Press Release

Heartland BancCorp Earns $2.7 Million, or $1.67 Per Share, in Second Quarter, Assets Surpass $1.0 Billion; Declares Quarterly Cash Dividend of $0.4731 per Share

Company Release - 7/17/2018 4:00 PM ET

WHITEHALL, Ohio, July 17, 2018 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQB:HLAN), today reported net income increased 21.9% to $2.7 million, or $1.63 per diluted share, in the second quarter of 2018, compared to $2.2 million, or $1.37 per diluted share, in the second quarter a year ago.  In the preceding quarter, net income was $2.5 million, or $1.52 per diluted share.  In the first six months of 2018, net income increased 28.9% to $5.2 million, or $3.15 per diluted share, compared to $4.1 million, or $2.50 per diluted share, in the first six months a year ago.

The company also announced its board of directors declared a regular quarterly cash dividend of $0.4731 per share.  The dividend will be payable October 10, 2018, to shareholders of record as of September 25, 2018.

“Heartland’s record second quarter operating results were highlighted by robust loan and deposit growth and solid net interest income,” stated G. Scott McComb, Chairman, President and CEO.  “Over the past five years, we have expanded our asset base at a compounded annual rate of 12.1% and surpassed the $1 billion milestone this quarter.  We will continue to look for growth opportunities in and around our surrounding markets that benefit both our customers and shareholders.”

Second Quarter Financial Highlights (at or for the period ended June 30, 2018)

  • Net income increased 21.9% to $2.7 million, compared to $2.2 million in the second quarter of 2017.
  • Pre-tax income increased 5.6% to $3.3 million, compared to $3.1 million in the second quarter of 2017.
  • Net interest margin was 3.91% compared to 3.93% in the preceding quarter and 3.97% in the second quarter a year ago.
  • Annualized return on average assets was 1.12%.
  • Annualized return on average equity was 13.73%.
  • Total assets increased 18.6% to $1.0 billion, compared to $845.1 million a year earlier.
  • Net loans increased 18.2% to $784.4 million from a year ago.
  • Total deposits increased 17.8% to $844.4 million from a year ago.
  • Tangible book value per share was $48.99 per share compared to $47.97 three months earlier and $47.16 per share one year earlier.
  • Declared quarterly cash dividend of $0.4731 per share, which represents a 2.13% yield based on the June 30, 2018, stock price ($88.85).

Balance Sheet Review

“We have been growing the bank at a robust rate and a highlight of the quarter was surpassing $1.0 billion in assets,” said McComb.  “Contributing to this, net loans increased 7.0% during the quarter and 18.2% year over year, with solid production in all loan types, and acquiring targeted client relationships.”

Net loans were $784.4 million at June 30, 2018, compared to $733.3 million at March 31, 2018, and increased 18.2% compared to $663.4 million at June 30, 2017. 

Heartland’s total deposits increased 17.8% to $844.4 million at June 30, 2018, compared to $716.8 million a year earlier and increased 3.7% compared to $814.2 million three months earlier.  Noninterest bearing demand deposit accounts represented 24.4%; savings, NOW and money market accounts represented 40.2%; and CDs comprised 35.4% of the total deposit portfolio, at June 30, 2018. 

Total assets increased 18.6% to $1.0 billion at June 30, 2018, compared to $845.1 million a year earlier and shareholders’ equity increased 6.5% to $80.3 million at June 30, 2018, compared to $75.4 million one year ago.  At quarter end, Heartland’s tangible book value increased 3.9% to $48.99 per share compared to $47.16 per share one year earlier.

Operating Results

Heartland’s net interest income before the provision for loan loss increased 15.6% to $8.7 million in the second quarter of 2018, compared to $7.5 million in the second quarter a year ago, and increased 6.0% compared to $8.2 million in the preceding quarter.  For the first six months of 2018, net interest income increased 15.7% to $16.9 million compared to $14.6 million in the first six months of 2017.

