UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 11-K

(Mark One):

þ		ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

o		TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission file number 0-23636

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

Hawthorn Bancshares, Inc. Profit Sharing 401(k) Plan

 

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

 

REQUIRED INFORMATION

See attachments to this report, which are incorporated herein by reference.

SIGNATURES

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-136477) of Hawthorn Bancshares, Inc. (formerly known as Exchange National Bancshares, Inc.) of our report dated June 23, 2011, with respect to the financial statements of the Hawthorn Bancshares Profit Sharing 401(k) Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2010.

/s/ BKD, LLP

St. Louis, Missouri

June 23, 2011

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan
Accountants’ Report and Financial Statements
December 31, 2010 and 2009

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan

December 31, 2010 and 2009

Contents

Report of Independent Registered Public Accounting Firm			1
Financial Statements
Statements of Net Assets Available for Benefits			2
Statements of Changes in Net Assets Available for Benefits			3
Notes to Financial Statements			4
Supplemental Schedule
Schedule H, Line 4i — Schedule of Assets (Held at End of Year)			12

Report of Independent Registered Public Accounting Firm

Retirement and Investment Committee
Hawthorn Bancshares, Inc.
     Profit Sharing 401(k) Plan
Lee’s Summit, Missouri

We have audited the accompanying statements of net assets available for benefits of Hawthorn Bancshares, Inc. Profit Sharing 401(k) Plan as of December 31, 2010 and 2009, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audits also included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Hawthorn Bancshares, Inc. Profit Sharing 401(k) Plan as of December 31, 2010 and 2009, and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying supplemental schedule of assets (held at end of year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

/s/ BKD, LLP

St. Louis, Missouri
June 23, 2011

Federal Employer Identification Number: 44-0160260

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan

		2010				2009
Investments, At Fair Value		$	17,437,294			$	15,573,852
Receivables
Employer’s contribution			11,225				277,518
Employees’ contribution			24,178				—
			35,403				277,518
Net Assets Available for Benefits		$	17,472,697			$	15,851,370

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan

		2010				2009
Investment Income
Net appreciation in fair value of investments		$	870,487			$	760,759
Interest and dividends			390,105				380,940
Net investment income			1,260,592				1,141,699
Contributions
Employer			319,908				585,497
Participants			683,071				665,506
Other			205,272				—
			1,208,251				1,251,003
Total additions			2,468,843				2,392,702
Deductions
Benefits paid to participants			847,516				953,394
Net Increase			1,621,327				1,439,308
Net Assets Available for Benefits, Beginning of Year			15,851,370				14,412,062
Net Assets Available for Benefits, End of Year		$	17,472,697			$	15,851,370

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan

Note 1: Description of the Plan

The following description of the Hawthorn Bancshares, Inc. Profit Sharing 401(k) Plan (“Plan”) provides only general information. Participants should refer to the Plan Document and Summary Plan Description for a more complete description of the Plan’s provisions, which are available from the Plan Administrator.

     General

The Plan is a defined contribution plan sponsored by Hawthorn Bancshares, Inc. and its subsidiaries (collectively the “Company”) for the benefit of the employees of the Company who have at least 90 days of service and are age 21 or older. An eligible employee becomes a participant in the Plan on the first day of each quarter of the plan year. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Capital Bank and Trust Company is the trustee of the Plan.

     Contributions

The Company profit-sharing contributions are discretionary as determined by the Company’s Board of Directors. All employer contributions are allocated to a participant’s account based on that participant’s compensation compared to the total compensation of all eligible participants. In addition, the Company matches the participant’s salary deferral into the plan dollar for dollar up to 3% of the participant’s annual salary. All contributions are made conditioned upon their deductibility for federal income tax purposes.

Participants have the option to make voluntary contributions to the Plan up to the annual limit set by the Internal Revenue Service (IRS).

     Participant Investment Account Options

Investment account options available include various mutual funds and common stock of the Company. Each participant has the option of directing his/her contributions into any of the separate investment accounts and may change the allocation daily.

     Participant Accounts

Each participant’s account is credited with the participant’s contribution, the Company’s contribution and plan earnings. Allocations are based on participant earnings. The benefits to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009

     Vesting

Participant contributions and earnings thereon are 100% vested at all times. Employer contributions and earnings thereon vest 20% per year of service and become fully vested at the completion of five years of service at the Company. At the time a participant terminates his/her employment, the nonvested portion of the employer contribution account is forfeited and allocated to eligible participants on a pro rata allocation method.

     Payment of Benefits

Under the terms of the Plan, participants are entitled to receive the amount credited to their accounts upon normal retirement at the age of 65 or disability retirement. Participants terminating employment prior to retirement are entitled to receive that portion of their account that is vested. In the event of death, the participant’s account becomes fully vested and the balance is paid to the designated beneficiary. Distributions under the Plan are payable in a lump sum or through installments.

     Plan Termination

Although the Company has not expressed any intention to do so, it may discontinue its contributions and terminate the Plan at any time. In such an event, the participants’ accounts become fully vested and are not subject to forfeiture.

Note 2: Summary of Significant Accounting Policies

     Basis of Presentation

The accompanying financial statements have been prepared on an accrual basis of accounting except for benefits, which are recorded upon distribution, and present the net assets available for plan benefits and changes in those net assets.

     Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets and changes in net assets and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009

     Valuation of Investments

Investments in securities traded on a national securities exchange are valued at the latest reported sales price on the last business day of the period. If no sale has taken place, the securities are valued at the latest bid price. The investment in employer securities is valued at the latest bid price reported.

