HWBK · Hawthorn Bancshares, Inc.

Hawthorn Bancshares, Inc. (HBI) entered into a definitive Agreement and Plan of Reorganization on April 29, 2026, to acquire FSC Bancshares, Inc. (FBI), expanding its Missouri banking footprint with nine additional branches and $384 million in assets. The transaction structure involves a two-step merger process: first, HBI's wholly-owned subsidiary Hawthorn Holdco merges into FBI with FBI surviving, followed immediately by FBI merging into HBI. Concurrently, Farmers State Bank merges into Hawthorn Bank. This integrated approach is intended to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code. Consideration totals approximately $28.3 million, comprising $14 million cash (potentially reduced if FBI's adjusted shareholders' tangible equity falls below $19 million) and 413,101 HBI shares distributed pro rata based on FBI's outstanding common stock. Both boards unanimously approved the deal, bolstered by voting agreements from FBI directors and executives controlling 37.9% of shares, reducing approval risk. Key conditions include FBI shareholder vote, Nasdaq listing of new HBI shares, regulatory consents, SEC effectiveness of the S-4 registration, and tax opinions. Termination rights exist for both parties, with FBI owing a $1.12 million fee in certain scenarios like pursuing a superior proposal. The deal is targeted for Q3 2026 close, with no prior material relationship between HBI and FBI, positioning it as a strategic community banking expansion in northern Missouri.