UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2009
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number: 0-23636
 HAWTHORN BANCSHARES, INC.
  Missouri
(State or other jurisdictionof incorporation or organization)
    
    43-1626350
(I.R.S. Employer
Identification No.)
 300 Southwest Longview Boulevard, Lees Summit, Missouri 64081
 (816) 347-8100
 N/A
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



Item 1. Financial Statements
 HAWTHORN BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
 March 31,
    
    December 31,2009
    
    2008(Unaudited)ASSETSLoans
    
    $
    1,004,530,173
    
    
    $
    1,009,103,532Allowances for loan losses
    
    
    (13,159,425
    )
    
    
    (12,666,546
    )Net loans
    
    
    991,370,748
    
    
    
    996,436,986Investment in available-for-sale securities, at fair value
    
    
    146,462,294
    
    
    
    149,400,929Investment in equity securities, at cost
    
    
    8,875,250
    
    
    
    8,875,250Total investment securities
    
    
    155,337,544
    
    
    
    158,276,179Federal funds sold and securities purchased under agreements to resell
    
    
    116,432
    
    
    
    104,393Cash and due from banks
    
    
    51,442,542
    
    
    
    53,723,075Premises and equipment  net
    
    
    38,713,892
    
    
    
    39,260,220Other real estate owned and repossessed assets
    
    
    7,473,293
    
    
    
    7,828,278Accrued interest receivable
    
    
    6,995,873
    
    
    
    7,476,093Mortgage servicing rights
    
    
    1,520,838
    
    
    
    1,171,225Intangible assets  net
    
    
    1,961,554
    
    
    
    2,130,097Cash surrender value  life insurance
    
    
    1,861,058
    
    
    
    1,852,902Other assets
    
    
    10,748,579
    
    
    
    11,439,419Total assets
    
    $
    1,267,542,353
    
    
    $
    1,279,698,867LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Non-interest bearing demand
    
    $
    123,679,202
    
    
    $
    125,245,200Savings, interest checking and money market
    
    
    360,758,142
    
    
    
    342,626,702Time deposits $100,000 and over
    
    
    140,533,958
    
    
    
    142,972,489Other time deposits
    
    
    366,049,903
    
    
    
    344,451,998Total deposits
    
    
    991,021,205
    
    
    
    955,296,389Federal funds purchased and securities sold
under agreements to repurchase
    
    
    26,322,121
    
    
    
    29,138,623Subordinated notes
    
    
    49,486,000
    
    
    
    49,486,000Other borrowed money
    
    
    83,857,844
    
    
    
    129,057,483Accrued interest payable
    
    
    3,984,907
    
    
    
    3,847,415Other liabilities
    
    
    6,548,979
    
    
    
    6,454,574Total liabilities
    
    
    1,161,221,056
    
    
    
    1,173,280,484Stockholders equity:Preferred stock, $1000 par valueAuthorized and issued 30,255 shares at March 31, 2009,
    
    
    28,007,412
    
    
    
    27,888,294Common stock, $1 par valueAuthorized 15,000,000 shares; issued 4,298,353 shares
    
    
    4,298,353
    
    
    
    4,298,353Surplus
    
    
    25,182,126
    
    
    
    25,144,323Retained earnings
    
    
    51,432,211
    
    
    
    51,598,678Accumulated other comprehensive income, net of tax
    
    
    918,013
    
    
    
    1,005,553Treasury stock; 161,858 shares, at cost
    
    
    (3,516,818
    )
    
    
    (3,516,818
    )Total stockholders equity
    
    
    106,321,297
    
    
    
    106,418,383Total liabilities and stockholders equity
    
    $
    1,267,542,353
    
    
    $
    1,279,698,867
  2




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##### 



HAWTHORN BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
 For the Three Months EndedMarch 31,2009
    
    2008INTEREST INCOMEInterest and fees on loans
    
    $
    14,444,026
    
    
    $
    16,461,890Interest on debt securities:Taxable
    
    
    1,162,507
    
    
    
    1,399,518Nontaxable
    
    
    393,616
    
    
    
    477,500Interest on federal funds sold and securities purchased
under agreements to resell
    
    
    150
    
    
    
    33,960Interest on interest-bearing deposits
    
    
    14,392
    
    
    
    187Dividends on equity securities
    
    
    19,559
    
    
    
    52,611Total interest income
    
    
    16,034,250
    
    
    
    18,425,666INTEREST EXPENSEInterest on deposits:Savings, interest checking and money market
    
    
    949,950
    
    
    
    1,549,381Time deposit accounts $100,000 and over
    
    
    1,080,246
    
    
    
    1,621,318Other time deposit accounts
    
    
    2,939,881
    
    
    
    3,551,537Interest on federal funds purchased and securities sold
under agreements to repurchase
    
    
    22,487
    
    
    
    375,381Interest on subordinated notes
    
    
    662,046
    
    
    
    850,990Interest on other borrowed money
    
    
    849,183
    
    
    
    932,659Total interest expense
    
    
    6,503,793
    
    
    
    8,881,266Net interest income
    
    
    9,530,457
    
    
    
    9,544,400Provision for loan losses
    
    
    1,750,000
    
    
    
    1,650,000Net interest income after provision for loan losses
    
    
    7,780,457
    
    
    
    7,894,400NON-INTEREST INCOMEService charges on deposit accounts
    
    
    1,377,799
    
    
    
    1,415,227Trust department income
    
    
    201,647
    
    
    
    211,756Gain on sale of mortgage loans, net
    
    
    1,020,971
    
    
    
    251,619Other
    
    
    164,351
    
    
    
    486,806Total non-interest income
    
    
    2,764,768
    
    
    
    2,365,408INVESTMENT SECURITIES GAINS (LOSSES), NET
    
    
    
    
    
    
    2,773NON-INTEREST EXPENSESalaries and employee benefits
    
    
    4,362,282
    
    
    
    4,693,719Occupancy expense, net
    
    
    608,277
    
    
    
    616,104Furniture and equipment expense
    
    
    563,658
    
    
    
    555,618FDIC insurance assessment
    
    
    680,781
    
    
    
    21,861Legal, examination, and professional fees
    
    
    360,870
    
    
    