“Our net interest margin contracted two basis points compared to the preceding quarter, primarily as a result of a slight increase in borrowings to fund loan demand,” said McComb.  Heartland’s net interest margin was 3.91% in the second quarter of 2018, compared to 3.93% in the preceding quarter and 3.97% in the second quarter a year ago.  In the first six months of 2018, Heartland’s net interest margin was 3.91% compared to 3.95% in the first six months of 2017.

Total revenues (net interest income before the provision for loan losses, plus noninterest income) increased 11.6% to $9.8 million in the second quarter, compared to $8.7 million in the second quarter a year ago, and increased 2.5% from $9.5 million in the preceding quarter.  Year-to-date, revenues increased 14.9% to $19.3 million, compared to $16.8 million in the same period one year earlier.

Solid growth in interest income more than offset lower noninterest income, due to fewer SBA loan sales.  Heartland’s noninterest income decreased to $1.0 million in the second quarter, compared to $1.2 million in the second quarter a year ago, and $1.3 million in the preceding quarter.  The net gains and commissions on loan sales and servicing was $220,000 in the second quarter of 2018, compared to $547,000 in the preceding quarter and $307,000 in the year ago quarter.  In the first six months of 2018, noninterest income increased 9.6% to $2.3 million, compared to $2.1 million in the first six months of 2017.

Second quarter noninterest expenses were $6.1 million, which was unchanged compared to the preceding quarter.  Noninterest expenses totaled $5.4 million in the second quarter a year ago.  Year-to-date, noninterest expense totaled $12.2 million, compared to $10.6 million in the first six months of 2017, reflecting continued branch and team expansion, as well as Heartland’s new Headquarters. The efficiency ratio for the second quarter of 2018 was 62.44%, compared to 63.36% for the preceding quarter and 61.43% in the second quarter of 2017.  

Credit Quality

Nonaccrual loans increased to $6.6 million at June 30, 2018, compared to $3.1 million a year earlier but decreased compared to $6.8 million three months earlier.  The increase compared to a year ago was primarily due to one lending relationship that was placed on nonaccrual during the preceding quarter.  There were $55,000 in loans past due 90 days and still accruing at June 30, 2018, compared to $62,000 at March 31, 2018, and $22,000 at June 30, 2017.

Performing restructured loans that were not included in nonaccrual loans at June 30, 2018, were $1.8 million compared to $1.7 million in the preceding quarter.  Borrowers who are in financial difficulty and who have been granted concessions that may include interest rate reductions, term extensions, or payment alterations are categorized as restructured loans. 

There was no other real estate owned (OREO) and other non-performing assets on the books at June 30, 2018.  Non-performing assets (NPAs), consisting of non-performing loans, OREO, and loans delinquent 90 days or more, were $6.7 million, or 0.67% of assets, at June 30, 2018, compared to $6.9 million, or 0.74% of assets, three months earlier, and $3.2 million, or 0.39% of assets, a year ago.

Heartland’s second quarter provision for loan losses was $375,000, the same as in the preceding quarter.  In the second quarter of 2017 the provision for loan losses was $255,000.  The allowance for loan losses was $6.9 million, or 0.87% of total loans at June 30, 2018, compared to $6.6 million, or 0.90% of total loans at March 31, 2018, and $6.2 million, or 0.93% of total loans a year ago.  As of June 30, 2018, the allowance for loan losses represented 104.2% of nonaccrual loans compared to 97.2% three months earlier, and 198.5% one year earlier.  Net charge-offs were $125,000 in the second quarter of 2018.  This compares to net recoveries of $49,000 in the preceding quarter and net charge-offs of $20,000 in the second quarter a year ago. 

About Heartland BancCorp

Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates 15 full-service banking offices. Heartland Bank, founded in 1911, provides full-service commercial, small business, and consumer banking services; professional financial planning services; and other financial products and services. Heartland Bank is a member of the Federal Reserve, a member of the FDIC, and an Equal Housing Lender. Heartland BancCorp is currently quoted on the OTC Markets (OTCQB) under the symbol HLAN. Learn more about Heartland Bank at Heartland.Bank.