Investment transactions are accounted for on the trade-date basis. The realized gains or losses on investments are determined using the average cost of the individual security issue. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

     Plan Tax Status

The IRS issued its latest determination letter on March 3, 2006, which stated that the Plan and its underlying trust qualify under the applicable provisions of the Internal Revenue Code and, therefore, are exempt from federal income taxes. The Plan has been amended since receiving the determination letter. However, the Plan Administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, we believe the Plan was qualified and the related trust was tax-exempt as of the financial statement date. The Plan is no longer subject to U.S. federal tax examinations for years before 2007.

     Administrative Expenses

The administrative expenses of the Plan are paid by the Company.

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009

Note 3: Investments

The following table presents the Plan’s investments. Investments that represent 5% or more of total plan assets in either year are separately identified:

		2010				2009
Mutual Funds
American Funds Money Market Fund		$	2,762,697			$	2,355,768
Large Cap
American Funds Growth Fund			1,423,242				1,525,205
American Funds Washington Mutual Investors Fund			1,873,403				1,749,876
Other			2,270,636				2,137,100
Mid Cap
American Funds Small-Cap World Fund			1,274,775				959,290
Other			831,094				769,204
Fixed Income
American Funds Bond Fund			2,188,396				1,707,577
PIMCO Total Return Fund			1,737,789				1,420,320
International
American Funds Euro-Pacific Growth Fund			1,229,625				1,128,133
Employer Securities — Hawthorn Bancshares, Inc. common stock			1,845,627				1,816,844
Cash — Hawthorn Bancshares Awaiting Stock Purchase Fund			10				4,535
Total investments		$	17,437,294			$	15,573,852

During the years ended 2010 and 2009, the Plan’s investments (including gains and losses on investments bought, sold and held during the year) appreciated in value by $870,487 and $760,759, respectively, as follows:

		2010				2009
Mutual Funds		$	1,023,056			$	1,995,907
Employer Securities — Hawthorn Bancshares, Inc. common stock			(152,569	)			(1,235,148	)
Net appreciation in fair value		$	870,487			$	760,759

     Interest and dividends realized on the Plan’s investments for the years ended 2010 and 2009 were $390,105 and $380,940, respectively.

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009

Note 4: Fair Value of Plan Assets

Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also establishes a fair value hierarchy which requires a plan to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying statements of net assets available for benefits, as well as the general classification of such assets pursuant to the valuation hierarchy.

     Investments

Where quoted market prices are available in an active market, investments are classified within Level 1 of the valuation hierarchy. All of the Plan’s investments are considered Level 1 investments and include common stock of the sponsor and mutual funds.

The following table presents the fair value measurements of assets recognized in the accompanying statements of net assets available for benefits measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31:

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009

						Fair Value Measurements Using
						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
						Assets				Inputs				Inputs
		Fair Value				(Level 1)				(Level 2)				(Level 3)
December 31, 2010
Common stock
Financial		$	1,845,627			$	1,845,627			$	—			$	—
Mutual funds
Large Cap		$	5,567,281			$	5,567,281			$	—			$	—
Mid Cap		$	2,105,869			$	2,105,869			$	—			$	—
Fixed Income		$	3,926,185			$	3,926,185			$	—			$	—
International		$	1,229,625			$	1,229,625			$	—			$	—
Money market fund		$	2,762,697			$	2,762,697			$	—			$	—
December 31, 2009
Common stock
Financial		$	1,816,844			$	1,816,844			$	—			$	—
Mutual funds
Large Cap		$	5,412,181			$	5,412,181			$	—			$	—
Mid Cap		$	1,728,494			$	1,728,494			$	—			$	—
Fixed Income		$	3,127,897			$	3,127,897			$	—			$	—
International		$	1,128,133			$	1,128,133			$	—			$	—
Money market fund		$	2,355,768			$	2,355,768			$	—			$	—

Note 5: Party-in-interest Transactions

The Plan held an investment of 214,608 and 190,455 shares of common stock of the Company with a fair value of $1,845,627 and $1,816,844 at December 31, 2010 and 2009, respectively, and received dividends of $62,724 and $108,620 on such shares during 2010 and 2009, respectively.

These investments are considered allowable party-in-interest transactions under ERISA guidelines.

Note 6: Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the participants’ account balances and the amounts reported in the statements of net assets available for benefits.

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009

The current protracted economic decline presents employee benefit plans with difficult circumstances and challenges, which in some cases have resulted in large and unanticipated declines in the fair value of investments. The financial statements have been prepared using values and information currently available to the Plan.

Given the volatility of current economic conditions, the values of assets recorded in the financial statements could change rapidly, resulting in material future adjustments in investment values that could negatively impact the Plan.

Supplemental Schedule

Hawthorn Bancshares, Inc.
Profit Sharing 401(k) Plan
EIN 43-1626350 PN 002

Schedule H, Line 4i — Schedule of Assets (Held at End of Year)
December 31, 2010

		Description
		of								Current
Investment Type and Issuer		Investment								Value
Mutual Funds
*American Funds Money Market Fund			2,762,697			Shares				$	2,762,697
*American Funds Washington Mutual Investors Fund			69,078			Shares					1,873,403
*American Funds Bond Fund			179,524			Shares					2,188,396
*American Funds Growth Fund			47,143			Shares					1,423,242
PIMCO Total Return Fund			160,165			Shares					1,737,789
*American Funds Euro-Pacific Growth Fund			30,227			Shares					1,229,625
*American Funds Small-Cap World Fund			33,017			Shares					1,274,775
Federated Kaufmann Fund			151,108			Shares					831,094
Templeton Growth Fund			40,714			Shares					724,304
*American Funds New Perspective Fund			28,390			Shares					804,845
AIM Structured Core Fund Investors			99,129			Shares					741,487
											15,591,657
*Hawthorn Bancshares, Inc. common stock			214,608			Shares					1,845,627
*Cash — Hawthorn Bancshares Awaiting Stock Purchase Fund											10
										$	17,437,294