 Second Quarter 2020 Results Net income of 3.3 million, 0.51 per diluted share Net interest margin, fully taxable equivalent FTE of 3.46 Return on average assets and equity of 0.81 and 11.12, respectively Loans increased 100 million, or 8.5, compared to linked quarter Deposits increased 148 million, or 12.6, compared to linked quarterJEFFERSON CITY, Mo., July 30, 2020 GLOBE NEWSWIRE -- Hawthorn Bancshares Inc. NASDAQ: HWBK, the Company or HWBK reported net income of 3.3 million for the second quarter an increase of 2.4 million compared to the linked first quarter linked quarter and a decrease of 0.2 million from the prior year quarter. Earnings per diluted share EPS was 0.51 for the second quarter 2020 compared to 0.13 and 0.54 for the linked quarter and prior year quarter, respectively. Net income and EPS in the current quarter increased from the linked quarter due to higher net interest income in the current quarter, in addition to a decrease in provision for credit losses compared to the linked quarter, described in more detail below.Chairman David T. Turner commented, The COVID-19 pandemic has turned out to be a more pervasive and catastrophic situation than anyone anticipated. Our bankers have worked tirelessly assisting our customers and small business owners in the communities we serve to cope with this reality, and to speed recovery.We provided uninterrupted services through our banking centers sometimes requiring appointment, online and mobile banking, our network of ATMsITMs, and our customer service center. We enabled over 87 million of lending with the origination of approximately 1,200 SBA-approved loans to small business owners through the SBA Paycheck Protection Program. Temporary fee waivers on deposit account service charges is another way we have responded to the financial hardships our customers have experienced. We also provided loan repayment modifications on over 560 loans, including temporary interest only payment arrangements and payment forbearance accommodations. See Loan Portfolio Granularity table below for more details.Turner continued, Despite these challenges, we continued to deliver strong operating results in the second quarter. Non-GAAP net income, which excludes an additional 0.5 million after tax loan loss provision attributed to COVID-19 for the current quarter, was 3.8 million, or 16.0 ahead of the linked quarter, and 6.7 ahead of the prior year quarter. Net interest income was 13.3 million, or 6.5 ahead of the linked quarter, and 9.7 ahead of the prior year quarter. Loans held for investment have grown 100 million as compared to the linked quarter, and have increased by 124 million from the prior year quarter. The recent loan growth was fueled in large part due to the aforementioned SBA Paycheck Protection Program.I am particularly proud of how our bankers have responded over the past 120 days. All of this was accomplished through the tremendous dedication, commitment, and tenacious efforts of our bankers, delivering the type of service our customers should expect. We are by no means past this pandemic, but we are very well positioned from an operational, financial, and capital perspective to continue delivering the types of services our customers and small business owners need in these unprecedented times.Highlights Earnings Net income in the second quarter 2020 was 3.3 million and EPS was 0.51. Pre-tax pre-provision income PTPP of 4.9 million in the second quarter increased 0.6 million or 14, and 0.3 million or 7 from the linked quarter and second quarter 2019, respectively. Net interest income and net interest margin Net interest income of 13.3 million for the second quarter 2020, increased 0.8 million and 1.2 million from the linked quarter and second quarter 2019, respectively. Loans Loans held for investment grew 100 million, or 8.5 to 1.3 billion as of June 30, 2020 as compared to the linked quarter. Year-over-year, loans grew 124 million, or 10.7, from 1.1 billion as of June 30, 2019. Growth in loans in the second quarter was primarily due to an increase in commercial loans for customers who participated in the SBA Paycheck Protection Program PPP. Asset quality Non-performing loans totaled 8.9 million at June 30, 2020, an increase of 0.8 million from 8.1 million at the end of the linked quarter, primarily due to two loans reclassified to nonaccrual status. The allowance for loan losses to total loans was 1.30 at June 30, 2020, a reduction from 1.33 at March 31, 2020 and increased from 1.03 at June 30, 2019. Deposits Total deposits grew 148 million, or 12.6 to 1.3 billion as of June 30, 2020 as compared to the linked quarter. Year-over-year, deposits grew 142 million, or 11.9. Growth in deposits in the second quarter was positively impacted by customers who