What changed in this filing

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Item 1. Financial Statements

2025-08-11 compared with 2025-05-12 · 212 added, 140 removed, 963 unchanged (27% of the section changed)

3 unchanged sentences

Consolidated Balance Sheets

(dollars in thousands, except per share data) March 31, 2025 December 31, 2024

(dollars in thousands, except per share data) June 30, 2025 December 31, 2024

Cash and due from banks $ 22,911 $ 23,668

7 unchanged sentences

Net loans 1,441,328 1,444,116

Loans held for sale 224 —

Premises and equipment - net 29,652 31,166

28 unchanged sentences

Consolidated Statements of Income (unaudited)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands, except per share data) 2025 2024 2025 2024

13 unchanged sentences

Total interest expense on deposits 6,508 7,568 13,321 15,033

Interest on federal funds purchased and securities sold under agreements to repurchase 1 — 1 —

Interest on Federal Home Loan Bank advances 404 831 903 1,680

4 unchanged sentences

(Release of) provision for credit losses on loans ( 159 ) 282 ( 441 ) 282

Release of provision for credit losses on unfunded commitments ( 58 ) ( 230 )

Provision for (release of) credit losses on unfunded commitments 108 175 50 ( 55 )

Total (release of) provision for credit losses on loans and unfunded commitments ( 51 ) 457 ( 391 ) 227

( 340 ) ( 230 )

Net interest income after provision for credit losses on loans and unfunded commitments 16,193 13,715 31,827 28,693

5 unchanged sentences

Gain on sale of mortgage loans, net 117 398 242 675

Gains on other real estate owned, net 21 34

(Losses) gains on other real estate owned, net ( 177 ) 454 ( 156 ) 488

Other 611 337 1,105 739

20 unchanged sentences

Consolidated Statements of Comprehensive Income (unaudited)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands) 2025 2024 2025 2024

11 unchanged sentences

Consolidated Statements of Stockholders’ Equity (unaudited)

Three Months Ended March 31, 2025 and 2024

Three Months Ended June 30, 2025 and 2024

(In thousands, except per share data) Common Stock Surplus Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Stockholders' Equity

Balance, March 31, 2025 $ 7,555 $ 76,938 $ 93,597 $ ( 12,275 ) $ ( 12,404 ) $ 153,411

Net income — — 6,101 — — 6,101

Other comprehensive income — — — 386 — 386

Share-based compensation expense — 96 — — — 96

Purchase of treasury stock — — — — ( 1,782 ) ( 1,782 )

Restricted share unit vesting and taxes paid related to net share settlement — ( 222 ) — — 222 —

Cash dividends declared, common stock ($ 0.20 per share)

— — ( 1,389 ) — — ( 1,389 )

Balance, June 30, 2025

$ 7,555 $ 76,812 $ 98,309 $ ( 11,889 ) $ ( 13,964 ) $ 156,823

Balance, March 31, 2024 $ 7,555 $ 76,847 $ 79,725 $ ( 16,103 ) $ ( 11,404 ) $ 136,620

Net income — — 4,629 — — 4,629

Other comprehensive loss — — — ( 1,130 ) — ( 1,130 )

Share-based compensation expense — 42 — — — 42

Purchase of treasury stock — — — — ( 592 ) ( 592 )

Restricted share unit vesting and taxes paid related to net share settlement — ( 81 ) — — 81 —

Cash dividends declared, common stock ($ 0.19 per share)

— — ( 1,328 ) — — ( 1,328 )

Balance, June 30, 2024

$ 7,555 $ 76,808 $ 83,026 $ ( 17,233 ) $ ( 11,915 ) $ 138,241

Six Months Ended June 30, 2025 and 2024

(In thousands, except per share data) Common Stock Surplus Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Stockholders' Equity

Balance, December 31, 2024

4 unchanged sentences

Purchase of treasury stock — — — — ( 2,222 ) ( 2,222 )

Restricted share unit vesting and taxes paid related to net share settlement — ( 222 ) — — 222 —

Cash dividends declared, common stock ($ 0.39 per share)

— — ( 2,717 ) — — ( 2,717 )

Balance, March 31, 2025

Balance, June 30, 2025

$ 7,555 $ 76,812 $ 98,309 $ ( 11,889 ) $ ( 13,964 ) $ 156,823

5 unchanged sentences

Purchase of treasury stock — — — — ( 1,006 ) ( 1,006 )

Restricted share unit vesting and taxes paid related to net share settlement — ( 81 ) — — 81 —

Cash dividends declared, common stock ($ 0.36 per share)

— — ( 2,523 ) — — ( 2,523 )

Balance, March 31, 2024

Balance, June 30, 2024

$ 7,555 $ 76,808 $ 83,026 $ ( 17,233 ) $ ( 11,915 ) $ 138,241

3 unchanged sentences

Consolidated Statements of Cash Flows (unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2025 2024

7 unchanged sentences

Investment securities losses, net 3 15

(Gain) loss on sales and dispositions of premises and equipment ( 50 ) 5

Gain on sales and dispositions of premises and equipment ( 48 ) ( 6 )

Gain on sales and dispositions of other real estate ( 28 ) ( 94 )

Provision for (release of) valuation allowance for other real estate owned 184 ( 386 )

Proceeds from the sale of mortgage servicing rights — 1,589

1 unchanged sentence

Increase in cash surrender value - life insurance ( 765 ) ( 485 )

Decrease (increase) in other assets 889 ( 724 )

(Increase) decrease in accrued interest receivable and other assets ( 384 ) 2,057

Decrease in operating lease liabilities ( 138 ) ( 103 )

Decrease in other liabilities ( 183 ) ( 856 )

Increase (decrease) in accrued interest payable and other liabilities 49 ( 1,143 )

