Hawthorn Bancshares, Inc. (HWBK): Business Model Canvas [Dec-2025 Updated]

You're looking to understand the engine room of Hawthorn Bancshares, Inc. (HWBK), and honestly, their Q3 2025 performance gives us a crystal-clear view of their community banking strength. This isn't about abstract strategy; it's about how they translate local relationships into real earnings, evidenced by a Net Interest Margin (NIM) hitting 3.97% while managing about $1.9 billion in total assets. We've broken down their entire operating model-from their core deposit gathering to the $16.9 million in Net Interest Income they pulled in that quarter-so you can see the precise mechanics behind their stability. Keep reading below for the full, nine-block canvas.

Hawthorn Bancshares, Inc. (HWBK) - Canvas Business Model: Key Partnerships

You're looking at the essential external relationships Hawthorn Bancshares, Inc. needs to keep its community banking engine running smoothly. These aren't just vendors; they are critical infrastructure partners, especially for a bank with total assets reaching $1.883 billion as of March 31, 2025.

The partnerships are structured to manage risk, extend reach beyond the physical footprint of branches across Missouri and Kansas, and ensure technology keeps pace with larger institutions.

Federal Deposit Insurance Corporation (FDIC) for deposit insurance

This is a non-negotiable regulatory partnership. The FDIC insures deposits up to the standard maximum deposit insurance amount, which is $250,000 per depositor, per insured bank, for each account ownership category. This underpins customer trust, which is vital when managing total deposits of $1.5 billion as of March 31, 2025.

Core banking software providers for technology infrastructure

Hawthorn Bancshares, Inc. relies on specialized fintech partners to power its core operations, including loan origination and digital services. The technology stack involves providers like CSI, which offers end-to-end financial software, and Hawthorn River, a community banking software solution designed to streamline lending processes. These systems support the loan portfolio, which stood at $1.51 billion in loans held for investment as of September 30, 2025.

The reliance on these systems is reflected in the operational efficiency; the efficiency ratio for the third quarter of 2025 was reported at 62.30%.

Regional correspondent banks for liquidity and services

While Hawthorn Bank maintains a 'well capitalized' regulatory position, with Tier 1 leverage at 11.64% as of March 31, 2025, correspondent banking relationships are key for managing large-dollar loan participations or accessing specialized liquidity outside of local deposit bases. These relationships are crucial for supporting commercial and real estate financing activities.

ATM network affiliations for broader customer access

To serve customers across its Missouri and Kansas footprint without needing a physical branch at every point, Hawthorn Bancshares, Inc. partners with shared ATM networks. This extends access beyond its listed branch locations in cities like Jefferson City, Columbia, and Lee's Summit.

Local real estate and title companies for mortgage referrals

The bank offers residential mortgages, meaning it must maintain strong referral channels with local title companies and real estate agencies within its service areas to ensure smooth closing processes and a steady flow of origination volume. This supports the loan portfolio growth, which increased by $51.1 million in the third quarter of 2025.

Here are some key financial figures from the nine months ending September 30, 2025, that contextualize the scale of operations supported by these partnerships:

The operational structure requires constant management of these external dependencies. You need to track service level agreements (SLAs) for the core providers, especially given the focus on digital banking solutions like remote deposit capture and online cash management tools.

Key operational dependency areas include:

• Core System Uptime Percentage
• Compliance System Update Frequency
• Correspondent Bank Credit Lines Utilized
• ATM Transaction Fee Structure
• Mortgage Closing Turnaround Time (TAT)

If onboarding takes 14+ days, churn risk rises.

Hawthorn Bancshares, Inc. (HWBK) - Canvas Business Model: Key Activities

You're looking at the core engine room of Hawthorn Bancshares, Inc. (HWBK) as of late 2025. These are the day-to-day, quarter-to-quarter actions that drive the business forward, especially now that the Wealth Management segment is officially separated for performance review.

