Investment Thesis
Hawthorn Bancshares demonstrates strong fundamental growth with revenue up 48.2% YoY and net income up 30.4% YoY, coupled with excellent operating margins of 29.2% and zero leverage. However, the bank's critically low ROE of 3.3% and ROA of 0.3% indicate severe capital efficiency problems, suggesting earnings growth is not translating into shareholder value creation typical for banking institutions.
Strengths
- Exceptional revenue growth of 48.2% year-over-year
- Excellent profit margins with 29.2% operating margin and 23.5% net margin
- Zero financial leverage (0.00x debt/equity) providing fortress balance sheet
- Solid free cash flow generation with 25% FCF margin and $6.1M FCF
- Strong interest coverage ratio of 13.8x indicating safety on obligations
- Consistent earnings growth with 31.4% diluted EPS increase
Risks
- Dangerously low ROE of 3.3% for a bank—far below industry norms of 10-15%
- ROA of 0.3% indicates severe inefficiency in deploying $1.9B in assets
- Unusual zero-debt capital structure for a bank may signal access issues or structural constraints
- Only 1 Form 4 insider filing in 90 days suggests minimal insider confidence in stock
- Net income of $5.7M on $1.9B assets implies poor asset utilization efficiency
- Data freshness at March 31, 2026 may not reflect current quarter performance
Key Metrics to Watch
- Return on Equity (ROE) trend—needs to improve significantly toward 10%+ range
- Return on Assets (ROA)—critical metric for banking profitability assessment
- Asset utilization efficiency and net interest margin stability
- Insider buying activity and Form 4 filings for confidence signals
- Loan growth versus deposit growth sustainability of 48% revenue expansion
Financial Metrics
Revenue
24.4M
Net Income
5.7M
EPS (Diluted)
$0.83
Free Cash Flow
6.1M
Total Assets
1.9B
Cash
101.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
29.2%
Net Margin
23.5%
ROE
3.3%
ROA
0.3%
FCF Margin
25.0%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.00x
Debt/Assets
90.5%
Interest Coverage
13.85x
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T07:30:36.665677 |
Data as of: 2026-03-31 |
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