Origination of mortgage loans held for sale ( 2,661 ) ( 34,810 )

3 unchanged sentences

Cash flows from investing activities:

Purchase of certificates of deposit in other banks — ( 1,000 )

Purchase of bank-owned life insurance — ( 35,000 )

Net (increase) decrease in loans ( 4,145 ) 20,225

Net decrease in loans 3,229 35,867

Purchase of available-for-sale debt securities ( 13,332 ) ( 18,965 )

10 unchanged sentences

Net decrease in interest-bearing transaction accounts ( 58,123 ) ( 42,269 )

Net (decrease) increase in time deposits ( 3,934 ) 23,363

Net increase in time deposits 8,035 22,298

Repayment of FHLB advances and other borrowings ( 170,100 ) ( 22,200 )

10 unchanged sentences

Consolidated Statements of Cash Flows (unaudited) continued

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2025 2024

4 unchanged sentences

Non-cash investing and financing activities:

Other real estate and repossessed assets acquired in settlement of loans $ — $ 2,730

Right of use assets obtained in exchange for new operating lease liabilities $ 1,351 $ —

49 unchanged sentences

(2) Loans and Allowance for Credit Losses

Major classifications within the Company’s loans held for investment portfolio at March 31, 2025 and December 31, 2024 were as follows:

(dollars in thousands) March 31, 2025 December 31, 2024

Major classifications within the Company’s loans held for investment portfolio at June 30, 2025 and December 31, 2024 were as follows:

(dollars in thousands) June 30, 2025 December 31, 2024

Commercial, financial, and agricultural $ 212,266 $ 202,329

8 unchanged sentences

The Bank does not have a concentration of credit in any one economic sector.

Accrued interest on loans totaled $ 6.4 million and $ 6.5 million at March 31, 2025 and December 31, 2024, respectively, and is included in accrued interest receivable and other assets on the Company's consolidated balance sheets.

Accrued interest on loans totaled $ 6.0 million and $ 6.5 million at June 30, 2025 and December 31, 2024, respectively, and is included in accrued interest receivable and other assets on the Company's consolidated balance sheets.

The total amount of accrued interest is excluded from the amortized cost basis of loans presented above.

Further, the Company has elected not to measure an allowance for credit losses for accrued interest receivable.

At March 31, 2025, loans of $ 733.7 million were pledged to the Federal Home Loan Bank (FHLB) as collateral for borrowings and letters of credit.

At June 30, 2025, loans of $ 723.2 million were pledged to the Federal Home Loan Bank (FHLB) as collateral for borrowings and letters of credit.

Allowance for Credit Losses

10 unchanged sentences

The liability for unfunded lending commitments utilizes the same model as the allowance for credit losses on loans, however, the liability for unfunded lending commitments incorporates an assumption for the portion of unfunded commitments that are expected to be funded.

The allowance for credit losses on unfunded commitments totaled $ 0.9 million at both March 31, 2025 and December 31, 2024, respectively.

The allowance for credit losses on unfunded commitments totaled $ 1.0 million and $ 0.9 million at June 30, 2025 and December 31, 2024, respectively.

HAWTHORN BANCSHARES, INC.

5 unchanged sentences

The following tables illustrate the changes in the allowance for credit losses on loans by portfolio segment:

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

(dollars in thousands) Commercial, Financial, & Agricultural Real Estate Construction - Residential Real Estate Construction - Commercial Real Estate Mortgage - Residential Real Estate Mortgage - Commercial Installment and Other Consumer Un- allocated Total

4 unchanged sentences

Balance at end of period $ 2,144 $ 328 $ 1,484 $ 4,917 $ 12,392 $ 112 $ 193 $ 21,570

Three Months Ended March 31, 2024

Six Months Ended June 30, 2025

4 unchanged sentences

Balance at end of period $ 2,144 $ 328 $ 1,484 $ 4,917 $ 12,392 $ 112 $ 193 $ 21,570

Three Months Ended June 30, 2024

Balance at beginning of period $ 3,374 $ 672 $ 1,297 $ 5,109 $ 12,857 $ 172 $ 194 $ 23,675

Charge-offs ( 1,857 ) — — ( 22 ) ( 67 ) ( 61 ) — ( 2,007 )

Recoveries 10 — — 4 — 16 — 30

Provision for (release of) credit losses 94 ( 74 ) 180 122 118 36 ( 194 ) 282

Balance at end of period $ 1,621 $ 598 $ 1,477 $ 5,213 $ 12,908 $ 163 $ — $ 21,980

Six Months Ended June 30, 2024

Balance at beginning of period $ 3,208 $ 1,043 $ 3,273 $ 5,264 $ 10,537 $ 232 $ 187 $ 23,744

Charge-offs ( 1,888 ) — — ( 23 ) ( 89 ) ( 130 ) — ( 2,130 )

Recoveries 20 — — 5 — 59 — 84

Provision for (release of) credit losses 281 ( 445 ) ( 1,796 ) ( 33 ) 2,460 2 ( 187 ) 282

Balance at end of period $ 1,621 $ 598 $ 1,477 $ 5,213 $ 12,908 $ 163 $ — $ 21,980

Collateral-Dependent loans

3 unchanged sentences

If the fair value of the collateral exceeds the loan’s amortized cost, no allowance is necessary.

The Company’s policy is to obtain appraisals on any significant pieces of collateral.

Higher discounts are applied in determining fair value for real estate collateral in industries that are undergoing significant stress, or for properties that are specialized use or have limited marketability.

There have been no significant changes to the types of collateral securing the Company's collateral dependent loans since December 31, 2024.

The Company’s policy is to obtain appraisals on any significant

HAWTHORN BANCSHARES, INC.