Managing the Net Interest Margin (NIM), which hit 3.97% in Q3 2025

A primary key activity is actively managing the spread between what Hawthorn Bancshares, Inc. earns on its assets and what it pays on its liabilities. This focus paid off in the third quarter of 2025. The Net Interest Margin, calculated on a fully taxable equivalent (FTE) basis, improved to 3.97% in Q3 2025. That's a solid step up from 3.89% in the second quarter of 2025 and significantly higher than the 3.36% seen in the prior year quarter. This margin expansion was a main driver in the efficiency ratio improvement to 62.30% in Q3 2025.

Here's a quick look at the interest-earning side of the equation:

Commercial and residential loan origination and servicing

The growth of the loan portfolio is central to the Bank segment's performance. Hawthorn Bancshares, Inc. is actively originating and servicing loans across its footprint in Missouri and the greater Kansas City area. This activity is focused on expanding customer relationships and attracting new clients, as noted by CEO Brent Giles.

The results of this activity show in the balance sheet movement:

• Loans held for investment increased by $51.1 million, or 3.5%, from the prior quarter, reaching $1.51 billion as of September 30, 2025.
• This represents an annualized increase of 3.2% from September 30, 2024.
• The Bank's specialties include commercial banking, equipment, operating, commercial real estate, Small Business Administration (SBA) loans, and personal banking services like real estate mortgage lending.

You have to keep the credit quality tight while growing the book. That's the balancing act.

Core deposit gathering to fund the loan portfolio

Funding that loan growth requires disciplined deposit gathering, focusing on stable, lower-cost sources. Hawthorn Bancshares, Inc. saw total deposits increase by $7.9 million, or 0.5%, compared to the second quarter of 2025, ending at $1.53 billion on September 30, 2025.

A key indicator of core funding strength is the composition of those deposits:

• Non-interest bearing demand deposits represented 27.8% of total deposits as of September 30, 2025.
• This percentage is up from 27.7% at June 30, 2025, and 26.0% at September 30, 2024, showing a successful shift toward less costly funding.

Still, the growth was selective; the increase came primarily from non-interest bearing demand deposits and other time deposits, offset by decreases in savings, interest checking, and money market accounts.

Expanding the wealth management and trust services group

Hawthorn Bancshares, Inc. officially recognized its Wealth Management business as a separate reporting segment beginning in the first quarter of 2025, signaling a dedicated focus on this area. This key activity involves hiring additional management resources to build out the structure for products and processes.

The CEO specifically mentioned experiencing growth in this group during the third quarter of 2025. The segment includes a broad range of financial and investment planning services for individuals and business owners, along with the Company's existing trust services, such as estate planning and asset management.

Maintaining strong credit quality and capital ratios

This is the non-negotiable activity that underpins everything else. Credit quality remained strong through the third quarter of 2025. You want to see low non-performing assets, and HWBK delivered:

The ratio of non-performing assets to total loans improved to 0.48% as of September 30, 2025, down from 0.58% in the prior year quarter. Net loan charge-offs were minimal at $0.04 million, equating to just 0.01% annualized of average loans for the quarter.

The company also ensured it remained well capitalized, a critical measure for any bank holding company:

• Total risk-based capital to risk-weighted assets stood at 14.90%.
• Tier 1 capital to risk-weighted assets was 13.65%.
• Common equity tier 1 was 10.71%.

Finance: draft 13-week cash view by Friday.

Hawthorn Bancshares, Inc. (HWBK) - Canvas Business Model: Key Resources

You're looking at the core assets that power Hawthorn Bancshares, Inc. (HWBK) right now, focusing on the tangible and human capital that drive the business model as of late 2025. These are the foundational elements that allow the bank to execute its strategy.

The balance sheet strength is a primary resource. As of September 30, 2025, the total assets figure stood at $1,932,105 thousand, which is approximately $1.932 billion. This scale supports the lending and deposit-gathering operations across the footprint. Furthermore, the bank maintains a status as well capitalized, a critical resource for regulatory compliance and stability. The total risk-based capital ratio to risk-weighted assets was reported at 14.90% on that same date.