    313,431Advertising and promotion
    
    
    281,271
    
    
    
    235,610Postage, printing, and supplies
    
    
    284,470
    
    
    
    287,291Processing expense
    
    
    854,748
    
    
    
    815,491Other
    
    
    998,375
    
    
    
    1,105,523Total non-interest expense
    
    
    8,994,732
    
    
    
    8,644,648Income before income taxes
    
    
    1,550,493
    
    
    
    1,617,933Less income taxes
    
    
    493,862
    
    
    
    531,058Net income
    
    
    1,056,631
    
    
    
    1,086,875Preferred stock dividends
    
    
    493,104
    
    
    
    Net income available to common shareholders
    
    $
    563,527
    
    
    $
    1,086,875Basic earnings per share
    
    $
    0.14
    
    
    $
    0.26Diluted earnings per share
    
    $
    0.14
    
    
    $
    0.26
  3




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##### 



HAWTHORN BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
 Three months ended March 31,2009
    
    2008Cash flows from operating activities:Net income
    
    $
    1,056,631
    
    
    $
    1,086,875Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    1,750,000
    
    
    
    1,650,000Depreciation expense
    
    
    525,900
    
    
    
    537,037Net accretion of debt securities, premiums, and discounts
    
    
    84,597
    
    
    
    (41,003
    )Amortization of intangible assets
    
    
    168,543
    
    
    
    188,994Stock based compensation expense
    
    
    37,803
    
    
    
    66,987Decrease in accrued interest receivable
    
    
    480,220
    
    
    
    1,395,735Increase in cash surrender value -life insurance
    
    
    (8,156
    )
    
    
    (7,245
    )Decrease (increase) in other assets
    
    
    460,862
    
    
    
    (1,380,401
    )Increase in accrued interest payable
    
    
    137,492
    
    
    
    51,257Increase in other liabilities
    
    
    94,405
    
    
    
    221,413Gain on sales of debt securities
    
    
    
    
    
    
    (2,773
    )Origination of mortgage loans for sale
    
    
    (51,495,000
    )
    
    
    (15,287,729
    )Proceeds from the sale of mortgage loans
    
    
    52,515,971
    
    
    
    15,539,348Gain on sale of mortgage loans, net
    
    
    (1,020,971
    )
    
    
    (251,619
    )Loss on sales and dispositions of premises and equipment
    
    
    3,513
    
    
    
    7,910Other real estate owned impairment charges
    
    
    815,574
    
    
    
    84,000(Increase) decrease in deferred tax asset
    
    
    (55,965
    )
    
    
    487,099Other, net
    
    
    158,846
    
    
    
    3,926Net cash provided by operating activities
    
    
    5,710,265
    
    
    
    4,349,811Cash flows from investing activities:Net decrease (increase) in loans
    
    
    2,631,238
    
    
    
    (20,015,410
    )Purchase of available-for-sale debt securities
    
    
    (36,673,418
    )
    
    
    (136,956,490
    )Proceeds from maturities of available-for-sale debt securities
    
    
    31,174,201
    
    
    
    57,531,407Proceeds from calls of available-for-sale debt securities
    
    
    8,190,000
    
    
    
    26,232,640Proceeds from sales of available-for-sale debt securities
    
    
    
    
    
    
    30,920,778Purchase of equity securities
    
    
    
    
    
    
    (966,900
    )Proceeds from sales of equity securities
    
    
    
    
    
    
    356,500Purchases of premises and equipment
    
    
    (166,876
    )
    
    
    (337,883
    )Proceeds from sales of premises and equipment
    
    
    36,990
    
    
    
    27,900Proceeds from sales of other real estate owned and repossessions
    
    
    224,411
    
    
    
    335,245Net cash provided by (used) in investing activities
    
    
    5,416,546
    
    
    
    (42,872,213
    )Cash flows from financing activities:Net decrease in demand deposits
    
    
    (1,565,998
    )
    
    
    (6,445,199
    )Net increase in interest-bearing transaction accounts
    
    
    18,131,440
    
    
    
    1,078,276Net increase in time deposits
    
    
    19,159,374
    
    
    
    901,004Net (decrease) increase in federal funds purchased and securities sold
under agreements to repurchase
    
    
    (2,816,502
    )
    
    
    27,024,906Proceeds from Federal Home Loan Bank advances
    
    
    
    
    
    
    70,000,000Repayment of Federal Home Loan Bank advances
    
    
    (45,199,639
    )
    
    
    (56,204,286
    )Cash dividends paid  preferred stock
    
    
    (235,317
    )
    
    
    Cash dividends paid  common stock
    
    
    (868,663
    )
    
    
    (875,594
    )Net cash (used) in provided by financing activities
    
    
    (13,395,305
    )
    
    
    35,479,107Net decrease in cash and cash equivalents
    
    
    (2,268,494
    )
    
    
    (3,043,295
    )Cash and cash equivalents, beginning of year
    
    
    53,827,468
    
    
    
    35,873,385Cash and cash equivalents, end of period
    
    $
    51,558,974
    
    
    $
    32,830,090Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    6,366,301
    
    
    $
    8,830,006Income taxes
    
    $
    
    
    
    $
    Supplemental schedule of noncash investing and financing activities:Other real estate and repossessions acquired in settlement of loans
    
    $
    685,000
    
    
    $
    802,313
  4




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##### 



(Unaudited)
 Basis of Presentation
    Fair Value Measurements
 Fair Value Measurement.
      5




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##### 



Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly
  Available-for-sale securities
  Loans
 Accounting by Creditors for Impairment of a Loan
  Fair Value MeasurementsAt March 31, 2009 UsingQuoted Pricesin ActiveMarkets for
    
    Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableFair Value
    
    Assets
    
    Inputs
    
    InputsDescription
    
    March 31, 2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Available-for-Sale
Securities
    
    $
    146,462,294
    
    
    $
    
    
    
    $
    146,462,294
    
    
    $
    Impaired loans
    
    $
    27,584,222
    
    
    $
    
    
    
    $
    27,584,222
    
    
    $
    
 6




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##### 



Earnings per Share
  For the Three Months EndedMarch 31,2009
    
    2008Net income, basic and diluted
    
    $
    1,056,631
    
    
    $
    1,086,875Less: preferred stock dividends
    
    
    493,104
    
    
    