1 unchanged sentence

Notes to the Consolidated Financial Statements

The amortized cost of collateral-dependent loans by class as of March 31, 2025 and December 31, 2024 was as follows:

pieces of collateral.

There have been no significant changes to the types of collateral securing the Company's collateral dependent loans since December 31, 2024.

The amortized cost of collateral-dependent loans by class as of June 30, 2025 and December 31, 2024 was as follows:

Collateral Type

(dollars in thousands) Real Estate Other Allowance Allocated

March 31, 2025

June 30, 2025

Commercial, financial, and agricultural $ — $ 1,814 $ 649

Real estate construction − residential 454 — 194

Real estate mortgage − residential 454 — 87

Real estate mortgage − commercial 65 — —

14 unchanged sentences

Such loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected.

The substandard category includes non-accrual loans.

• Doubtful - loans that have all the weaknesses inherent in loans classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently known facts, conditions, and values.

These loans are also on non-accrual status.

• Non-accrual - loans that are delinquent for 90 days or more and the ultimate collectability of interest or principal is no longer probable.

Real estate loans secured by one-to-four family residential properties are exempt from these non-accrual guidelines.

These loans are placed on non-accrual status after they become 120 days past due (the majority of the Company's non-accrual loans have a substandard risk grade.)

HAWTHORN BANCSHARES, INC.

1 unchanged sentence

Notes to the Consolidated Financial Statements

The following table presents the recorded investment by risk categories at March 31, 2025:

The following table presents the recorded investment by risk categories at June 30, 2025:

Revolving Converted to

2 unchanged sentences

(dollars in thousands) 2025 2024 2023 2022 2021 Prior Cost Basis Cost Basis Total

March 31, 2025

June 30, 2025

Commercial, Financial, & Agricultural

3 unchanged sentences

Substandard — 780 87 3,510 547 75 1,144 403 6,546

Non-accrual loans — 286 87 78 — 37 435 — 923

Total $ 31,147 $ 15,312 $ 15,735 $ 25,184 $ 22,396 $ 28,849 $ 71,829 $ 1,814 $ 212,266

2 unchanged sentences

Pass $ 7,010 $ 8,264 $ 8,755 $ — $ — $ — $ — $ — $ 24,029

Non-accrual loans — 454 — — — — — — 454

Watch — — 88 — — — — — 88

Total $ 7,010 $ 8,264 $ 8,843 $ — $ — $ — $ — $ — $ 24,117

4 unchanged sentences

Substandard — — 29 — — — — — 29

Non-accrual loans — — — — — 44 — — 44

Total $ 17,430 $ 20,044 $ 8,415 $ 10,575 $ 2,918 $ 1,154 $ 5,905 $ — $ 66,441

4 unchanged sentences

Substandard 58 — — 783 — 218 114 — 1,173

Doubtful — — — — — 9 — — 9

Non-accrual loans 90 — — 334 89 174 163 — 850

Total $ 50,219 $ 24,500 $ 42,867 $ 109,499 $ 46,530 $ 59,779 $ 45,239 $ 2,404 $ 381,037

5 unchanged sentences

Substandard — 1,782 65 4,190 — 779 144 — 6,960

Non-accrual loans — — 64 72 — — — — 136

Total $ 77,072 $ 93,042 $ 105,837 $ 193,353 $ 169,580 $ 110,986 $ 16,483 $ 887 $ 767,240

2 unchanged sentences

Pass $ 1,244 $ 1,607 $ 2,573 $ 2,585 $ 713 $ 2,997 $ 62 $ — $ 11,781

Non-accrual loans — — 18 2 — 8 — — 28

Substandard — — 9 — — 7 — — 16

Total $ 1,244 $ 1,607 $ 2,582 $ 2,585 $ 713 $ 3,004 $ 62 $ — $ 11,797

5 unchanged sentences

Substandard 58 2,562 190 8,483 547 1,079 1,402 403 14,724

Doubtful — — — — — 9 — — 9

Non-accrual loans 90 740 169 486 89 263 598 — 2,435

Total $ 184,122 $ 162,769 $ 184,279 $ 341,196 $ 242,137 $ 203,772 $ 139,518 $ 5,105 $ 1,462,898

15 unchanged sentences

Doubtful — — — — — — 79 — 79

Non-accrual loans 286 87 78 — 37 — 356 — 844

Total $ 23,012 $ 21,509 $ 34,926 $ 25,966 $ 26,903 $ 4,194 $ 63,885 $ 1,934 $ 202,329

2 unchanged sentences

Pass $ 16,368 $ 13,808 $ 601 $ 617 $ 165 $ — $ — $ 33 $ 31,592

Non-accrual loans 454 — — — — — — — 454

Substandard 454 — — — — — — — 454

Total $ 16,822 $ 13,808 $ 601 $ 617 $ 165 $ — $ — $ 33 $ 32,046

4 unchanged sentences

Substandard — 29 — — — 49 — — 78

Non-accrual loans — — — — — 49 — — 49

Total $ 50,653 $ 7,210 $ 10,437 $ 3,828 $ 622 $ 613 $ 7,072 $ — $ 80,435

4 unchanged sentences

Substandard — — 426 89 — 376 169 — 1,060

Non-accrual loans — — 426 89 — 278 169 — 962

Total $ 35,707 $ 46,795 $ 116,394 $ 49,999 $ 42,459 $ 24,491 $ 44,347 $ 1,543 $ 361,735

5 unchanged sentences

Substandard 64 75 231 — — — — — 370

Non-accrual loans 64 75 — — — — — — 139

Total $ 86,281 $ 117,979 $ 223,371 $ 205,552 $ 69,342 $ 57,536 $ 14,815 $ 718 $ 775,594