The funding base, which is the lifeblood of any bank, is anchored by its deposit base. The total deposits figure as of September 30, 2025, was $1.53 billion. This figure is closely aligned with the core deposit base you noted, representing the stable, low-cost funding that fuels loan growth. The quality of this funding is also noteworthy, with non-interest bearing demand deposits making up 27.8% of total deposits at the end of the third quarter of 2025.

Physical presence and human capital round out the essential resources. Hawthorn Bancshares, Inc. maintains an established branch network that serves communities throughout Missouri and Kansas. This physical footprint is complemented by the expertise of its staff. The bank relies on experienced local lending and wealth management personnel to build and maintain the relationship-driven business model.

Here's a quick view of the key financial and structural resources as of the end of the third quarter of 2025:

The human element is critical to servicing the customer base, which relies on specialized teams:

• Experienced local lending personnel for commercial and consumer loan origination.
• Wealth management personnel supporting investment advisory and fiduciary services.
• Personnel focused on treasury management and merchant services for business clients.

The physical infrastructure supports the community focus. You can see the geographic reach:

• Locations throughout Missouri.
• Presence in the Kansas City metropolitan area.
• Key Missouri cities include Jefferson City, Columbia, Springfield, and Lee's Summit.

The capital structure itself is a resource, providing flexibility. Beyond the 14.90% total risk-based capital ratio, the bank also reported a Common Equity Tier 1 ratio of 10.71% and a Tier 1 Leverage ratio of 11.97% at September 30, 2025. Also, as of that date, $8.7 million remained available under the share repurchase authorization.

Finance: draft 13-week cash view by Friday.

Hawthorn Bancshares, Inc. (HWBK) - Canvas Business Model: Value Propositions

You're looking at what Hawthorn Bancshares, Inc. (HWBK) offers its customers-the core reasons they choose Hawthorn Bank over the big national players. It really boils down to local presence and solid financials.

Deeply rooted community banking philosophy and local decision-making

The value here is knowing your banker is local. Hawthorn Bank has served families and businesses for more than 150 years, which is a deep commitment to the Missouri communities it serves, including Jefferson City, Columbia, Springfield, and the greater Kansas City area. Decisions aren't made three states away; they're made right here.

Full-service financial suite: commercial lending, retail banking, and wealth management

You get a comprehensive set of tools under one roof. Hawthorn Bancshares, Inc. operates through two reporting segments: the Bank and the Wealth Management business, which started reporting separately in Q1 2025. This means you can handle your business operating loan, your personal checking account, and your estate planning all in one relationship.

• Commercial banking for small and mid-sized businesses.
• Retail banking, including mortgage lending and deposit accounts.
• Wealth Management services like trust and asset management.

Financial stability and strong credit quality (NPA/loans at 0.48% in Q3 2025)

Stability is a key proposition, especially when the market gets choppy. You can see the strength in the Q3 2025 numbers; credit quality remained strong with non-performing assets (NPA) to total loans at 0.48% as of September 30, 2025. That's better than the 0.58% seen in Q3 2024. Also, the total risk-based capital ratio stood at 14.90%, keeping them well above those required thresholds. Here's a quick look at some key Q3 2025 performance indicators:

The bank grew its loan portfolio by 3.5% quarter-over-quarter, reaching $1.51 billion in loans held for investment as of September 30, 2025.

Personalized, high-touch relationship banking services

The bank focuses on expanding customer relationships, which is the engine behind that loan growth. You get personalized service that national chains often can't match. The CEO specifically highlighted growth in customer relationships as a driver for the loan portfolio increase in Q3 2025.

Competitive loan products for commercial real estate and small business

Hawthorn Bank specializes in commercial banking for small and mid-sized businesses. Their offerings include specific products like equipment loans, operating lines of credit, commercial real estate financing, and Small Business Administration (SBA) loans. They are actively growing this portfolio, evidenced by the $51.1 million loan increase quarter-over-quarter.