    Net income available to
common shareholders
    
    
    563,527
    
    
    
    1,086,875Average shares outstanding
    
    
    4,136,495
    
    
    
    4,169,495Effect of dilutive stock options
    
    
    
    
    
    
    22,771Average shares outstanding including
dilutive stock options
    
    $
    4,136,495
    
    
    $
    4,192,266Net income per share, basic
    
    $
    0.14
    
    
    $
    0.26Net income per share, diluted
    
    
    0.14
    
    
    
    0.26
   2009
    
    2008Anti-dilutive shares
    
    
    262,266
    
    
    
    25,951
 Stock-Based Compensation
  7




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##### 



WeightedWeighted
    
    Aggregate
    
    AverageAverage
    
    Intrinsic
    
    ContractualExercise
    
    Value
    
    TermOptions
    
    Price
    
    (000)
    
    (in years)Outstanding at January 1, 2009
    
    
    266,835
    
    
    $
    26.10Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (1,431
    )
    
    
    31.43Canceled
    
    
    
    
    
    
    Outstanding at March 31, 2009
    
    
    265,404
    
    
    $
    26.07
    
    
    $
    
    
    
    
    5.7Exercisable at March 31, 2009
    
    
    190,581
    
    
    $
    25.50
    
    
    $
    
    
    
    
    4.7
  Comprehensive Income
  Three Months EndedMarch 31,2009
    
    2008Net income
    
    $
    1,056,631
    
    
    $
    1,086,875Other comprehensive income:Unrealized gain (loss) on securities:Unrealized gain (loss) on debt and
equity securities available-for-sale,
net of tax
    
    
    (99,585
    )
    
    
    715,359Adjustment for (gain) loss on sales
and calls of
debt and equity securities, net of
tax
    
    
    
    
    
    
    (1,692
    )Defined benefit pension plans:Amortization of prior service cost
included in
net periodic pension cost, net of tax
    
    
    12,045
    
    
    
    3,926Total other comprehensive income
(loss)
    
    
    (87,540
    )
    
    
    717,593Comprehensive income
    
    $
    969,091
    
    
    $
    1,804,468
 Goodwill and Intangible Assets
  8




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##### 



For the Three Months Ended March 31,2009
    
    2008Gross
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    Accumulated
    
    Net
    
    Carrying
    
    Accumulated
    
    NetAmount
    
    Amortization
    
    Amount
    
    Amount
    
    Amortization
    
    AmountAmortizable
intangible assets:Core deposit
intangible
    
    $
    7,060,224
    
    
    $
    (5,098,670
    )
    
    $
    1,961,554
    
    
    $
    7,060,224
    
    
    $
    (4,417,678
    )
    
    $
    2,642,546Mortgage servicing
rights
    
    
    3,061,142
    
    
    
    (1,540,304
    )
    
    
    1,520,838
    
    
    
    2,583,979
    
    
    
    (1,422,680
    )
    
    
    1,161,299Total amortizable
intangible assets
    
    
    10,121,366
    
    
    
    (6,638,974
    )
    
    
    3,482,392
    
    
    
    9,644,203
    
    
    
    (5,840,358
    )
    
    
    3,803,845Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,323,775
    
    
    
    
    
    
    
    40,323,775Total intangible
assets
    
    $
    10,121,366
    
    
    $
    (6,638,974
    )
    
    $
    3,482,392
    
    
    $
    49,967,978
    
    
    $
    (5,840,358
    )
    
    $
    44,127,620
  Core Deposit
    
    MortgageIntangible
    
    ServicingAsset
    
    RightsBalance at December 31, 2008
    
    $
    2,130,097
    
    
    $
    1,171,225Additions
    
    
    
    
    
    
    668,239Amortization
    
    
    (168,543
    )
    
    
    (318,626
    )Balance at March 31, 2009
    
    $
    1,961,554
    
    
    $
    1,520,838
  9




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##### 



Core Deposit
    
    MortgageIntangible
    
    ServicingAsset
    
    Rights2010
    
    $
    526,477
    
    
    $
    423,0002011
    
    
    434,763
    
    
    
    299,0002012
    
    
    408,062
    
    
    
    236,0002013
    
    
    134,684
    
    
    
    186,0002014
    
    
    
    
    
    
    146,000
  Three Months Ended March 31,Aggregate amortization expense
    
    2009
    
    2008Core deposit intangible asset
    
    $
    168,543
    
    
    $
    188,994Mortgage servicing rights
    
    
    318,626
    
    
    
    165,247
 Income Taxes
  Accounting for Uncertainty in Accounting in Income Taxes, an
Interpretation of FAS No. 109, Accounting for Income Taxes
 Employee Benefit Plans
  2009
    
    2008Payroll taxes
    
    $
    329,300
    
    
    $
    380,841Medical plans
    
    
    370,545
    
    
    
    364,421401k match
    
    
    77,730
    
    
    
    78,084Pension plan
    
    
    228,999
    
    
    
    218,336Profit-sharing
    
    
    67,175
    
    
    
    79,478Other
    
    
    21,140
    
    
    
    30,602Total employee benefits
    
    $
    1,094,889
    
    
    $
    1,151,762
 10




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##### 



Estimated
    
    Actual2009
    
    2008Service cost  benefits earned during the year
    
    $
    851,000
    
    
    $
    820,401Interest cost on projected benefit obligations
    
    
    509,000
    
    
    
    452,524Expected return on plan assets
    
    
    (523,000
    )
    
    
    (454,344
    )Amortization of prior service cost
    
    
    79,000
    
    
    
    78,628Amortization of net gains
    
    
    
    
    
    
    (42,802
    )Net priodic pension expense  Annual
    
    $
    916,000
    
    
    $
    854,407Pension expense  three months ended March 31 (actual)
    
    $
    228,999
    
    
    $
    218,336
  Preferred Stock
     11




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##### 



12




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##### 



Item 2  Managements Discussion and Analysis of Financial Condition
And Results of Operations
 Forward-Looking Statements
  
    
    statements that are not historical in nature, and
    
    statements preceded by, followed by or that include the words believes, expects, may,
will, should, could, anticipates, estimates, intends or similar expressions.
  
