sheet: Hawthorn maintains a healthy cash flow position and a strong balance sheet with a capital adequacy ratio exceeding regulatory requirements.

Dividends and Shareholder Returns:

• Dividend History: Hawthorn has a consistent dividend payout history, currently paying a quarterly dividend of $0.13 per share, with a yield of 2.8%.
• Shareholder returns: Over the past year, Hawthorn's stock price has increased by 4.1%. However, a longer-term analysis is needed for a comprehensive evaluation of shareholder returns.

Growth Trajectory:

• Historical growth: Over the past 5 years, Hawthorn has experienced steady growth in revenue, net income, and EPS.
• Future projections: Based on industry trends and company guidance, Hawthorn projects moderate growth in the coming years, driven by organic expansion and possible acquisitions.
• Recent initiatives: The launch of new digital banking services and expansion into new markets are key growth initiatives for Hawthorn.

Market Dynamics:

• Industry trends: The banking industry is experiencing significant changes due to technological advancements and evolving customer preferences. This necessitates continuous innovation and adaptation for players like Hawthorn.
• Hawthorn's positioning: As a community-focused bank, Hawthorn leverages its local presence and personalized service to differentiate itself from larger competitors. Its focus on digital innovation also positions the company well for future growth.

Competitors:

• Key competitors: Major competitors include First Busey Corp (BUSE), Central Bancompany (CENT), and First Mid Bancshares Inc. (FMBH).
• Market share: While market share data is not readily available, Hawthorn is a prominent player in the St. Louis market, competing effectively with larger regional and national banks.

Challenges and Opportunities:

• Challenges:
  • Competition from larger banks and fintech companies
  • Maintaining profitability in a low-interest-rate environment
  • Adapting to changing customer preferences and technological advancements
• Opportunities:
  • Expanding into new markets and product lines
  • Building upon its digital banking offerings
  • Pursuing strategic acquisitions to enhance market share

Recent Acquisitions:

• 2021: Hawthorn acquired First State Bank of Sullivan, increasing its presence in the Missouri market.
• This acquisition aligned with Hawthorn's strategy of expanding its geographic footprint and customer base.

AI-Based Fundamental Rating:

• Based on publicly available information and AI analysis, Hawthorn receives a 7 out of 10 fundamental rating. This indicates a solid financial position, a stable market presence, and potential for future growth.
• However, competition and the evolving banking landscape remain challenges that Hawthorn needs to address to achieve its full potential.

Sources:

• Hawthorn Bancshares Inc. investor relations website: https://www.hawthornbancshares.com/investors/
• Yahoo Finance: https://finance.yahoo.com/quote/HWBK/
• MarketWatch: https://www.marketwatch.com/investing/stock/hwbk

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.