Finance: draft a comparison of Q3 2025 commercial loan growth vs. Q3 2024 by next Tuesday.

Hawthorn Bancshares, Inc. (HWBK) - Canvas Business Model: Customer Relationships

Hawthorn Bancshares, Inc. operates with a core philosophy centered on a relationship-driven and community-focused approach. This strategy is directly tied to quantifiable results, as evidenced by the growth in the loan portfolio, which expanded by $51.1 million, or 3.5%, in the third quarter of 2025 compared to the prior quarter. The Chief Executive Officer noted that loan portfolio growth was achieved by expanding customer relationships. The company also reported growth in its wealth management group in the third quarter of 2025.

The high-touch service model is designed to build long-term relationships through local decision-making and personalized service. This focus supports the overall financial health, with the Net Interest Margin (FTE) reaching 3.97% in the third quarter of 2025, up from 3.36% in the prior year quarter. Furthermore, the company maintained strong credit quality, with non-performing assets to total loans at 0.48% as of September 30, 2025.

The physical presence supports face-to-face interaction across its service area. Hawthorn Bank has served families and businesses for more than 150 years, with locations concentrated throughout Missouri and Kansas. This local footprint includes markets such as:

• Jefferson City headquarters
• Greater Kansas City metropolitan area
• Columbia
• Springfield
• Clinton

To complement the in-person service, Hawthorn Bancshares, Inc. provides self-service options via digital and mobile platforms, including internet banking. While specific Hawthorn Bancshares, Inc. digital adoption rates for late 2025 aren't public, the broader industry trend shows that improving digital experiences is a key priority for 52% of institutions in 2025.

Here are key financial metrics from the third quarter of 2025 that reflect the success of the relationship-focused strategy:

The focus on core relationship growth is also supported by the composition of the deposit base, which indicates customer stickiness:

• Non-interest bearing demand deposits were 27.8% of total deposits as of September 30, 2025.
• Total deposits stood at $1.53 billion at September 30, 2025.
• Total assets were $1,932,105 thousand as of September 30, 2025.

Hawthorn Bancshares, Inc. (HWBK) - Canvas Business Model: Channels

The Channels block for Hawthorn Bancshares, Inc. centers on a hybrid approach, blending the traditional, high-touch community bank presence with necessary digital capabilities to serve its defined geographic footprint across Missouri and Kansas.

Physical branch network across Missouri and Kansas

The primary physical channel is the network of Hawthorn Bank banking centers. This network is concentrated in key Missouri markets, supplemented by strategic expansion into Kansas. This physical presence is key to maintaining the relationship-driven community bank model you are known for. As of early 2025, the network included established locations in:

• Jefferson City, Missouri (Headquarters)
• Greater Kansas City metropolitan area (Missouri side)
• Columbia, Missouri
• Springfield, Missouri
• Clinton, Missouri

Furthermore, the company executed a strategic channel expansion by opening a new banking center location in Overland Park, Kansas, in February 2025. This move signals a direct channel push into the Kansas market, specifically aiming to mirror success in wealth management there, similar to what the trust and investment teams have achieved in mid- and southern Missouri. While the exact number of banking centers is not publicly itemized, the operational footprint is anchored by these key Missouri and Kansas communities.

Robust online and mobile banking platforms

To meet modern customer expectations, Hawthorn Bancshares, Inc. deploys digital channels that allow for 24/7 account management. These platforms are essential for transactional efficiency, reducing reliance on physical visits for routine tasks.

• Enables customers to manage accounts, transfer funds, and pay bills remotely.
• Supports mobile check deposit capabilities.
• Provides secure, around-the-clock access to account statements.

Extensive proprietary and affiliated ATM network

For immediate cash access, the bank utilizes a combination of its own machines and network affiliations. This extends the reach beyond the physical branch footprint for basic cash withdrawals and balance inquiries. The network is described as extensive, though the precise count of proprietary versus affiliated machines is not a reported metric.