    
    competitive pressures among financial services companies may increase significantly,
    
    changes in the interest rate environment may reduce interest margins,
    
    general economic conditions, either nationally or in Missouri, may be less favorable than
expected and may adversely affect the quality of our loans and other assets,
    
    increases in non-performing assets in our loan portfolios and adverse economic conditions
may necessitate increases to our provisions for loan losses,
    
    costs or difficulties related to the integration of the business of Hawthorn and its
acquisition targets may be greater than expected,
    
    legislative or regulatory changes may adversely affect the business in which Hawthorn and
its subsidiaries are engaged, and
    
    changes may occur in the securities markets.
  Overview
   13




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##### 



Critical Accounting Policies
  Allowance for Loan Losses
  Income Taxes
  Goodwill and Other Intangible Assets
 Accounting for Impairment or Disposal of Long-Lived Assets
 Goodwill and Other Intangible Assets,
 14




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##### 



SELECTED CONSOLIDATED FINANCIAL DATA
  Selected Financial Data
 Three MonthsEndedMarch 31,(In thousands, except per share data)
    
    2009
    
    2008Per Share DataBasic earnings per common share
    
    $
    0.14
    
    
    $
    0.26Diluted earnings per common share
    
    
    0.14
    
    
    
    0.26Paid on preferred stock
    
    
    235
    
    
    
    Amortization of discount on preferred stock
    
    
    119
    
    
    
    Paid on common stock
    
    
    869
    
    
    
    876Book value per common share
    
    
    18.93
    
    
    
    26.91Market price
    
    
    11.75
    
    
    
    27.54Selected Ratios(Based on average balance sheets)Return on average total assets
    
    
    0.34
    %
    
    
    0.36
    %Return on average common stockholders equity
    
    
    2.88
    %
    
    
    3.89
    %Average common stockholders equity to average total assets
    
    
    6.28
    %
    
    
    9.20
    %(Based on end-of-period data)Efficiency ratio (1)
    
    
    73.16
    %
    
    
    72.59
    %Period-end common stockholders equity to period-end assets
    
    
    6.18
    %
    
    
    9.10
    %Period-end tangible common stockholders equity to
period-end tangible assets
    
    
    5.92
    %
    
    
    5.72
    %Period-end stockholders equity to period-end assets
    
    
    8.39
    %
    
    
    9.10
    %Total risk-based capital ratio
    
    
    16.22
    
    
    
    13.17Tier 1 risk-based capital ratio
    
    
    13.70
    
    
    
    11.00Leverage ratio
    
    
    11.02
    
    
    
    8.87
 (1)
    
    Efficiency ratio is calculated as non-interest expense as a percent of revenue. Total revenue
includes net interest and non-interest income.
 15




---



##### 



Results of Operations
 Summary
 Three MonthsEnded March 31,(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeNet interest income
    
    $
    9,530
    
    
    $
    9,545
    
    
    $
    (15
    )
    
    
    (0.2)
    %Provision for loan losses
    
    
    1,750
    
    
    
    1,650
    
    
    
    100
    
    
    
    6.1Noninterest income
    
    
    2,765
    
    
    
    2,365
    
    
    
    400
    
    
    
    16.9Investment securities gains, net
    
    
    
    
    
    
    3
    
    
    
    (3
    )
    
    
    (100.0
    )Noninterest expense
    
    
    8,995
    
    
    
    8,645
    
    
    
    350
    
    
    
    4.0Income (loss) before income taxes
    
    
    1,550
    
    
    
    1,618
    
    
    
    (68
    )
    
    
    (4.2
    )Income taxes
    
    
    493
    
    
    
    531
    
    
    
    (38
    )
    
    
    (7.2
    )Net income
    
    $
    1,057
    
    
    $
    1,087
    
    
    $
    (30
    )
    
    
    (2.8)
    %Less: preferred dividends
    
    
    493
    
    
    
    
    
    
    
    493
    
    
    
    Net income available to common
shareholders
    
    $
    564
    
    
    $
    1,087
    
    
    $
    (523
    )
    
    
    (48.1)
    %
  16




---



##### 



Net Interest Income
  Average Balance Sheets
  Three Months Ended March 31,2009
    
    
    
    
    
    
    
    
    
    2008Interest
    
    Rate
    
    
    
    
    
    Interest
    
    RateAverage
    
    Income/
    
    Earned/
    
    Average
    
    Income/
    
    Earned/(dollars in thousands)
    
    Balance
    
    Expense(1)
    
    Paid(1)
    
    Balance
    
    Expense(1)
    
    Paid(1)ASSETSLoans: (2) (4)
    
    $
    1,010,167
    
    
    $
    14,467
    
    
    
    5.81
    %
    
    $
    917,800
    
    
    $
    16,487
    
    
    
    7.21
    %Investment in securities: (3)Government sponsored enterprises
    
    
    108,795
    
    
    
    1,143
    
    
    
    4.26
    
    
    
    123,844
    
    
    
    1,381
    
    
    
    4.47State and municipal
    
    
    41,828
    
    
    
    586
    
    
    
    5.68
    
    
    
    51,099
    
    
    
    698
    
    
    
    5.48Other
    
    
    8,875
    
    
    
    20
    
    
    
    0.91
    
    
    
    6,252
    
    
    
    53
    
    
    
    3.40Federal funds sold
    
    
    451
    
    
    
    
    
    
    
    
    
    
    
    4,573
    
    
    
    34
    
    
    
    2.98Interest bearing deposits in
other financial institutions
    
    
    17,604
    
    
    
    14
    
    
    
    0.32
    
    
    
    124
    
    
    
    
    
    
    
    Total interest earning assets
    
    
    1,187,720
    
    
    
    16,230
    
    
    
    5.54
    
    
    
    1,103,692
    
    
    
    18,653
    
    
    
    6.78All other assets
    
    
    88,750
    
    
    
    
    
    
    
    
    
    
    
    126,890Allowance for loan losses
    
    
    (12,729
    )
    
    
    
    
    
    
    
    
    
    
    (9,435
    )Total assets
    
    $
    1,263,741
    
    
    
    
    
    
    
    
    
