See "Forward Looking Statements" under Item 7 of this report. which in turn owns all of the issued and outstanding capital stock of Hawthorn Bank. These preferred shares were transferred to employees beginning in January 2019. Liability of Commonly Controlled Institutions. Our Business Depends On Our Ability To Successfully Manage Credit Risk. The operation of our business requires us to manage credit risk. The CECL model is expected to result in more timely recognition of credit losses. Competition among depository institutions for deposits has increased significantly. Employee errors could also subject us to financial claims for negligence. Recent Issuance of SecuritiesNone.Item 6. They involve risks, uncertainties and assumptions. Principal Accounting Fees and Services. Policy and Regulatory Developments. These changes are discussed in greater detail below under Non-interest Expense. See the Liquidity Management section for further discussion. In addition, all other loans are reviewed on a risk weighted selection process. During this review, management also determines which loans should be considered impaired. Of this increase, $29.5 million was related to loan modifications under the CARES Act. Once the impairment amount is calculated, a specific reserve allocation is recorded. At December 31, 2020 the balance of these loans totaled $65.1 million. The phase-in period for the Company began on January 1, 2015. Many assumptions are used to calculate the impact of interest rate fluctuations. Actual results could differ from those estimates. Adjusted cost reflects the funded loan amount and any loan origination costs and fees. These loans are placed on non-accrual after 120 days past due. The Company measures the impairment loss of a TDR in the same manner as described below. Dividend and interest income are recognized when earned. These assumptions are validated on a periodic basis. Loan servicing fee income represents revenue earned for servicing mortgage loans. Any adjustment is recorded as a charge-off against the allowance for loan losses. Installment and other consumer loans consist primarily of the financing of vehicles. As provided for by the CARES Act, the Company offered payment modifications to borrowers. The Company\'s investment securities are classified as available for sale. The TPS represent preferred interests in the trust. The proceeds of the TPS were invested in junior subordinated debentures of the Company. I have reviewed this report on Form 10-K of Hawthorn Bancshares, Inc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