Dedicated wealth management and trust advisors

This channel is explicitly managed as a distinct reporting segment since the first quarter of 2025, showing its importance as a dedicated revenue driver. The growth in this area is a noted positive in recent results. The channel is supported by dedicated advisors providing personalized strategies.

Here are the reported financial results for this channel as of the third quarter of 2025:

The CEO specifically highlighted growth in the wealth management group in the third quarter of 2025, indicating this channel is actively being cultivated.

Direct sales force for commercial and industrial (C&I) lending

The C&I lending channel relies on a direct sales approach, integrated with the community banking teams, to originate loans for small and mid-sized businesses. This force is part of the overall employee base supporting the Bank segment. As of late 2025, the total company headcount was reported at 259 employees, with total assets for the Bank segment at $1.9 billion as of March 31, 2025. The C&I loan portfolio, which includes equipment, operating, and commercial real estate loans, is a core focus for growth, supported by these direct relationship managers.

Hawthorn Bancshares, Inc. (HWBK) - Canvas Business Model: Customer Segments

Hawthorn Bancshares, Inc. serves a defined geographic footprint, primarily across southwest Missouri and select markets in nearby states, operating through Hawthorn Bank.

Small-to-Midsize Businesses (SMBs) needing commercial loans and treasury services are a core focus, supported by the bank's commitment to local decision-making.

Commercial Real Estate (CRE) investors and developers are served with specialized financing. For example, at September 30, 2025, the non-owner occupied CRE loan portfolio included Multi Family loans totaling $188,299 thousand, which represented 29.9 % of that specific portfolio segment as of that date.

Affluent individuals requiring wealth management and trust services represent a growing segment, as management noted experienced growth in their wealth management group during the third quarter of 2025.

Local retail customers seeking checking, savings, and mortgage products form the base of the deposit funding. As of September 30, 2025, total deposits stood at $1.53 billion. Furthermore, non-interest bearing demand deposits, often associated with business operating accounts but also including retail, made up 27.8 % of total deposits at that same date.

Agricultural clients in rural Missouri markets receive financing for agricultural operations as part of the commercial lending offerings.

The overall balance sheet supporting these segments as of the end of the third quarter 2025 was:

The services tailored to these groups include:

• Treasury Management Services: remote deposit capture, positive pay, and ACH origination.
• Consumer Lending: residential mortgages, auto loans, and personal loans.
• Deposit Products: checking, savings, and money market accounts.

The loan portfolio growth reflects expanding customer relationships across these segments, with total loans held for investment increasing by $51.1 million, or 3.5%, compared to the prior quarter ending June 30, 2025.

Hawthorn Bancshares, Inc. (HWBK) - Canvas Business Model: Cost Structure

The cost structure for Hawthorn Bancshares, Inc. (HWBK) is heavily influenced by the cost of funding its assets and the expenses associated with its operational footprint, which includes a physical branch network. As of late 2025, based on third-quarter performance, managing these costs is central to maintaining the improved efficiency ratio of 62.30% reported for Q3 2025.

Interest expense paid on deposits, a key funding cost

The cost of funding is a primary driver of the overall cost base. Hawthorn Bancshares, Inc. has seen its average cost of deposits fluctuate, reflecting the competitive rate environment. For the third quarter of 2025, the average cost of deposits stood at 2.36%. This was a slight increase from the 2.35% reported in the prior quarter (Q2 2025), but a notable decrease from the 2.74% recorded in the prior year quarter (Q3 2024). The composition of deposits also plays a role; non-interest bearing demand deposits represented 27.8% of total deposits as of September 30, 2025.

Personnel expenses, including salaries and benefits (a rising non-interest expense)

Personnel costs are a significant component of non-interest expense. Total non-interest expense for the third quarter of 2025 was $12.8 million, which was an increase of $0.8 million, or 6.9%, from the prior year quarter. The increase in total non-interest expense for the nine months ended September 30, 2025, to $37.6 million, was primarily attributed to an increase in salaries and employee benefits. This suggests that personnel costs are the main upward pressure point within the operating expense category. The company is actively managing this, as evidenced by the efficiency ratio improvement despite this rise.