2 unchanged sentences

Pass $ 2,188 $ 3,636 $ 3,591 $ 1,165 $ 554 $ 2,805 $ 72 $ — $ 14,011

Non-accrual loans — — — — — 10 — — 10

Substandard — — — — — 10 — — 10

Total $ 2,188 $ 3,636 $ 3,591 $ 1,165 $ 554 $ 2,815 $ 72 $ — $ 14,021

6 unchanged sentences

Doubtful — — — — — — 79 — 79

Non-accrual loans 804 162 504 89 37 337 525 — 2,458

Total $ 214,663 $ 210,937 $ 389,320 $ 287,127 $ 140,045 $ 89,649 $ 130,191 $ 4,228 $ 1,466,160

12 unchanged sentences

Non-accrual loans are returned to accrual status when, in the opinion of management, the financial condition of the borrower indicates that the timely collectability of interest and principal is probable and the borrower demonstrates the ability to pay under the terms of the note through a sustained period of repayment performance, which is generally six months.

The following table presents the recorded investment in non-accrual loans and loans past due over 90 days still on accrual by class of loans as of March 31, 2025 and December 31, 2024:

The following table presents the recorded investment in non-accrual loans and loans past due over 90 days still on accrual by class of loans as of June 30, 2025 and December 31, 2024:

(dollars in thousands) Non-accrual with no Allowance Non-accrual with Allowance Total Non-accrual 90 Days Past Due And Still Accruing Total Non-performing Loans

March 31, 2025

June 30, 2025

Commercial, Financial, and Agricultural $ — $ 1,006 $ 1,006 $ — $ 1,006

Real estate construction − residential — 454 454 — 454

Real estate construction − commercial — 44 44 — 44

Real estate mortgage − residential — 1,026 1,026 498 1,524

10 unchanged sentences

Total $ — $ 2,537 $ 2,537 $ 210 $ 2,747

No material amount of interest income was recognized on non-accrual loans during the three months ended March 31, 2025.

No material amount of interest income was recognized on non-accrual loans during the three and six months ended June 30, 2025.

HAWTHORN BANCSHARES, INC.

1 unchanged sentence

Notes to the Consolidated Financial Statements

The following table provides aging information for the Company’s past due and non-accrual loans at March 31, 2025 and December 31, 2024.

The following table provides aging information for the Company’s past due and non-accrual loans at June 30, 2025 and December 31, 2024.

(dollars in thousands) Current or Less Than 30 Days Past Due 30 - 89 Days Past Due 90 Days Past Due And Still Accruing Non-Accrual Total

March 31, 2025

June 30, 2025

Commercial, Financial, and Agricultural $ 209,069 $ 2,191 $ — $ 1,006 $ 212,266

18 unchanged sentences

If a loan modification is determined to be made to a borrower experiencing financial difficulty, the loan is considered collateral-dependent and evaluated as part of the allowance for credit losses as described above in the Allowance for Credit Losses section of this note.

For the three months ended March 31, 2025, the Company did not modify any loans made to borrowers experiencing financial difficulty.

For each of the three and six months ended June 30, 2025 and June 30, 2024, the Company did not modify any loans made to borrowers experiencing financial difficulty.

The Company monitors loan payments on an on-going basis to determine if a loan is considered to have a payment default.

4 unchanged sentences

The loans are primarily sold to Freddie Mac, Fannie Mae, PennyMac, and various other secondary market investors.

At March 31, 2025, the carrying amount of these loans was $ 0.2 million compared to no loans at December 31, 2024.

There were no loans held for sale at both June 30, 2025 and December 31, 2024.

HAWTHORN BANCSHARES, INC.

2 unchanged sentences

(3) Other Real Estate and Other Assets Acquired in Settlement of Loans

March 31, December 31,

June 30, December 31,

(dollars in thousands) 2025 2024

Commercial $ 2,552 $ —

Real estate construction - commercial — 2,549

4 unchanged sentences

Total other real estate owned and repossessed assets $ 2,425 $ 1,446

At March 31, 2025, there were no consumer mortgage loans secured by residential real estate properties in the process of foreclosure compared to $ 0.3 million at December 31, 2024.

At June 30, 2025, there were no consumer mortgage loans secured by residential real estate properties in the process of foreclosure compared to $ 0.3 million at December 31, 2024.

Activity in the valuation allowance for other real estate owned was as follows for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands) 2025 2024 2025 2024

Balance at beginning of period $ 2,003 $ 5,950 $ 2,003 $ 5,950

Release of provision for valuation allowance for other real estate owned — —

Provision for (release of) provision for valuation allowance for other real estate owned

184 ( 386 ) 184 ( 386 )

Charge-offs ( 1,962 ) ( 3,820 ) ( 1,962 ) ( 3,820 )

4 unchanged sentences

(4) Investment Securities

The amortized cost and fair value of debt securities classified as available-for-sale at March 31, 2025 and December 31, 2024 were as follows:

The amortized cost and fair value of debt securities classified as available-for-sale at June 30, 2025 and December 31, 2024 were as follows:

Gross Unrealized

(dollars in thousands) Total Amortized Cost Gains Losses Fair Value

March 31, 2025

June 30, 2025

Treasury $ 4,943 $ 104 $ — $ 5,047

24 unchanged sentences

government-sponsored enterprises.

Debt securities with carrying values aggregating approximately $ 88.8 million and $ 82.4 million at March 31, 2025 and December 31, 2024, respectively, were pledged to secure public funds, securities sold under agreements to repurchase, and for other purposes as required or permitted by law.

There were no proceeds from sales of available-for-sale securities for the three months ended March 31, 2025 and 2024.

All gains and losses recognized on equity securities during the three months ended March 31, 2025 and 2024 were unrealized.