In May 2018, Heartland was ranked #37 on the American Banker magazine's list of Top 200 Publicly Traded Community Banks and Thrifts based on three-year average return on equity ("ROE") as of 12/31/17.

Safe Harbor Statement

This release contains forward-looking statements that reflect management's current views of future events and operations. These forward-looking statements are based on information currently available to the Company as of the date of this release.  It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations.


 

  
Heartland BancCorp 
Consolidated Balance Sheets 
         
Assets June 30, 2018 March 31, 2018 June 30, 2017 
 Cash and cash equivalents   38,369    30,839    26,859 
 Interest bearing time deposits   -     250    -  
 Available-for-sale securities   121,654    118,440    108,841 
 Held-to-maturity securities, fair value $3,696,526 and $5,608,318 at June 30, 2018 and 2017,         
 respectively and $4,701,998 at March 31, 2018   3,671    4,655    5,465 
 Loans, net of allowance for loan losses of $6,897,958 and $6,237,997 at June 30, 2018 and 2017,         
 respectively and $6,648,933 at March 31, 2018   784,379    733,320    663,438 
 Premises and equipment   27,052    26,229    18,079 
 Nonmarketable equity securities   2,836    2,830    2,830 
 Foreclosed assets held for sale   -     -     -  
 Interest receivable   3,593    3,695    2,366 
 Goodwill   417    417    417 
 Deferred income taxes   805    805    2,374 
 Life insurance assets   16,332    13,054    12,909 
 Other    3,003    3,048    1,477 
   Total assets$  1,002,110 $  937,582  $  845,056 
         
Liabilities and Shareholders' Equity       
  Liabilities       
 Deposits       
 Demand$  206,013 $  208,713  $  162,887 
 Saving, NOW and money market   339,082    311,966    257,704 
 Time   299,331    293,498    296,233 
   Total deposits   844,425    814,177    716,823 
 Short-term borrowings   56,105    24,471    31,996 
 Long-term debt   15,460    15,460    15,460 
 Interest payable and other liabilities   5,841    5,090    5,427 
   Total liabilities   921,831    859,199    769,705 
         
  Shareholders' Equity       
 Common stock, without par value; authorized 5,000,000 shares;         
 issued 2018 -  1,630,149 shares 2017 -  1,589,028 shares and March 2018 - 1,625,349 shares   25,531    25,298    24,091 
 Retained earnings   57,365    55,421    50,979 
 Accumulated other comprehensive income (expense)   (2,617)   (2,335)   282 
   Total shareholders' equity   80,279    78,384    75,351 
   Total liabilities and shareholders' equity$  1,002,110  $  937,582  $  845,056 
   Book value per share$49.25 $48.23 $47.42 
       

 