deposited PPP loan proceeds into demand deposit accounts, in addition to an increase in total interest bearing deposits. Capital Total shareholders equity was 120 million and the tangible common equity to tangible assets ratio was 7.13 at June 30, 2020. Regulatory capital ratios remain well-capitalized, with tier 1 leverage ratio of 9.82 and a total risk-based capital ratio of 14.64.In the second quarter of 2020, the Companys Board of Directors temporarily suspended the share repurchase program previously authorized in 2019 for the purchase of up to 5.0 million of shares. At the end of the second quarter, 4.2 million dollars remained for share repurchase pursuant to that authorization.The Companys Board of Directors approved a quarterly cash dividend of 0.12 per common share and a common stock dividend of 4.0, each payable July 1, 2020 to shareholders of record at the close of business on June 15, 2020.Net Interest Income and Net Interest MarginNet interest income for the second quarter increased 0.8 million to 13.3 million from 12.5 million in the linked quarter, and increased 1.2 million from the prior year quarter. The increase in the linked quarter and prior year quarter was primarily due to a decrease in the cost of deposits. Included in net interest income in the second quarter was 0.4 million of loan fees related to the PPP. Net interest margin, on a tax equivalent basis, was 3.46 for the second quarter, a decrease from 3.55 in the linked quarter, and 3.50 in the second quarter of 2019.LoansLoans held for investment totaled 1.3 billion at June 30, 2020, increasing 100 million or 8.5 and 124 million or 10.7 from the linked quarter and prior year quarter, respectively. Non-performing loans to total loans was 0.70 at June 30, 2020, and 0.68 and 0.50 at the end of the linked quarter and prior year quarter, respectively.The yield earned on average loans held for investment was 4.68 for the second quarter, compared to 5.01 for the linked quarter and 5.14 for the prior year quarter.In April 2020, the Company began offering loans through the PPP which was part of the CARES Act passed by Congress. At June 30, 2020, approximately 1,200 loans had been provided to small business customers totaling 87.0 million, for an average of 72,500 per loan.As provided for by the CARES Act, the Company offered three-month payment modifications to borrowers. At June 30, 2020, 568 loans totaling 286.8 million or 22.4 of total loans had entered into some form of a modification. These loan modifications include 177.2, or 61.8, on interest only, and 109.6 million, or 38.2, on full deferral. See table below titled Loan Portfolio Granularity Loan Modifications under the CARES Act by NAICS Code.Additionally, some borrowers have requested an additional three-month payment modification. This includes forty loans totaling 58.3 million, or 20.3 of the previously modified loans. These loan modifications include 22.6 million on interest only and 35.8 million on full deferral See table below titled Loan Portfolio Granularity Loan Modifications under the CARES Act for Six Months by NAICS Code.Asset QualityNon-performing loans totaled 8.9 million at June 30, 2020, an increase of 0.8 million from 8.1 million at the end of the linked quarter, primarily due to two loans reclassified to nonaccrual status. In the second quarter 2020, the Company had net loan recoveries of 29,000 compared to net loan charge-offs of 84,000 or 0.01 of average loans in the linked quarter and 212,000, or 0.02 of average loans in the prior year quarter.The Company recorded a provision for credit losses of 0.9 million for the second quarter 2020 compared to 3.3 million for the linked quarter and 0.3 million for the second quarter 2019. The increase in the allowance for loan losses in the current quarter and linked quarter compared to the prior year quarter is primarily due to the additional loan loss provision of 0.6 million and 3.6 million, respectively, for the COVID-19 pandemic as previously described above.The allowance for loan losses at June 30, 2020, was 16.6 million, or 1.30 of outstanding loans, and 186.6 of non-performing loans. At March 31, 2020, the allowance for loan losses was 15.7 million, or 1.33 of outstanding loans, and 194.7 of non-performing loans. At June 30, 2019, the allowance for loan losses was 11.9 million or 1.03 of outstanding loans, and 203.5 of non-performing loans. The allowance for loan losses represents managements best estimate of probable losses inherent in the loan portfolio and is commensurate with risks in the loan portfolio as of June 30, 2020.Deposits Deposits totaled 1.3 billion at June 30, 2020, increasing 148 million or 12.6 and 142 million or 11.9 from the end of the linked quarter and prior year quarter, respectively. 