    
    $
    1,221,147LIABILITIES AND STOCKHOLDERS
EQUITYNOW accounts
    
    $
    143,674
    
    
    $
    336
    
    
    
    0.95
    %
    
    $
    115,138
    
    
    $
    373
    
    
    
    1.30
    %Savings
    
    
    44,391
    
    
    
    36
    
    
    
    0.33
    
    
    
    43,266
    
    
    
    58
    
    
    
    0.54Money market
    
    
    177,300
    
    
    
    578
    
    
    
    1.32
    
    
    
    174,142
    
    
    
    1,117
    
    
    
    2.57Time deposits of
$100,000 and over
    
    
    138,539
    
    
    
    1,080
    
    
    
    3.16
    
    
    
    142,880
    
    
    
    1,622
    
    
    
    4.55Other time deposits
    
    
    356,812
    
    
    
    2,940
    
    
    
    3.34
    
    
    
    313,988
    
    
    
    3,552
    
    
    
    4.54Total time deposits
    
    
    860,716
    
    
    
    4,970
    
    
    
    2.34
    
    
    
    789,414
    
    
    
    6,722
    
    
    
    3.42Federal funds purchased and
securities sold under agreements
to repurchase
    
    
    29,344
    
    
    
    23
    
    
    
    0.32
    
    
    
    51,894
    
    
    
    375
    
    
    
    2.90Subordinated notes
    
    
    49,486
    
    
    
    662
    
    
    
    5.43
    
    
    
    49,486
    
    
    
    851
    
    
    
    6.90Other borrowed money
    
    
    89,037
    
    
    
    849
    
    
    
    3.87
    
    
    
    90,053
    
    
    
    933
    
    
    
    4.16Total interest bearing liabilities
    
    
    1,028,583
    
    
    
    6,504
    
    
    
    2.56
    
    
    
    980,847
    
    
    
    8,881
    
    
    
    3.63Demand deposits
    
    
    118,620
    
    
    
    
    
    
    
    
    
    
    
    118,944Other liabilities
    
    
    9,267
    
    
    
    
    
    
    
    
    
    
    
    8,962Total liabilities
    
    
    1,156,470
    
    
    
    
    
    
    
    
    
    
    
    1,108,753Stockholders equity
    
    
    107,271
    
    
    
    
    
    
    
    
    
    
    
    112,394Total liabilities and
stockholders equity
    
    $
    1,263,741
    
    
    
    
    
    
    
    
    
    
    $
    1,221,147Net interest income (FTE)
    
    
    
    
    
    $
    9,726
    
    
    
    
    
    
    
    
    
    
    $
    9,772Net interest spread
    
    
    
    
    
    
    
    
    
    
    2.98
    %
    
    
    
    
    
    
    
    
    
    
    3.15
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.32
    %
    
    
    
    
    
    
    
    
    
    
    3.55
    %
 (1)
    
    Interest income and yields are presented on a fully taxable equivalent basis using the
Federal statutory income tax rate of 35%, net of
nondeductible interest expense. Such adjustments totaled $196,000 and $228,000 for the three
months ended March 31, 2009 and 2008, respectively.(2)
    
    Non-accruing loans are included in the average amounts outstanding.(3)
    
    Average balances based on amortized cost.(4)
    
    Fees and costs on loans are included in interest income.
 17




---



##### 



Comparison of the three months ended March 31, 2009 and 2008
      18




---



##### 



Rate and volume analysis
  Three Months Ended March 31,2009 vs. 2008Change due toTotal
    
    Average
    
    Average(Dollars In thousands)
    
    Change
    
    Volume
    
    RateInterest income on a fully taxable equivalent basis:Loans: (1) (3)
    
    $
    (2,020
    )
    
    $
    1,548
    
    
    $
    (3,568
    )Investment securities:Government sponsored entities
    
    
    (238
    )
    
    
    (161
    )
    
    
    (77
    )State and municipal(2)
    
    
    (112
    )
    
    
    (130
    )
    
    
    18Other
    
    
    (33
    )
    
    
    16
    
    
    
    (49
    )Federal funds sold
    
    
    (34
    )
    
    
    (16
    )
    
    
    (18
    )Interest bearing deposits in other financial institutions
    
    
    14
    
    
    
    
    
    
    
    14Total interest income
    
    
    (2,423
    )
    
    
    1,257
    
    
    
    (3,680
    )Interest expense:NOW accounts
    
    
    (37
    )
    
    
    80
    
    
    
    (117
    )Savings
    
    
    (22
    )
    
    
    2
    
    
    
    (24
    )Money market
    
    
    (539
    )
    
    
    20
    
    
    
    (559
    )Time deposits of 100,000 and over
    
    
    (542
    )
    
    
    (48
    )
    
    
    (494
    )Other time deposits
    
    
    (612
    )
    
    
    440
    
    
    
    (1,052
    )Federal funds purchased and securities sold under agreements to repurchase
    
    
    (352
    )
    
    
    (115
    )
    
    
    (237
    )Subordinated notes
    
    
    (189
    )
    
    
    
    
    
    
    (189
    )Other borrowed money
    
    
    (84
    )
    
    
    (11
    )
    
    
    (73
    )Total interest expense
    
    
    (2,377
    )
    
    
    368
    
    
    
    (2,745
    )Net interest income on a fully taxable equivalent basis
    
    $
    (46
    )
    
    $
    889
    
    
    $
    (935
    )
 (1)
    
    Interest income and yields are presented on a fully taxable equivalent basis using the
Federal statutory income tax rate of 35%, net of
nondeductible interest expense. Such adjustments totaled $196,000 and $228,000 for the three
months ended March 31, 2009 and 2008, respectively.(2)
    
    Non-accruing loans are included in the average amounts outstanding.(3)
    
    Fees and costs on loans are included in interest income.
   19




---



##### 



Provision for loan losses
   Non-interest Income and Expense
 Non-interest income
 Three MonthsEnded March 31,(Dollars in thousands)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeNon-interest IncomeService charges on deposit accounts
    
    $
    1,378
    
    
    $
    1,415
    
    
    $
    (37
    )
    
    
    (2.6
    )%Trust department income
    
    
    202
    
    
    
    212
    
    
    