Debt securities with carrying values aggregating approximately $ 89.8 million and $ 82.4 million at June 30, 2025 and December 31, 2024, respectively, were pledged to secure public funds, securities sold under agreements to repurchase, and for other purposes as required or permitted by law.

There were no proceeds from sales of available-for-sale securities for each of the three and six months ended June 30, 2025 and 2024.

All gains and losses recognized on equity securities during each of the three and six months ended June 30, 2025 and 2024 were unrealized.

HAWTHORN BANCSHARES, INC.

1 unchanged sentence

Notes to the Consolidated Financial Statements

The amortized cost and fair value of debt securities classified as available-for-sale at March 31, 2025, by contractual maturity are shown below.

Accrued interest on investments was consistent at $ 1.5 million at both March 31, 2025 and December 31, 2024, and is included in accrued interest receivable and other assets on the Company's consolidated balance sheets.

The amortized cost and fair value of debt securities classified as available-for-sale at June 30, 2025, by contractual maturity are shown below.

Accrued interest on investments was consistent at $ 1.6 million at both June 30, 2025 and December 31, 2024, and is included in accrued interest receivable and other assets on the Company's consolidated balance sheets.

The total amount of accrued interest is excluded from the amortized cost basis of investments presented below.

12 unchanged sentences

Investments in FHLB stock, and Midwest Independent BankersBank ("MIB") stock, that do not have readily determinable fair values, are required for membership in those organizations.

(dollars in thousands) March 31, 2025 December 31, 2024

(dollars in thousands) June 30, 2025 December 31, 2024

Other securities:

6 unchanged sentences

Notes to the Consolidated Financial Statements

Gross unrealized losses on debt securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2025 and December 31, 2024 were as follows:

Gross unrealized losses on debt securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2025 and December 31, 2024 were as follows:

Less than 12 months 12 months or more

(dollars in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Total Fair Value Total Unrealized Losses

March 31, 2025

June 30, 2025

government and federal agency obligations $ — $ — $ 380 $ ( 2 ) $ 380 $ ( 2 )

19 unchanged sentences

Total $ 51,361 $ ( 811 ) $ 144,583 $ ( 30,221 ) $ 195,944 $ ( 31,032 )

The total available-for-sale portfolio consisted of approximately 390 securities at March 31, 2025.

The portfolio included 357 securities having an aggregate fair value of $ 159.4 million that were in a loss position at March 31, 2025.

Securities identified as temporarily impaired which had been in a loss position for 12 months or longer totaled $ 140.4 million at fair value at March 31, 2025.

The $ 31.0 million aggregate unrealized loss included in accumulated other comprehensive loss at March 31, 2025 was caused by interest rate fluctuations.

The total available-for-sale portfolio consisted of approximately 390 securities at June 30, 2025.

The portfolio included 354 securities having an aggregate fair value of $ 152.9 million that were in a loss position at June 30, 2025.

Securities identified as temporarily impaired that had been in a loss position for 12 months or longer totaled $ 137.1 million at fair value at June 30, 2025.

The $ 30.4 million aggregate unrealized loss included in accumulated other comprehensive loss at June 30, 2025 was caused by interest rate fluctuations.

The decline in fair value is attributable to changes in interest rates and not credit quality.

13 unchanged sentences

The following table reflects the estimated fair value of derivative instruments included in other assets and other liabilities on the consolidated balance sheets along with their respective notional amounts on a gross basis.

As of March 31, 2025 As of December 31, 2024

As of June 30, 2025 As of December 31, 2024

Fair Value Fair Value

3 unchanged sentences

Total derivatives not designated as hedging instruments $ 286 $ 328 $ 66 $ 89

The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the consolidated statements of income for the three months ended March 31, 2025 and 2024.

The Company did not recognize other income related to client swaps in either of the three months ended March 31, 2025 and 2024.

The Company did not recognize other income related to client swaps in any of the three and six months ended June 30, 2025 and 2024.

Gain or (Loss) Recognized in Income on Derivative

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands) Location of Gain or (Loss) Recognized in Income on Derivative 2025 2024 2025 2024

8 unchanged sentences

Certain derivative transactions have collateral requirements, both at the inception of the trade, and as the value of each derivative position changes.

As of March 31, 2025, the Company had recorded the obligation to collect cash collateral of $ 0.2 million.

As of March 31, 2025, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $ 0.05 million.

As of March 31, 2025, the

As of June 30, 2025, the Company had recorded the obligation to collect cash collateral of $ 0.1 million.

As of June 30, 2025, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $ 0.04 million.

As of June 30, 2025, the Company

HAWTHORN BANCSHARES, INC.

1 unchanged sentence

Notes to the Consolidated Financial Statements

Company has not posted any collateral related to these agreements.

If the Company had breached any of these provisions at March 31, 2025, it could have been required to settle its obligations under the agreements at their termination value of $ 0 .

has not posted any collateral related to these agreements.

If the Company had breached any of these provisions at June 30, 2025, it could have been required to settle its obligations under the agreements at their termination value of $ 0 .

The table below presents the aggregate amount of time deposits with balances that met or exceeded the Federal Deposit Insurance Corporation ("FDIC") insurance limit of $250,000 and brokered deposits for the periods indicated.

(dollars in thousands) March 31, 2025 December 31, 2024

(dollars in thousands) June 30, 2025 December 31, 2024

Time deposits with balances > $250,000 $ 91,158 $ 100,383

1 unchanged sentence

The Company's leases primarily consist of office space and bank branches with remaining lease terms of generally 1 to 10 years.

As of March 31, 2025, operating right of use (ROU) assets and liabilities were $ 2.9 million and $ 3.0 million, respectively.

