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Hawthorn Bancshares Reports First Quarter Earnings And Dividends

Hawthorn Bancshares Inc. (NASDAQ: HWBK), today reported consolidated financial results for the Company for the quarter ended March 31. The Company also announced a 4% stock dividend and continuation of its quarterly $0.05 per share cash dividend payable July 1, 2011 to common shareholders of record June 15, 2011.

Net income for the quarter was $1.0 million, compared to $0.5 million for the first quarter of 2010. After deducting dividends of $0.5 million on the preferred stock issued to the U.S. Treasury under the Capital Purchase Program, Hawthorn earned $0.10 per diluted common share for the three months ending March 31, 2011, versus $0.00 for the first quarter of 2010. For the quarter, the annualized return on average common equity was 2.56% and the annualized return on average assets was 0.32% compared with 0.02% and 0.16%, respectively, for the same period in 2010.

Cash and Stock Common Dividend

The Board of Directors approved a quarterly cash dividend of $0.05 per common share, payable July 1, 2011 to shareholders of record at the close of business on June 15, 2011. The current cash dividend rate is consistent with prior quarter. The Board also approved a special stock dividend of 4% payable July 1, 2011 to common shareholders of record at the close of business on June 15, 2011.

Regarding approval of the cash and stock dividends, Chairman David T. Turner said, “As with every quarter, profitability trends and capital levels are evaluated to determine if a dividend is warranted. Earnings levels have improved over prior quarter and our capital account continues to far exceed regulatory requirements for ‘well capitalized’ banks. We are pleased with the trend in performance and want to continue our long record of paying cash dividends.”

Operating Results

Net Interest Income

Net interest income for the quarter ended March 31, 2011 increased 1.6% to $10.5 million from $10.3 million for the same period in 2010. The increase is attributed to continued strengthening of the Company’s net interest margin which increased from 3.61% at March 31, 2010 to 3.84% for the first quarter of 2011. The net interest margin for the full year 2010 was 3.78%. In commenting on growth in the margin, Chairman David T. Turner said “With non-performing assets of $65.8 million, there is significant downward pressure on asset yields. However, lower funding costs for the company more than outpaced declining asset yields; thereby, resulting in a net improvement in the company’s margin.”

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