    (10
    )
    
    
    (4.7
    )Gains on sales of mortgage loans
    
    
    1,021
    
    
    
    252
    
    
    
    769
    
    
    
    305.2Other
    
    
    164
    
    
    
    486
    
    
    
    (322
    )
    
    
    (66.3
    )Total non-interest income
    
    $
    2,765
    
    
    $
    2,365
    
    
    $
    400
    
    
    
    16.9
    %Investment securities gains (losses), net
    
    $
    
    
    
    $
    3
    
    
    $
    (3
    )
    
    
    (100.0
    )%Non-interest income as a % of total revenue *
    
    
    22.5
    %
    
    
    19.9
    %Total revenue per full-time equivalent employee
    
    $
    54.6
    
    
    $
    60.6
    
    
    $
 *
    
    Total revenue is calculated as net interest income plus
non-interest income
 Three Months Ended March 31, 2009 and 2008
  20




---



##### 



Non-interest expense
 Three MonthsEnded March 31,(Dollars in thousands)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeNon-interest ExpenseSalary expense
    
    $
    3,267
    
    
    $
    3,542
    
    
    $
    (275
    )
    
    
    (7.8
    )%Employee benefits
    
    
    1,095
    
    
    
    1,152
    
    
    
    (57
    )
    
    
    (4.9
    )Occupancy expense, net
    
    
    608
    
    
    
    616
    
    
    
    (8
    )
    
    
    (1.3
    )Furniture and equipment expense
    
    
    564
    
    
    
    557
    
    
    
    7
    
    
    
    1.3FDIC insurance assessment
    
    
    681
    
    
    
    22
    
    
    
    659
    
    
    NMLegal, examination, and professional fees
    
    
    361
    
    
    
    313
    
    
    
    48
    
    
    
    15.3Advertising and promotion
    
    
    281
    
    
    
    235
    
    
    
    46
    
    
    
    19.6Postage, printing, and supplies
    
    
    284
    
    
    
    287
    
    
    
    (3
    )
    
    
    (1.0
    )Processing expense
    
    
    855
    
    
    
    815
    
    
    
    40
    
    
    
    4.9Other
    
    
    999
    
    
    
    1,106
    
    
    
    (107
    )
    
    
    (9.7
    )Total non-interest expense
    
    $
    8,995
    
    
    $
    8,645
    
    
    $
    350
    
    
    
    4.0
    %Efficiency ratio
    
    
    73.2
    %
    
    
    72.6
    %Salaries and benefits as a % of total
non-interest expense
    
    
    48.5
    %
    
    
    54.3
    %Number of full time equivalent employees
    
    
    344
    
    
    
    343
 Three Months Ended March 31, 2009 and 2008
  Income taxes
  Lending and Credit Management
   21




---



##### 



March 31,
    
    December 31,(In thousands)
    
    2009
    
    2008Amount
    
    %
    
    Amount
    
    %Commercial, financial, and agricultural
    
    $
    152,204
    
    
    
    15.2
    %
    
    $
    153,386
    
    
    
    15.2
    %Real estate Construction
    
    
    115,557
    
    
    
    12.9
    
    
    
    129,639
    
    
    
    12.8Real estate Mortgage
    
    
    706,285
    
    
    
    70.3
    
    
    
    692,530
    
    
    
    68.6Installment loans to individuals
    
    
    30,484
    
    
    
    3.0
    
    
    
    33,548
    
    
    
    3.3Total loans
    
    $
    1,004,530
    
    
    
    100.0
    %
    
    $
    1,009,103
    
    
    
    100.0
    %
      Accounting by Creditors for Impairment of a
Loan,
 22




---



##### 



Allowance for Loan Losses
   Three Months EndedMarch 31,(Dollars in thousands)
    
    2009
    
    2008Provision for loan losses
    
    
    1,750
    
    
    
    1,650Net loan charge-offs:Commercial, financial, and agricultural
    
    
    117
    
    
    
    816Real estate  construction
    
    
    476
    
    
    
    (17
    )Real estate  mortgage
    
    
    646
    
    
    
    63Installment loans to individuals
    
    
    18
    
    
    
    62Total net loan charge-offs
    
    
    1,257
    
    
    
    924
  23




---



##### 



March 31,
    
    December 31,(Dollars in thousands)
    
    2009
    
    2008Nonaccrual loans:Commercial, financial, and agricultural
    
    $
    1,923
    
    
    $
    2,071Real estate  construction
    
    
    11,931
    
    
    
    10,347Real estate  mortgage
    
    
    9,037
    
    
    
    7,850Installment loans to individuals
    
    
    126
    
    
    
    119Total nonaccrual loans
    
    
    23,017
    
    
    
    20,387Loans contractually past  due 90 days
or more and still accruing:Commercial, financial, and agricultural
    
    
    971
    
    
    
    140Real estate  construction
    
    
    
    
    
    
    52Real estate  mortgage
    
    
    1,663
    
    
    
    547Installment loans to individuals
    
    
    19
    
    
    
    4Total loans contractually past -due
90 days or more and still accruing
    
    
    2,653
    
    
    
    743Restructured troubled loans
    
    
    3,736
    
    
    
    3,736Total nonperforming loans
    
    
    29,406
    
    
    
    24,866Other real estate
    
    
    7,473
    
    
    
    7,828Total nonperforming assets
    
    $
    36,879
    
    
    $
    32,694Loans
    
    $
    1,004,530
    
    
    
    1,009,103Allowance for loan losses to loans
    
    
    1.31
    %
    
    
    1.26
    %Nonperforming loans to loans
    
    
    2.93
    %
    
    
    2.46
    %Allowance for loan losses to nonperforming loans
    
    
    44.75
    %
    
    
    50.94
    %Nonperforming assets to loans and foreclosed assets
    
    
    3.64
    %
    
    
    3.21
    %
    24




---



##### 



Accounting
by Creditors for Impairment of a Loan,
       25




---



##### 



Financial Condition
         26




---



##### 



Liquidity and Capital Resources
 Liquidity Management
    March 31,
    
    December 31,(dollars in thousands)
    
    2009
    
    2008Liquid assets:Federal funds sold
    
    $
    116
    
    
    $
    104Available for sale investments securities
    
    
    146,462
    
    
    