Operating expenses for maintaining the physical branch network

The cost of maintaining the physical branch network is embedded within the total non-interest expense. While a specific line item for branch operating costs isn't isolated in the summary data, the overall non-interest expense of $12.8 million in Q3 2025 covers all operational overhead, including physical infrastructure, occupancy, and other administrative costs. The company has taken steps that impact fixed costs, such as closing an operational center, which resulted in moving the property to other real estate owned in Q2 2025.

Provision for credit losses, which was $0.4 million in Q3 2025

The expense related to potential loan defaults, the provision for credit losses, was a positive charge in Q3 2025. Hawthorn Bancshares, Inc. provided a provision for credit losses of $0.4 million for the third quarter 2025. This compares to a release of provision of $0.1 million in the prior quarter (Q2 2025) and a provision of $0.5 million in the prior year quarter (Q3 2024). The allowance for credit losses at September 30, 2025, stood at $21.9 million, covering non-performing loans 446.02% over.

Technology and data processing costs for digital platforms

Specific figures for technology and data processing costs are not explicitly broken out in the high-level Q3 2025 summaries. However, these costs are part of the total non-interest expense. The CEO noted growth in the wealth management group, which suggests ongoing investment in platforms supporting those services. The overall non-interest expense for the quarter was $12.8 million.

Here is a summary of the key cost-related financial metrics from Q3 2025:

You'll want to track the year-to-date increase in salaries and benefits, as that is clearly driving the rise in non-interest expense. Finance: draft 13-week cash view by Friday.

Hawthorn Bancshares, Inc. (HWBK) - Canvas Business Model: Revenue Streams

You're looking at how Hawthorn Bancshares, Inc. actually brings in the money, which for a bank like this, boils down to interest earned versus fees collected. Honestly, the core of the business is still the balance sheet spread.

For the third quarter of 2025, the primary driver was Net Interest Income (NII) from lending activities, which totaled $\mathbf{\$16.9 \text{ million}}$. This figure reflects the difference between the interest income generated from loans and securities and the interest expense paid on deposits and borrowings. Management noted that the Net Interest Margin (FTE) expanded to $\mathbf{3.97\%}$ in Q3 2025, up from $\mathbf{3.36\%}$ in the prior year quarter, driven by higher loan yields and contained deposit costs.

The secondary, but still important, component is Non-interest income. For Q3 2025, this stream was $\mathbf{\$3.7 \text{ million}}$. This income category is where you find the revenue from services provided, which is key for diversification.

Here's a quick look at the main Q3 2025 revenue components for Hawthorn Bancshares, Inc.:

The CEO specifically pointed to growth in the wealth management group during the Q3 2025 results call, suggesting that fees from wealth management, trust, and brokerage services are a growing part of that non-interest income pie. You can see this momentum in the nine-month figures, where NII was $\mathbf{\$48.3 \text{ million}}$, an increase of $\mathbf{\$5.1 \text{ million}}$ compared to the first nine months of 2024.

The remaining revenue streams, which fall under non-interest income, include:

• Loan origination and servicing fees, which would capture income from originating new loans or servicing existing ones, including any mortgage brokerage income.
• Dividends and interest earned from the portfolio of investment securities held by Hawthorn Bancshares, Inc.

For the nine months ended September 30, 2025, total non-interest income was $\mathbf{\$10.7 \text{ million}}$. That's a slight dip of $\mathbf{\$0.1 \text{ million}}$ compared to the same period in 2024. Still, the growth in core lending income, evidenced by the $\mathbf{3.5\%}$ sequential loan growth in Q3 2025, is definitely the story here.

The total revenue for the trailing twelve months ending September 30, 2025, reached $\mathbf{\$77.61 \text{ million}}$. That represents significant growth of $\mathbf{255.6\%}$ year over year, though you should check the specific components driving that massive annual jump, as reported revenue figures can sometimes be calculated differently across reporting periods.