As of March 31, 2025, the weighted-average remaining lease term on these operating leases was approximately 5.9 years and the weighted-average discount rate used to measure the lease liabilities was approximately 4.4 %.

As of June 30, 2025, operating right of use (ROU) assets and liabilities were $ 2.7 million and $ 2.9 million, respectively.

As of June 30, 2025, the weighted-average remaining lease term on these operating leases was approximately 5.8 years and the weighted-average discount rate used to measure the lease liabilities was approximately 4.4 %.

Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities.

4 unchanged sentences

Operating lease cost, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in net occupancy expense in the consolidated statements of income.

The operating lease cost was $ 0.14 million for the three months ended March 31, 2025, compared to $ 0.07 million for the three months ended March 31, 2024.

The table below summarizes the maturity of remaining operating lease liabilities:

The operating lease cost was $ 0.2 million and $ 0.3 million for the three and six months ended June 30, 2025, respectively, compared to $ 0.06 million and $ 0.1 million for the three and six months ended June 30, 2024, respectively.

The table below summarizes the maturity of remaining operating lease liabilities at June 30, 2025:

Lease payments due in:

11 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the change in the components of the Company’s accumulated other comprehensive income (loss) for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31, 2025

The following table summarizes the change in the components of the Company’s accumulated other comprehensive income (loss) for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30, 2025

(dollars in thousands) Unrealized Gains (Losses) on Securities (1) Unrecognized Net Pension and Postretirement (Income) Costs (2) Accumulated Other Comprehensive Income (Loss)

3 unchanged sentences

Current period other comprehensive income (loss), before tax 1,339 ( 638 ) 701

Income tax benefit (expense) ( 102 ) 57 ( 45 )

Income tax (expense) benefit ( 281 ) 134 ( 147 )

Current period other comprehensive income (loss), net of tax 1,058 ( 504 ) 554

Balance at end of period $ ( 23,358 ) $ 11,469 $ ( 11,889 )

Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

(dollars in thousands) Unrealized Gains (Losses) on Securities (1) Unrecognized Net Pension and Postretirement (Income) Costs (2) Accumulated Other Comprehensive Income (Loss)

9 unchanged sentences

Repurchase Program

Pursuant to the Company's 2019 Repurchase Plan, management is given discretion to determine the number and pricing of the shares to be repurchased, as well as the timing of any such repurchases.

The Company repurchased 15,856 common shares under the repurchase plan during the first three months of 2025 at an average cost of $ 27.51 per share totaling $ 0.4 million.

As of March 31, 2025, $ 3.5 million remained available for share repurchases pursuant to the plan.

On June 5, 2025, the Company announced that its Board of Directors approved a new common stock repurchase program under which the Company may repurchase up to $ 10.0 million of its common stock, which replaced the Company’s prior common stock repurchase program.

Pursuant to the repurchase program, management is given discretion to determine the number and pricing of the shares to be repurchased, as well as the timing of any such repurchases.

The timing and total amount of stock repurchases will depend on market and other conditions and may be made from time to time in open market purchases or privately negotiated transactions.

The program has no termination date, may be suspended or discontinued at any time and does not obligate the Company to acquire any amount of common stock.

The Company repurchased 79,777 common shares under its repurchase programs during the first six months of 2025 at an average cost of $ 27.62 per share totaling $ 2.2 million.

As of June 30, 2025, $ 9.0 million remained available for share repurchases pursuant to the Company's current repurchase program.

HAWTHORN BANCSHARES, INC.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(9) Share-Based Compensation

4 unchanged sentences

The Equity Plan is also designed to assist the Company in attracting and retaining selected service providers by providing them with the opportunity to participate in the success and profitability of the Company.

The terms of the Equity Plan provide for the grant of stock

HAWTHORN BANCSHARES, INC.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

options, stock appreciation rights, restricted stock, restricted stock units, performance shares, other equity-based awards and cash awards.

The terms of the Equity Plan provide for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, other equity-based awards and cash awards.

Subject to certain adjustments, the maximum number of shares of the Company's common stock that may be delivered pursuant to awards under the Equity Plan is 203,000 shares.

5 unchanged sentences

The service-based RSUs vest, and shares of common stock are issued, in equal installments on the first, second, and third anniversaries of the date of grant.

The following table summarizes the status of the Company's RSUs for the three months ended March 31, 2025:

The following table summarizes the status of the Company's RSUs for the six months ended June 30, 2025 and 2024:

(dollars in thousands, except per share amounts) Quantity Weighted-Average Grant Date Fair Value Per share Quantity Weighted-Average Grant Date Fair Value Per share

5 unchanged sentences

The fair value of the RSUs units is determined using the Company’s stock price on the date of grant.

Total share-based compensation expense recognized for the three months ended March 31, 2025 and 2024 for these RSUs was $ 0.08 million and $ 0.03 million, respectively.

Total share-based compensation expense recognized for these RSUs was $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2025, respectively, compared to $ 0.04 million and $ 0.1 million for the three and six ended June 30, 2024, respectively.

Forfeitures will be recognized as they occur.

At March 31, 2025, there was $ 0.7 million of total unrecognized compensation expense related to RSUs that is expected to be recognized over a weighted-average period of 2.2 years.

At June 30, 2025, there was $ 0.8 million of total unrecognized compensation expense related to RSUs that is expected to be recognized over a weighted-average period of 1.5 years.

(10) Retirement Plans

3 unchanged sentences

In addition, employees were able to make additional tax-deferred contributions.

Total expense recorded for the Company-match was $ 0.2 million and $ 0.1 million for the three months ended March 31, 2025 and 2024, respectively.

Total expense recorded for the Company-match was $ 0.1 million and $ 0.3 million for the three and six months ended June 30, 2025, respectively, compared to $ 0.1 million and $ 0.3 million for the three and six ended June 30, 2024, respectively.