    149,401Total
    
    
    146,578
    
    
    
    149,505
  March 31,(dollars in thousands)
    
    2009Investment securities pledged for the purpose of securing:Federal Reserve Bank borrowings
    
    $
    3,330Repurchase agreements
    
    
    32,229Other Deposits
    
    
    90,687Total pledged, at fair value
    
    
    126,246
   27




---



##### 



March 31,
    
    December 31,(dollars in thousands)
    
    2009
    
    2008Core deposit base:Non-interest bearing demand
    
    $
    123,679
    
    
    $
    125,245Interest checking
    
    
    139,605
    
    
    
    123,289Savings and money market
    
    
    221,153
    
    
    
    219,338Total
    
    
    484,437
    
    
    
    467,872
  March 31,
    
    December 31,(dollars in thousands)
    
    2009
    
    2008Borrowings:Securities sold under agreements to repurchase
    
    $
    26,322
    
    
    $
    29,139FHLB advances
    
    
    83,858
    
    
    
    129,057Subordinated notes
    
    
    49,486
    
    
    
    49,486Total
    
    
    159,666
    
    
    
    207,682
   March 31, 2009Federal(dollars in thousands)
    
    FHLB
    
    Reserve
    
    OtherCollateral value pledged
    
    $
    329,350
    
    
    $
    3,459
    
    
    $
    9,770Advances outstanding
    
    
    (83,858
    )
    
    
    
    
    
    
    (2,095
    )Letters of credit issued
    
    
    (100
    )
    
    
    
    
    
    
    Total
    
    
    245,392
    
    
    
    3,459
    
    
    
    7,675
 Sources and Uses of Funds
  28




---



##### 



Regulatory Capital
    Minimum
    
    Well-CapitalizedActual
    
    Capital requirements
    
    Capital RequirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioMarch 31, 2009Total
capital (to risk-weighted assets):Company
    
    $
    164,084
    
    
    
    16.22
    %
    
    $
    80,948
    
    
    
    8.00
    %
    
    
    
    
    
    
    Hawthorn Bank
    
    
    127,915
    
    
    
    12.73
    
    
    
    80,392
    
    
    
    8.00
    
    
    $
    100,490
    
    
    
    10.00
    %Tier I
capital (to risk-weighted assets):Company
    
    $
    138,576
    
    
    
    13.70
    
    
    $
    40,474
    
    
    
    4.00
    %
    
    
    
    
    
    
    Hawthorn Bank
    
    
    115,354
    
    
    
    11.48
    
    
    
    40,196
    
    
    
    4.00
    
    
    $
    60,294
    
    
    
    6.00
    %Tier I capital (to adjusted average assets):Company
    
    $
    138,576
    
    
    
    11.02
    
    
    $
    37,730
    
    
    
    3.00
    %
    
    
    
    
    
    
    Hawthorn Bank
    
    
    115,354
    
    
    
    9.23
    
    
    
    37,478
    
    
    
    3.00
    
    
    $
    62,463
    
    
    
    5.00
    %
 Minimum
    
    Well-CapitalizedActual
    
    Capital requirements
    
    Capital RequirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioDecember 31, 2008Total capital (to risk-weighted assets):Company
    
    $
    163,949
    
    
    
    16.01
    %
    
    $
    81,912
    
    
    
    8.00
    %
    
    
    
    
    
    
    Hawthorn Bank
    
    
    125,510
    
    
    
    12.35
    
    
    
    81,310
    
    
    
    8.00
    
    
    $
    101,638
    
    
    
    10.00
    %Tier I capital (to risk-weighted assets):Company
    
    $
    138,756
    
    
    
    13.55
    
    
    $
    40,956
    
    
    
    4.00
    %
    
    
    
    
    
    
    Hawthorn Bank
    
    
    113,158
    
    
    
    11.13
    
    
    
    40,655
    
    
    
    4.00
    
    
    $
    60,983
    
    
    
    6.00
    %Tier I capital (to adjusted average assets):Company
    
    $
    138,756
    
    
    
    10.80
    
    
    $
    38,543
    
    
    
    3.00
    %
    
    
    
    
    
    
    Hawthorn Bank
    
    
    113,158
    
    
    
    8.82
    
    
    
    38,497
    
    
    
    3.00
    
    
    $
    64,162
    
    
    
    5.00
    %
 29




---



##### 



Over5 years orno stated(Dollars in thousands)
    
    Year 1
    
    Year 2
    
    Year 3
    
    Year 4
    
    Year 5
    
    Maturity
    
    TotalASSETSInvestment securities
    
    $
    37,204
    
    
    $
    12,321
    
    
    $
    7,461
    
    
    $
    9,824
    
    
    $
    14,203
    
    
    $
    74,324
    
    
    $
    155,337Interest-bearing deposits
    
    
    33,093
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,093Federal funds sold and securities
purchased under agreements to resell
    
    
    116
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116Loans
    
    
    496,887
    
    
    
    167,620
    
    
    
    139,732
    
    
    
    74,293
    
    
    
    86,719
    
    
    
    26,120
    
    
    
    991,371Total
    
    $
    567,300
    
    
    $
    179,941
    
    
    $
    147,193
    
    
    $
    84,117
    
    
    $
    100,922
    
    
    $
    100,444
    
    
    $
    1,179,917LIABILITIESSavings, Now deposits
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    127,008
    
    
    $
    
    
    
    $
    
    
    
    $
    127,008Rewards checking, Super Now,
money market deposits
    
    
    233,956
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    233,956Time deposits
    
    
    382,250
    
    
    
    64,028
    
    
    
    31,096
    
    
    
    4,733
    
    
    
    24,161
    
    
    
    110
    
    
    
    506,378Federal funds purchased and securities
sold under agreements to repurchase
    
    
    26,322
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,322Subordinated notes
    
    
    49,486
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,486Other borrowed money
    
    
    22,766
    
    
    
    37,338
    
    
    
    23,485
    
    
    
    247
    
    
    
    22
    
    
    
    
    
    
    
    83,858Total
    
    $
    714,780
    
    
    $
    101,366
    
    
    $
    54,581
    
    
    $
    131,988
    
    
    $
    24,183
    
    
    $
    110
    
    
    $
    1,027,008Interest-sensitivity GAP
Periodic GAP
    
    $
    (147,480
    )
    
    $
    78,575
    
    
    $
    92,612
    
    
    $
    (47,871
    )
    
    $
    76,739
    
    
    $
    100,334
    
    
    $
    152,909Cumulative GAP
    
    $
    (147,480
    )
    
    $
    (68,905
    )
    
    $
    23,707
    
    
    $
    (24,164
    )
    
    $
    52,575
    
    
    $
    152,909
    
    
    $
    152,909Ratio of interest-earnings
assets to interest-bearing liabilitiesPeriodic GAP
    
    
    0.79
    
    
    
    1.78
    
    
    
    2.70
    
    
    
    0.64
    
    
    
    4.17
    
    
    
    913.13
    
    
    
    1.15Cumulative GAP
    
    
    0.79
    
    
    
    0.92
    
    
    
    1.03
    
    
    
    0.98
    
    
    
    1.05
    
    
    
    1.15
    
    
    
    1.15
   30




---



##### 



Impact of New Accounting Pronouncements
 Employers Disclosures about Postretirement Benefit Plan Assets, Employers Disclosures
about Pensions and Other Postretirement Benefits
 Fair Value Measurement,
 Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly
 Recognition and Presentation of
Other-than-Temporary Impairment
 31




---



##### 



Interim Disclosures about Fair
Value of Financial Statements
 , Business Combinations Noncontrolling Interests in Consolidated Financial Statements an
amendment to ARB No. 51
 The Fair Value Option for Financial Assets and
Financial Liabilities  including an amendment of FASB Statement No. 115
 32




---



##### 



PART II  OTHER INFORMATION
 Item 1.
    
    Legal Proceedings
    
    NoneItem 1A.
    
    Risk Factors
    
    NoneItem 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    NoneItem 3.
    
    Defaults Upon Senior Securities
    
    NoneItem 4.
    
    Submission of Matters to a Vote of Security Holders
    
    NoneItem 5.
    
    Other Information
    
    NoneItem 6.
    
    Exhibits
 Exhibit No.
    
    Description3.1
    
    Restated Articles of Incorporation of our Company (filed as
Exhibit 3.1 to our Companys current report on Form 8-K on
August 9, 2007 and incorporated herein by reference).3.1.1
    
    Certificate of Designations of Fixed Rate Cumulative Perpetual
Preferred Stock, Series 2008, dated December 17, 2008 (filed
as Exhibit 3.1.1 to our Companys current report on Form 8-K
on December 23, 2008 and incorporated herein by reference).3.2
    
    Amended and Restated Bylaws of our Company (filed as Exhibit
3.2 to our Companys current report on Form 8-K on November 1,
2007 and incorporated herein by reference).4.1
    
    Specimen certificate representing shares of our
Companys $1.00 par value common stock (filed as Exhibit 4.1
to our Companys Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 (Commission file number 0-23636)
and incorporated herein by reference).4.2
    
    Specimen certificate representing shares of our Fixed Rate
Cumulative Perpetual Preferred Stock, Series 2008 (filed as
Exhibit 4.2 to our Companys current report on Form 8-K on
December 23, 2008 and incorporated herein by reference).4.3
    
    Warrant to purchase shares of our Companys $1.00 par value
Common Stock, dated December 19, 2008 (filed as Exhibit 4.3 to
our Companys current report on Form 8-K on December 23, 2008
and incorporated herein by reference).31.1
    
    Certificate of the Chief Executive Officer of our Company
pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certificate of the Chief Financial Officer of our Company
pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certificate of the Chief Executive Officer of our Company
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certificate of the Chief Financial Officer of our Company
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 33




---



##### 



SIGNATURES
  HAWTHORN BANCSHARES, INC.DateMay 8, 2009
    
    /s/ James E. Smith

James E. Smith, Chairman of the Board
and Chief Executive Officer (Principal Executive Officer)May 8, 2009
    
    /s/ Richard G. Rose

Richard G. Rose, Chief Financial Officer
(Principal Financial
Officer and Principal Accounting Officer)
 34




---



##### 



HAWTHORN BANCSHARES, INC.
   Exhibit No.
    
    Description
    
    Page No.3.1
    
    Restated Articles of Incorporation of our Company (filed as Exhibit 3.1 to our Companys
current report on Form 8-K on August 9, 2007 and incorporated herein by reference).
    
    **3.1.1
    
    Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock, Series
 2008, dated December 17, 2008 (filed as Exhibit 3.1.1 to our
Companys current report on Form 8-K on December 23, 2008 and incorporated herein
 by reference).
    
    **3.2
    
    Amended and Restated Bylaws of our Company (filed as Exhibit 3.2 to our Companys current
report on Form 8-k on November 1, 2007 and incorporated herein by reference).
    
    **4.1
    
    Specimen certificate representing shares of our Companys $1.00 par value common stock (filed as
Exhibit 4.1 to our Companys Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (Commission file number 0-23636) and incorporated herein by reference).
    
    **4.2
    
    Specimen certificate representing shares of our Fixed Rate Cumulative Perpetual Preferred Stock,
Series 2008 (filed as Exhibit 4.2 to our Companys current report on Form 8-K on December 23, 2008 and incorporated herein by reference).
    
    **4.3
    
    Warrant to purchase shares of our Companys
 $1.00 par value Common Stock, dated December 19,
 2008 (filed as Exhibit 4.3 to our Companys
 current report on Form 8-K on December 23, 2008
 and incorporated herein by reference).
    
    **31.1
    
    Certificate of the Chief Executive Officer of
 our Company pursuant to Section 302 of the
 Sarbanes-Oxley Act of 2002
    
    3631.2
    
    Certificate of the Chief Financial Officer of our Company pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    3732.1
    
Certificate of the Chief Executive Officer of
 our Company pursuant to Section 906 of the
 Sarbanes-Oxley Act of 2002
    
    3832.2
    
Certificate of the Chief Financial Officer of
 our Company pursuant to Section 906 of the
 Sarbanes-Oxley Act of 2002
    
    39
 
 **
    
    Incorporated by reference. 35