Hawthorn Bancshares, Inc. (NASDAQ: HWBK), today reported consolidated financial results for the Company, including its main operating subsidiary, Hawthorn Bank, for the second quarter ended June 30, 2010.

Hawthorn Bank, which is the main operating subsidiary of Hawthorn Bancshares, reported second quarter earnings of $2.0 million compared to $1.3 million generated during the first quarter. “Hawthorn Bank has always been a source of strength for Hawthorn Bancshares and management is pleased that our core operations continue to be profitable in such a challenging economic cycle.” said Chairman and CEO James E. Smith. The net income available to common shareholders of Hawthorn Bancshares was reduced by parent company operating expenses, non-bank impairment charges related to assets transferred out of Hawthorn Bank and preferred dividends on stock issued to the U.S. Treasury under the Capital Purchase Program.

On a consolidated basis, Hawthorn Bancshares generated net income for the quarter of $0.8 million, up from $0.5 million for the first quarter, and down from $1.2 million for the second quarter of 2009. After deducting accrued dividends and accretion on preferred stock issued to the U.S. Treasury, income available to common shareholders was $0.3 million for the second quarter compared to $0.0 million for the first quarter, and $0.7 million for the same period in 2009. From a diluted earnings per common share basis, Hawthorn generated $0.06 for the second quarter compared to $0.00 per common share for the first quarter, and $0.16 per common share for the second quarter 2009.

Operating Results

Net Interest Income

Net interest income for the quarter ended June 30, 2010 increased 10.9% to $11.1 million from $10.0 million for the same period in 2009. The increase is attributed to continued strengthening of the Company’s net interest margin which increased from 3.42% for the second quarter of 2009 to 3.88% for the second quarter of 2010.