The employer discretionary profit-sharing contribution made to the 401(k) plan was $ 0.8 million and $ 0.6 million for plan years 2024 and 2023, respectively.

On November 7, 2018, the Board of Directors of the Company adopted a supplemental executive retirement plan (SERP), effective as of January 1, 2018.

The SERP provides select employees who satisfy certain eligibility requirements with certain benefits upon retirement, termination of employment or death.

The accrued liability relating to the SERP was $ 1.7 million as of March 31, 2025, and the expense was consistent at $ 0.02 million for both the three months ended March 31, 2025 and 2024, and is recognized over the required service period.

HAWTHORN BANCSHARES, INC.

1 unchanged sentence

Notes to the Consolidated Financial Statements

On November 7, 2018, the Board of Directors of the Company adopted a supplemental executive retirement plan (SERP), effective as of January 1, 2018.

The SERP provides select employees who satisfy certain eligibility requirements with certain benefits upon retirement, termination of employment or death.

The accrued liability relating to the SERP was $ 1.7 million as of June 30, 2025, and the expense for the three and six months ended June 30, 2025 was $ 0.02 million and $ 0.04 million, respectively, compared to $ 0.02 million and $ 0.05 million for the three and six months ended June 30, 2024, respectively, and is recognized over the required service period.

The Company provides a noncontributory defined benefit pension plan for all full-time and eligible employees.

7 unchanged sentences

The following items are components of net pension cost (income) for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands) 2025 2024 2025 2024

19 unchanged sentences

Presented below is a summary of the components used to calculate basic and diluted earnings per common share, which have been restated for all stock dividends:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands, except per share data) 2025 2024 2025 2024

32 unchanged sentences

The fair value measurements are subject to management's independent verification to another pricing source for reasonableness each quarter.

Treasury securities are classified as Level 1, and all other available for sale securities are classified as Level 2.

Other Investment Securities

16 unchanged sentences

(dollars in thousands) Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

March 31, 2025

June 30, 2025

Treasury $ 5,047 $ 5,047 $ — $ —

9 unchanged sentences

Derivative instruments, interest rate swaps 286 286

Loans held for sale 224 — 224 —

Total $ 222,093 $ 5,118 $ 216,975 $ —

22 unchanged sentences

Mortgage Servicing Rights Interest Rate Lock Commitments

Three Months Ended March 31,

Six Months Ended June 30,

(dollars in thousands) 2025 2024 2025 2024

2 unchanged sentences

Included in earnings — ( 149 ) — ( 11 )

Included in other comprehensive income — — — —

Purchases — — — —

— ( 1,589 ) — ( 76 )

25 unchanged sentences

Fair Value Measurements Using

(dollars in thousands) Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Three Months Ended March 31, Total Gains (Losses)*

March 31, 2025

Six Months Ended June 30, Total Gains (Losses)*

June 30, 2025

Collateral dependent impaired loans:

Commercial, financial, & agricultural $ 1,165 — — $ 1,165 $ — $ —

Real estate construction − residential 260 — — 260 —

Real estate mortgage - residential 367 — — 367 — —

Real estate mortgage - commercial 65 — — 65 — —

1 unchanged sentence

Other real estate and repossessed assets $ — $ — $ — $ — $ 21 $ ( 156 )

March 31, 2024

June 30, 2024

Collateral dependent impaired loans:

18 unchanged sentences

Certificates of deposit are other investments made by the Company with other financial institutions that are carried at cost, which is equal to fair value.

Accrued Interest Receivable and Payable

For accrued interest receivable and payable, the carrying amount is a reasonable estimate of fair value because of the short maturity for these financial instruments.

HAWTHORN BANCSHARES, INC.

1 unchanged sentence

Notes to the Consolidated Financial Statements

Accrued Interest Receivable and Payable

For accrued interest receivable and payable, the carrying amount is a reasonable estimate of fair value because of the short maturity for these financial instruments.

The fair value of deposits with no stated maturity, such as non-interest-bearing demand, NOW accounts, savings, and money market, is equal to the amount payable on demand.

6 unchanged sentences

The discount rate is estimated using the rates currently offered for other borrowed money of similar remaining maturities.

A summary of the carrying amounts and fair values of the Company’s financial instruments at March 31, 2025 and December 31, 2024 is as follows:

March 31, 2025

A summary of the carrying amounts and fair values of the Company’s financial instruments at June 30, 2025 and December 31, 2024 is as follows:

June 30, 2025

Fair Value Measurements

March 31, 2025 Quoted Prices in Active Markets for Identical Assets Other Observable Inputs Net Significant Unobservable Inputs

June 30, 2025 Quoted Prices in Active Markets for Identical Assets Other Observable Inputs Net Significant Unobservable Inputs

(dollars in thousands) Carrying amount Fair value (Level 1) (Level 2) (Level 3)

46 unchanged sentences

The allowance for credit losses associated with unfunded commitments and letters of credit is recorded within other liabilities on the consolidated balance sheets.

At March 31, 2025, the allowance for credit losses for unfunded commitments was $ 0.9 million.

At June 30, 2025 and December 31, 2024, the allowance for credit losses for unfunded commitments was $ 1.0 million and $ 0.9 million, respectively.

HAWTHORN BANCSHARES, INC.

2 unchanged sentences

The contractual amounts of off-balance-sheet financial instruments were as follows as of the dates indicated:

(dollars in thousands) March 31, 2025 December 31, 2024

(dollars in thousands) June 30, 2025 December 31, 2024

Commitments to extend credit $ 334,263 $ 305,811

Forward sale commitments 224 —

Standby letters of credit 53,699 141,807

9 unchanged sentences

These standby letters of credit are primarily issued to support contractual obligations of the Company’s customers.

