Press Release

Heartland BancCorp Earns $3.1 Million, or $1.83 Per Share, in Third Quarter, Declares Quarterly Cash Dividend of $0.4731 per Share

Company Release - 10/16/2018 4:00 PM ET

WHITEHALL, Ohio, Oct. 16, 2018 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQB: HLAN), today reported net income increased 11.3% to $3.1 million, or $1.83 per diluted share, in the third quarter of 2018, compared to $2.8 million, or $1.68 per diluted share, in the third quarter a year ago.  In the preceding quarter, net income was $2.7 million, or $1.63 per diluted share.  In the first nine months of 2018, net income increased 21.8% to $8.3 million, or $4.99 per diluted share, compared to $6.8 million, or $4.18 per diluted share, in the first nine 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 January 10, 2019, to shareholders of record as of December 25, 2018.

“Our third quarter record financial results were highlighted by strong loan and core deposit growth and solid net interest income reflecting earning asset expansion and our expanding net interest margin,” stated G. Scott McComb, Chairman, President and CEO.  “Overall, these factors contributed to a return on average assets of 1.20% and a return on average equity of 15.00% for the quarter.  We have been successful at keeping operating expenses in check while growing the franchise, and now have both the infrastructure and banking teams in place to continue to grow and gain market share.” 

Third Quarter Financial Highlights (at or for the period ended September 30, 2018)

  • Net income increased 11.3% to $3.1 million, compared to $2.8 million in the third quarter of 2017.
  • Net interest margin was 3.93% compared to 3.91% in the preceding quarter and 4.05% in the third quarter a year ago.
  • Annualized return on average assets was 1.20%.
  • Annualized return on average equity was 15.00%.
  • Total assets increased 15.6% to $1.02 billion, compared to $885.1 million a year earlier.
  • Net loans increased 16.7% to $795.3 million from a year ago.
  • Total deposits increased 14.4% to $875.4 million from a year ago.
  • Tangible book value per share was $49.24 per share compared to $48.99 three months earlier and $47.91 per share one year earlier.
  • Declared quarterly cash dividend of $0.4731 per share, which represents a 2.08% yield based on the September 30, 2018, stock price ($91.00).

Balance Sheet Review

“Loan growth remains robust, with a modest increase compared to three months earlier and double-digit growth compared to a year ago,” said McComb.  “The increase is largely concentrated in the commercial real estate loan segment as well as residential real estate.” 

Net loans increased 16.7% to $795.3 million at September 30, 2018, compared to $681.4 million at September 30, 2017, and increased modestly compared to $784.4 million at June 30, 2018.  Owner occupied commercial real estate loans (CRE) increased 21.2% to $229.2 million at September 30, 2018 and comprise 28.6% of the total loan portfolio.  Non-owner occupied CRE loans increased 16.0% to $236.5 million compared to a year ago and comprises 29.5% of the total loan portfolio.  1-4 family residential real estate loans were up 23.9% from year ago levels to $203.5 million and represent 25.4% of total loans.  Commercial loans were down 3.6% from year ago levels to $91.0 million at September 30, 2018 and comprise 11.3% of the total loan portfolio.  Home equity loans increased 16.7% from year ago levels to $30.3 million and represent 3.8% of total loans and consumer loans increased 16.8% from year ago levels to $11.9 million and represent 1.5% of the total loan portfolio.

Heartland’s total deposits increased 14.4% to $875.4 million at September 30, 2018, compared to $765.0 million a year earlier and increased 3.7% compared to $844.4 million three months earlier.  Noninterest bearing demand deposit accounts increased 15.5% at September 30, 2018, compared to a year ago, and represented 24.1% of total deposits.  Savings, NOW and money market accounts increased 20.8% compared to a year ago and represented 39.7% of total deposits and CDs increased 7.6% when compared to a year ago and comprised 36.3% of the total deposit portfolio at September 30, 2018.

Total assets increased 15.6% to $1.02 billion at September 30, 2018, compared to $885.1 million a year earlier and shareholders’ equity increased 5.4% to $81.7 million at September 30, 2018, compared to $77.5 million a year earlier.  At quarter end, Heartland’s tangible book value increased 2.8% to $49.24 per share compared to $47.91 per share one year earlier.

Operating Results

“Our net interest margin improved two basis points compared to the preceding quarter, largely due to profitable loan growth and rising interest rates,” said McComb.  Heartland’s net interest margin was 3.93% in the third quarter of 2018, compared to 3.91% in the preceding quarter and 4.05% in the third quarter a year ago.  In the first nine months of 2018, Heartland’s net interest margin was 3.94% compared to 3.99% in the first nine months of 2017.

Net interest income before the provision for loan loss increased 14.6% to $9.2 million in the third quarter of 2018, compared to $8.1 million in the third quarter a year ago, and increased 5.9% compared to $8.7 million in the preceding quarter.  For the first nine months of 2018, net interest income increased 15.3% to $26.2 million compared to $22.7 million in the first nine months of 2017.

Total revenues (net interest income before the provision for loan losses, plus noninterest income) increased 13.2% to $10.7 million in the third quarter, compared to $9.4 million in the third quarter a year ago, and increased 9.3% from $9.8 million in the preceding quarter.  Year-to-date, revenues increased 14.3% to $29.9 million, compared to $26.2 million in the same period one year earlier.

Heartland’s noninterest income was $1.4 million in the third quarter, the same as in the third quarter a year ago, and a 37.5% increase compared to $1.0 million in the preceding quarter.  The net gains and commissions on loan sales and servicing was $388,000 in the third quarter of 2018, compared to $220,000 in the preceding quarter and $308,000 in the year ago quarter.  In the first nine months of 2018, noninterest income increased 8.0% to $3.8 million, compared to $3.5 million in the first nine months of 2017.

Third quarter noninterest expenses were $6.5 million, compared to $6.1 million in the preceding quarter.  Noninterest expenses totaled $5.4 million in the third quarter a year ago.  Year-to-date, noninterest expense totaled $18.7 million, compared to $16.0 million in the first nine months of 2017, reflecting continued branch expansion, key new hires, as well as Heartland’s new corporate headquarters.  The efficiency ratio for the third quarter of 2018 was 61.28%, compared to 62.44% for the preceding quarter and 57.35% in the third quarter of 2017.  

Credit Quality

Nonaccrual loans decreased to $4.0 million at September 30, 2018, compared to $6.6 million three months earlier.  Nonaccrual loans were $3.2 million at September 30, 2018.  There were $24,000 in loans past due 90 days and still accruing at September 30, 2018, compared to $55,000 at June 30, 2018, and $753,000 at September 30, 2017.

Performing restructured loans that were not included in nonaccrual loans at September 30, 2018, were $1.8 million, the same as 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 September 30, 2018.  Non-performing assets (NPAs), consisting of non-performing loans, OREO, and loans delinquent 90 days or more, were $4.0 million, or 0.39% of assets, at September 30, 2018, compared to $6.7 million, or 0.67% of assets, three months earlier, and $4.0 million, or 0.45% of assets, a year ago.

Heartland’s third quarter provision for loan losses was $375,000, the same as in the preceding quarter.  In the third quarter of 2017 the provision for loan losses was $255,000.  The allowance for loan losses was $7.3 million, or 0.91% of total loans at September 30, 2018, compared to $6.9 million, or 0.87% of total loans at June 30, 2018, and $6.4 million, or 1.00% of total loans a year ago.  As of September 30, 2018, the allowance for loan losses represented 183.7% of nonaccrual loans compared to 104.2% three months earlier, and 199.3% one year earlier.  Net charge-offs were $2,000 in the third quarter of 2018.  This compares to net charge-offs of $125,000 in the preceding quarter and $107,000 in the third 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 Sept. 30, 2018 June 30, 2018 Sept. 30, 2017
   Cash and cash equivalents   37,908    38,369    30,514 
 Available-for-sale securities   128,886    121,654    123,636 
 Held-to-maturity securities, fair value $3,085,795 and $5,170,466 at September 30, 2018 and 2017, respectively and $3,696,526 at June 30, 2018   3,085    3,671    5,071 
 Commercial    91,008    97,737    94,395 
 Commercial Real Estate:      
 Owner occupied   229,173    228,633    189,012 
 Non Owner occupied   236,502    226,501    203,846 
 Residential Real Estate:      
 1-4 Family   203,547    197,898    164,315 
 Home Equity   30,266    30,183    25,933 
 Consumer   11,893    10,124    10,183 
 Total loans   802,389    791,076    687,684 
 Net deferred loan costs, premiums and discounts   230    201    75 
 Allowance for loan losses   (7,271)   (6,898)   (6,386)
 Net loans   795,348    784,379    681,373 
 Premises and equipment   27,894    27,052    21,524 
 Nonmarketable equity securities   3,527    2,836    2,830 
 Interest receivable   4,215    3,593    3,133 
 Goodwill   1,069    417    417 
 Intangible Assets   442    -     -  
 Deferred income taxes   805    805    2,374 
 Life insurance assets   16,443    16,332    12,794 
 Other    3,808    3,003    1,436 
   Total assets$  1,023,430 $  1,002,110  $   885,102 
        
Liabilities and Shareholders' Equity      
 Liabilities      
 Deposits      
 Demand$  210,639 $  206,013  $   182,342 
 Saving, NOW and money market   347,126    339,082    287,458 
 Time   317,613    299,331    295,225 
   Total deposits   875,378    844,425    765,025 
 Short-term borrowings   49,274    56,105    20,894 
 Long-term debt   10,460    15,460    15,460 
 Interest payable and other liabilities   6,610    5,841    6,196 
   Total liabilities   941,722    921,831    807,575 
        
  Shareholders' Equity      
 Common stock, without par value; authorized 5,000,000 shares;  issued 2018 -  1,637,522 shares 2017 -  1,609,528 shares and June 2018 - 1,630,149 shares   25,739    25,531    25,067 
 Retained earnings   59,652    57,365    52,304 
 Accumulated other comprehensive income (expense)   (3,683)   (2,617)   156 
   Total shareholders' equity   81,708    80,279    77,527 
   Total liabilities and shareholders' equity$  1,023,430  $   1,002,110  $   885,102 
   Book value per share$49.90 $49.25 $48.17 
      

 

 
Heartland BancCorp
Consolidated Statements of Income
 
   Three Months Ended,   Nine Months Ended
Interest Income Sept. 30, 2018 June 30, 2018 Sept. 30, 2017  Sept. 30, 2018  Sept. 30, 2017
 Loans$  10,185 $   9,450$  8,452 $  28,373  $  23,724
 Securities            
 Taxable    599   520   430    1,553     1,185
 Tax-exempt   404   416   405    1,238     1,196
 Other   120   108   70    311     167
   Total interest income   11,308   10,494   9,357    31,475     26,272
Interest Expense            
 Deposits   1,818   1,533   1,188    4,653     3,221
 Borrowings   263   246   117    662     363
   Total interest expense   2,081   1,779   1,305    5,315     3,584
Net Interest Income   9,227   8,715   8,052    26,160     22,688
Provision for Loan Losses   375   375   255    1,125     840
Net Interest Income After Provision for Loan Losses   8,852   8,340   7,797    25,035     21,848
Noninterest income            
 Service charges   555   530   515    1,599     1,506
 Net Gains and commissions on loan sales and servicing   388   220   308    1,156     776
 Title Insurance Income   86   -   -    86     -
 Net realized gains on available-for-sale securities   2   -   -    (64)    6
 Net realized gain/(loss) on sales of foreclosed assets   -   -   -    11     139
 Gain on redemption of life insurance proceeds   -   -   301    -     301
 Increase in cash value of life insurance   -   125   86    208     264
 Other   407   171   156    790     515
   Total noninterest income   1,438   1,046   1,366    3,786     3,507
Noninterest Expense            
 Salaries and employee benefits   3,772   3,407   3,205    10,631     9,483
 Net occupancy and equipment expense   845   853   585    2,523     1,727
 Data processing fees   361   352   316    1,052     948
 Professional fees   241   199   164    605     448
 Marketing expense   213   212   141    638     553
 Printing and office supplies   65   80   57    217     171
 State franchise taxes   156   156   142    469     425
 FDIC Insurance premiums   132   112   99    365     259
 Other   749   723   693    2,201     1,949
   Total noninterest expense   6,534   6,094   5,402    18,701     15,963
Income before Income Tax   3,756   3,292   3,762    10,119     9,393
Provision for Income Taxes   695   575   1,010    1,818     2,576
Net Income$  3,062$  2,717$  2,752 $  8,301  $  6,817
Basic Earnings Per Share$  1.88$  1.67$  1.73 $5.11  $4.29
Diluted Earnings Per Share$  1.83$  1.63$  1.68 $4.99  $4.18
            

 

          
ADDITIONAL FINANCIAL INFORMATION         
(Dollars in thousands except per share amounts)(Unaudited)Three Months Ended Nine Months Ended
 Sept. 30, 2018 June 30, 2018 Sept. 30, 2017 Sept. 30, 2018 Sept. 30, 2017
Performance Ratios:         
Return on average assets 1.20%  1.12%  1.26% 1.15% 1.09%
Return on average equity 15.00%  13.73%  14.28% 13.92% 12.28%
Net interest margin 3.93%  3.91%  4.05% 3.94% 3.99%
Efficiency ratio 61.28%  62.44%  57.35% 62.32% 60.95%
          
Asset Quality Ratios and Data:As of or for the Three Months Ended    
 Sept. 30, 2018 June 30, 2018 Sept. 30, 2017    
Nonaccrual loans$3,959  $6,622  $3,205     
Loans past due 90 days and still accruing 24   55   753     
Non-performing investment securities -   -   -     
OREO and other non-performing assets -   -   -     
Total non-performing assets$3,983  $6,677  $3,958     
          
Non-performing assets to total assets 0.39%  0.67%  0.45%    
Net charge-offs quarter ending$2  $125  $107     
          
Allowance for loan loss$7,271  $6,898  $6,386     
Nonaccrual loans$3,959  $6,622  $3,205     
Allowance for loan loss to non accrual loans 183.66%  104.17%  199.25%    
Allowance for loan losses to loans outstanding 0.91%  0.87%  1.00%    
          
Restructured loans included in non-accrual$324  $324  $662     
Performing restructured loans (RC-C)$1,818  $1,833  $1,814     
          
Book Values:         
Total shareholders' equity$81,708  $80,279  $77,528     
Less, goodwill 1,069   417   417     
Shareholders' equity less goodwill$80,639  $79,862  $77,111     
Common shares outstanding 1,637,522   1,630,149   1,609,528     
Less treasury shares -   -
   -
     
Common shares as adjusted 1,637,522   1,630,149   1,609,528     
Book value per common share$   49.90   $   49.25   $   48.17      
          
Tangible book value per common share$   49.24   $   48.99   $   47.91      
          


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

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Source: Heartland BancCorp