Heartland BancCorp 
Consolidated Statements of Income 
  
   Three Months Ended,   Six Months Ended 
Interest Income June 30, 2018 March 31, 2018 June 30, 2017  June 30, 2018  June 30, 2017 
 Loans$  9,450 $  8,738 $  7,900 $  18,188  $  15,272 
 Securities   -   -    -    -     - 
 Taxable    520   434    391    954     755 
 Tax-exempt   416   418    398    834     791 
 Other   108   84    49    192     97 
   Total interest income   10,494   9,674    8,738    20,168     16,915 
Interest Expense             
 Deposits   1,533   1,303    1,070    2,836     2,033 
 Borrowings   246   153    129    399     246 
   Total interest expense   1,779   1,456    1,199    3,235     2,279 
Net Interest Income   8,715   8,218    7,539    16,933     14,636 
Provision for Loan Losses   375   375    255    750     585 
Net Interest Income After Provision for Loan Losses   8,340   7,843    7,284    16,183     14,051 
Noninterest income             
 Service charges   530   513    510    1,044     991 
 Net Gains and commissions on loan sales and servicing   220   547    307    767     468 
 Net realized gains on available-for-sale securities   -   (66)   -    (66)    6 
 Net realized gain/(loss) on sales of foreclosed assets   -   10    139    10     139 
 (Loss) gain on sale of premises and equipment   -   -    -    -     - 
 Gain on redemption of life insurance proceeds   -   -    -    -     - 
 Increase in cash value of life insurance   125   84    85    208     177 
 Other   171   213    165    384     360 
   Total noninterest income   1,046   1,301    1,206    2,347     2,141 
Noninterest Expense             
 Salaries and employee benefits   3,407   3,452    3,112    6,859     6,278 
 Net occupancy and equipment expense   853   824    583    1,677     1,142 
 Data processing fees   352   339    328    691     631 
 Professional fees   199   165    159    364     285 
 Marketing expense   212   213    271    425     412 
 Printing and office supplies   80   73    49    153     114 
 State franchise taxes   156   156    142    313     284 
 FDIC Insurance premiums   112   122    80    233     160 
 Other   723   729    648    1,452     1,255 
   Total noninterest expense   6,094   6,073    5,372    12,167     10,561 
Income before Income Tax   3,292   3,071    3,118    6,363     5,631 
Provision for Income Taxes   575   548    889    1,123     1,566 
Net Income$  2,717$  2,523 $  2,229 $  5,240  $  4,065 
Basic Earnings Per Share$  1.67$  1.56 $  1.40 $3.23  $2.56 
Diluted Earnings Per Share$  1.63$  1.52 $  1.37 $3.15  $2.50 
          

 

           
ADDITIONAL FINANCIAL INFORMATION          
(Dollars in thousands except per share amounts)(Unaudited)Three Months Ended Six Months Ended 
 June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017 
Performance Ratios:          
Return on average assets 1.12%  1.11%  1.07% 1.12% 1.01% 
Return on average equity  13.73%  13.04%  12.08% 13.36% 11.21% 
Net interest margin 3.91%  3.93%  3.97% 3.91% 3.95% 
Efficiency ratio 62.44%  63.36%  61.43% 62.89% 62.97% 
           
Asset Quality Ratios and Data:As of or for the Three Months Ended     
 June 30, 2018 March 31, 2018 June 30, 2017     
Nonaccrual loans$  6,622  $  6,840  $  3,143      
Loans past due 90 days and still accruing   55     62     22      
Non-performing investment securities   -      -      -       
OREO and other non-performing assets   -      -      -       
Total non-performing assets$  6,677  $  6,902  $  3,165      
           
Non-performing assets to total assets 0.67%  0.74%  0.39%     
Net charge-offs quarter ending $  125  $  (49) $  20      
           
Allowance for loan loss$  6,898  $  6,649  $  6,238      
Nonaccrual loans$  6,622  $  6,840  $  3,143      
Allowance for loan loss to nonaccrual loans 104.17%  97.21%  198.47%     
Allowance for loan losses to loans outstanding 0.87%  0.90%  0.93%     
           
Restructured loans included in non-accrual$  324  $  428  $  735      
Performing restructured loans (RC-C)$  1,833  $  1,663  $  1,902      
           
Book Values:          
Total shareholders' equity$  80,279  $  78,384  $  75,351      
Less, goodwill   417     417     417      
Shareholders' equity less goodwill$  79,862  $  77,967  $  74,934      
Common shares outstanding   1,630,149     1,625,349     1,589,028      
Less treasury shares   -      -      -       
Common shares as adjusted   1,630,149     1,625,349     1,589,028      
Book value per common share$   49.25   $   48.23   $   47.42       
           
Tangible book value per common share$   48.99   $   47.97   $   47.16       
           

Contacts:
G. Scott McComb, Chairman, President & CEO                                                                          
Heartland BancCorp  614-337-4600

 

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Source: Heartland BancCorp