The approximate remaining term of standby letters of credit ranged from one month to five years at March 31, 2025.

The approximate remaining term of standby letters of credit ranged from one month to five years at June 30, 2025.

Pending Litigation

9 unchanged sentences

The Company previously reported under one segment.

During the three months March 31, 2025, the Company identified its Wealth Management business as a strategic opportunity and hired additional management resources to provide the structure for products and processes for this business.

As a result, during the three months ended March 31, 2025, the Company identified its Wealth Management Business as its own separate reporting segment and now reports two aggregated reporting segments, consisting of the Bank and its Wealth Management business.

The Bank segment is composed of operations from providing a broad range of banking products and services located within the Missouri communities in and surrounding Jefferson City, Columbia, Clinton, Warsaw, Springfield, and the greater Kansas City metropolitan area.

During 2025, the Company identified its Wealth Management business as a strategic opportunity and hired additional management resources to provide the structure for products and processes for this business.

As a result, beginning in the first quarter of 2025, the Company identified its Wealth Management Business as its own separate reporting segment and now reports two aggregated reporting segments, consisting of the Bank and its Wealth Management business.

The Bank segment is composed of operations providing a broad range of banking products and services located within the Missouri communities in and surrounding Jefferson City, Columbia, Clinton, Warsaw, Springfield, and the greater Kansas City metropolitan area.

The Wealth Management segment includes a broad range of financial and investment planning services for individuals and business owners.

The Company's existing trust services will also be included in the Wealth Management segment.

The Company's existing trust services are also included in the Wealth Management segment.

The table below highlights the Company’s revenues, expenses and net income (loss) for each reportable segment and is reconciled to net income (loss) on a consolidated basis for the three and six months ended June 30, 2025 and 2024, respectively, was as follows:

HAWTHORN BANCSHARES, INC.

1 unchanged sentence

Notes to the Consolidated Financial Statements

The table below highlights the Company’s revenues, expenses and net income (loss) for each reportable segment and is reconciled to net income (loss) on a consolidated basis for the three months ended March 31, 2025 and 2024, respectively was as follows:

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

(dollars in thousands) Hawthorn Bank Wealth Management Non-Bank Total

3 unchanged sentences

Net interest income $ 16,971 $ — $ ( 829 ) $ 16,142

Provision for credit losses ( 340 ) — — ( 340 )

Release of provision for credit losses ( 51 ) — — ( 51 )

Operating expenses

10 unchanged sentences

Net income $ 6,691 $ 137 $ ( 727 ) $ 6,101

Six Months Ended June 30, 2025

(dollars in thousands) Hawthorn Bank Wealth Management Non-Bank Total

Operating revenue

Interest income $ 47,317 $ — $ 52 $ 47,369

Interest expense 14,225 — 1,708 15,933

Net interest income $ 33,092 $ — $ ( 1,656 ) $ 31,436

Release of provision for credit losses ( 391 ) — — ( 391 )

Operating expenses

Salaries and employee benefits $ 12,310 $ 665 $ 640 $ 13,615

Occupancy, furniture and equipment expense 2,171 38 — 2,209

Processing, network, and bank card expense 2,808 36 — 2,844

Legal, examination, and professional fees 737 — 184 921

Depreciation 1,140 — — 1,140

Other 3,540 46 453 4,039

Total operating expenses $ 22,706 $ 785 $ 1,277 $ 24,768

Non-interest income $ 5,074 $ 1,054 $ 880 $ 7,008

Investment securities losses, net ( 3 ) — — ( 3 )

Income taxes 3,011 — ( 431 ) 2,580

Net income $ 12,837 $ 269 $ ( 1,622 ) $ 11,484

Segment assets $ 1,866,399 $ 20 $ 10,998 $ 1,877,417

2 unchanged sentences

Notes to the Consolidated Financial Statements

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

(dollars in thousands) Hawthorn Bank Non-Bank Total

16 unchanged sentences

Net income $ 5,641 $ ( 1,012 ) $ 4,629

Six Months Ended June 30, 2024

(dollars in thousands) Hawthorn Bank Non-Bank Total

Operating revenue

Interest income $ 47,549 $ 59 $ 47,608

Interest expense 16,713 1,975 18,688

Net interest income $ 30,836 $ ( 1,916 ) $ 28,920

Provision for credit losses 227 — 227

Operating expenses

Salaries and employee benefits $ 12,805 $ 649 $ 13,454

Occupancy, furniture and equipment expense 2,074 — 2,074

Processing, network, and bank card expense 2,732 — 2,732

Legal, examination, and professional fees 1,115 220 1,335

Depreciation 925 — 925

Other 3,680 409 4,089

Total operating expenses $ 23,331 $ 1,278 $ 24,609

Non-interest income $ 6,416 $ 599 $ 7,015

Investment securities losses, net ( 15 ) — ( 15 )

Income taxes 2,544 ( 545 ) 1,999

Net income $ 11,135 $ ( 2,050 ) $ 9,085

Segment assets $ 1,840,251 $ 7,559 $ 1,847,810

HAWTHORN BANCSHARES, INC.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(16) Subsequent Events

On July 4, 2025, the One Big Beautiful Bill Act, which includes a broad range of tax reform provisions, was signed into law in the United States.

The Company is currently evaluating the impact of the new legislation but does not expect it will have a material impact on its results of operations.

On June 24, 2025, the Company filed a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission, which became effective on July 2, 2025.

The shelf registration statement is intended to provide us with financial flexibility to raise capital from the offering of up to $ 150 million of any combination of common stock, preferred stock, debt securities, depositary shares, warrants, purchase contracts, purchase units, subscription rights and units in one or multiple offerings while the shelf registration statement is effective.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements