WHITEHALL, Ohio, Oct. 15, 2019 (GLOBE NEWSWIRE) — Heartland BancCorp (“the company,” and “the bank”) (OTCQX: HLAN), today reported record third quarter 2019 net income of $3.6 million, or $1.77 per diluted share. This compares to $3.2 million, or $1.55 per diluted share, in the second quarter of 2019, and $3.1 million, or $1.83 per diluted share, in the third quarter of 2018. In the first nine months of the year, net income increased 17.4% to $9.7 million, compared to $8.3 million in the first nine months of 2018.
The company also announced its board of directors declared a regular quarterly cash dividend of $0.52 per share. The dividend will be payable January 10, 2020, to shareholders of record as of December 25, 2019. Heartland has paid regular cash dividends since 1993.
“We continued our upward momentum into the third quarter, producing record net income, double-digit loan and deposit growth, an annualized return on average assets of 1.28% and an annualized return on average equity of 11.56%,” stated G. Scott McComb, Chairman and Chief Executive Officer. “We have achieved top line revenue growth, putting us as a top quartile performer amongst our Ohio bank peers, all while growing our franchise. We have both the banking talent and infrastructure in place to continue to expand our banking strategy throughout Central Ohio.”
Third Quarter Financial Highlights (at or for the period ended September 30, 2019)
- Net income increased 18.3% to $3.6 million, compared to $3.1 million in the third quarter a year ago.
- Earnings per share were $1.77 in the third quarter compared to $1.83 a year ago.
- Net interest margin was 3.91%, which was unchanged compared to the preceding quarter and a five-basis point increase compared to 3.86% in the third quarter a year ago.
- Noninterest income increased 39.4% to $2.0 million, compared to the third quarter a year ago.
- Annualized return on average assets was 1.28%.
- Annualized return on average equity was 11.56%.
- Total assets increased 11.2% to $1.14 billion, compared to $1.02 billion a year earlier.
- Net loans increased 9.8% to $873.3 million from $795.3 million a year ago.
- Noninterest bearing demand deposits increased 25.1% compared to a year ago.
- Total deposits increased 11.4% to $975.4 million from $875.4 million a year ago.
- Tangible book value per share increased 2.2% to $61.31 per share, compared to $60.00 three months earlier, and grew 25.2% from $48.97 per share one year earlier.
- Declared quarterly cash dividend of $0.52 per share, which represents a 2.48% yield based on the September 30, 2019, stock price ($84.00).
Balance Sheet Review
“The year-over-year double digit growth in the loan portfolio is a result of the excellent work of our lending teams and the diversification across all loan segments. We continue to take a holistic approach to the structure and the rate of new loans, while at the same time remaining competitive,” said Brian T. Mauntel, President and Chief Operating Officer.
Net loans increased 9.8% to $873.3 million at September 30, 2019, compared to $795.3 million at September 30, 2018, and increased 1.5% compared to $860.2 million at June 30, 2019. Owner occupied commercial real estate loans (CRE) increased 5.2% to $241.0 million at September 30, 2019, compared to a year ago and comprise 27.3% of the total loan portfolio. Non-owner occupied CRE loans increased 15.4% to $272.8 million compared to a year ago and comprise 30.9% of the total loan portfolio. 1-4 family residential real estate loans were up 8.6% from year ago levels to $221.0 million and represent 25.1% of total loans. Commercial loans were up 15.3% from year ago levels to $104.9 million, at September 30, 2019, and comprise 11.9% of the total loan portfolio. Home equity loans increased 1.7% from year ago levels to $30.8 million and represent 3.5% of total loans. Consumer loans decreased from year ago levels to $11.3 million and represent 1.3% of the total loan portfolio.
“We continue to focus on growing noninterest bearing demand deposits through new product offerings and shifting the deposit mix away from wholesale funding and higher cost CDs. As a result, noninterest bearing demand deposits accounts increased 25.1% compared to a year ago,” said Mauntel. Total deposits increased 11.4% to $975.4 million at September 30, 2019, compared to $875.4 million a year earlier and increased 5.3% compared to $925.9 million three months earlier. Savings, NOW and money market accounts increased modestly compared to a year ago and represented 36.1% of total deposits and CDs increased 13.3% when compared to a year ago and comprised 36.9% of the total deposit portfolio, at September 30, 2019.
Total assets increased 11.2% to $1.14 billion at September 30, 2019, compared to $1.02 billion a year earlier. Shareholders’ equity increased 54.2% to $126.0 million at September 30, 2019, compared to $81.7 million a year earlier, reflecting the capital raise during the fourth quarter of 2018. At September 30, 2019, Heartland’s tangible book value increased 25.2% to $61.31 per share compared to $48.97 per share one year earlier.
Operating Results
“Our net interest margin remained unchanged compared to the preceding quarter and increased five basis points compared to the third quarter a year ago. As such, we remain well positioned in both rising and falling interest rate environments and expect to see minimal contraction with these two recent interest rate reductions,” said Carrie Almendinger, EVP and Chief Financial Officer.
Heartland’s net interest margin was 3.91% in the third quarter of 2019, the same as in the preceding quarter. In the third quarter of 2018, the net interest margin was 3.86%. In the first nine months of 2019, Heartland’s net interest margin improved 10 basis points to 3.94%, compared to 3.84% in the first nine months of 2018.
Net interest income before the provision for loan loss increased 12.2% to $10.4 million in the third quarter of 2019, compared to $9.2 million in the third quarter a year ago, and increased 4.7% compared to $9.9 million in the preceding quarter. In the first nine months of 2019, net interest income before the provision for loan losses increased 15.1% to $30.1 million, compared to $26.2 million in the first nine months of 2018.
Heartland’s total revenues (net interest income before the provision for loan losses, plus noninterest income) increased 15.9% to $12.4 million in the third quarter, compared to $10.7 million in the third quarter a year ago, and increased 4.3% from $11.8 million in the preceding quarter. Year-to-date, revenues increased 19.1% to $35.7 million, compared to $29.9 million in the same period one year earlier.
Noninterest income increased 39.4% to $2.0 million in the third quarter, compared to $1.4 million in the third quarter a year ago, and increased 2.8% compared to the preceding quarter. The TransCounty Title Agency acquisition contributed $583,000 to noninterest income during the third quarter of 2019. In the first nine months of 2019, noninterest income increased 47.0% to $5.6 million, compared to $3.8 million in the first nine months of 2018, with the TransCounty Title Agency acquisition contributing $1.6 million to noninterest income year-to-date.
Third quarter noninterest expenses were $7.6 million, which was unchanged from the preceding quarter. In the third quarter a year ago, noninterest expense totaled $6.5 million. The year-over-year increase was due to costs associated with the company’s branch expansion, including its new Upper Arlington branch, as well as costs associated with the subsidiary TransCounty Title Agency. In the first nine months of 2019, noninterest expenses totaled $22.6 million, compared to $18.7 million in the first nine months of 2018. The efficiency ratio for the third quarter of 2019 was 61.39%, compared to 63.92% for the preceding quarter and 61.28% for the third quarter of 2018.
Credit Quality
Nonaccrual loans totaled $2.3 million at September 30, 2019, compared to $1.8 million three months earlier and $4.0 million at September 30, 2018. There were $997,000 in loans past due 90 days and still accruing at September 30, 2019, compared to $253,000 at June 30, 2019, and $24,000 a year ago.
Performing restructured loans that were not included in nonaccrual loans at September 30, 2019, were $342,000, compared to $344,000 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.
Heartland had no other real estate owned (OREO) and other non-performing assets on the books at September 30, 2019 or at the preceding quarter end. Non-performing assets (NPAs), consisting of non-performing loans, OREO, and loans delinquent 90 days or more, were $3.3 million, or 0.29% of assets, at September 30, 2019, compared to $2.1 million, or 0.19% of total assets, three months earlier, and $4.0 million, or 0.39% of assets a year ago.
The third quarter provision for loan losses was $375,000, the same as in both the preceding quarter and the third quarter a year ago. The allowance for loan losses was $8.5 million, or 0.97% of total loans at September 30, 2019, compared to $8.0 million, or 0.92% of total loans at June 30, 2019, and $7.3 million, or 0.91% of total loans a year ago. As of September 30, 2019, the allowance for loan losses represented 376.3% of nonaccrual loans compared to 437.3% three months earlier, and 183.7% one year earlier. Heartland recorded net loan recoveries of $166,000 in the third quarter of 2019. This compares to net charge-offs of $81,000 in the preceding quarter and $2,000 in the third quarter a year ago.
Capital
On November 20, 2018, Heartland successfully completed a private placement of its common stock and generated net proceeds of approximately $28.9 million. The Company expects to use the proceeds from the capital raise for general corporate purposes, including but not limited to supporting organic growth, facilitating potential expansion opportunities, expanding products and services and debt repayment.
About Heartland BancCorp
Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates 16 full-service banking offices and TransCounty Title Agency, LLC. 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 (OTCQX) under the symbol HLAN. Learn more about Heartland Bank at Heartland.Bank.
In May of 2019, Heartland was ranked #44 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 12/31/18. In September of 2019, Heartland stock uplisted to the OTCQX® Best Market after previously trading on the OTCQB® Venture Market.
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 | |||||||||||||
| Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | |||||||||||
| Assets | |||||||||||||
| Cash and cash equivalents | $ | 57,356 | $ | 26,482 | $ | 37,908 | |||||||
| Available-for-sale securities | 140,156 | 147,592 | 128,886 | ||||||||||
| Held-to-maturity securities, fair values of, $906,529, $1,551,817 and $3,085,795 respectively | 918 | 1,548 | 3,085 | ||||||||||
| Commercial | 104,904 | 108,662 | 91,008 | ||||||||||
| CRE (Owner occupied) | 241,038 | 226,906 | 229,173 | ||||||||||
| CRE (Non Owner occupied) | 272,820 | 273,751 | 236,502 | ||||||||||
| 1-4 Family | 221,022 | 210,609 | 203,547 | ||||||||||
| Home Equity | 30,779 | 36,449 | 30,266 | ||||||||||
| Consumer | 11,307 | 11,717 | 11,893 | ||||||||||
| Net deferred loan costs, premiums and discounts | 6 | 50 | 230 | ||||||||||
| Allowance for loan losses | (8,534 | ) | (7,994 | ) | (7,271 | ) | |||||||
| Net Loans | 873,342 | 860,150 | 795,348 | ||||||||||
| Premises and equipment | 32,442 | 32,508 | 27,894 | ||||||||||
| Nonmarketable equity securities | 4,431 | 4,431 | 3,527 | ||||||||||
| Interest receivable | 5,266 | 4,579 | 4,215 | ||||||||||
| Goodwill | 1,206 | 1,206 | 1,069 | ||||||||||
| Intangible Assets | 964 | 409 | 442 | ||||||||||
| Deferred income taxes | 1,433 | 1,433 | 805 | ||||||||||
| Life insurance assets | 16,880 | 16,772 | 16,443 | ||||||||||
| Lease – Right of Use Asset | 2,619 | 2,655 | – | ||||||||||
| Other | 1,324 | 1,263 | 3,808 | ||||||||||
| Total assets | $ | 1,138,337 | $ | 1,101,028 | $ | 1,023,430 | |||||||
| Liabilities and Shareholders’ Equity | |||||||||||||
| Liabilities | |||||||||||||
| Deposits | |||||||||||||
| Demand | $ | 263,604 | $ | 216,392 | $ | 210,639 | |||||||
| Saving, NOW and money market | 351,821 | 338,178 | 347,126 | ||||||||||
| Time | 359,949 | 371,337 | 317,613 | ||||||||||
| Total deposits | 975,374 | 925,907 | 875,378 | ||||||||||
| Short-term borrowings | 10,111 | 27,970 | 49,274 | ||||||||||
| Long-term debt | 15,460 | 15,460 | 10,460 | ||||||||||
| Lease Liability | 2,619 | 2,655 | – | ||||||||||
| Interest payable and other liabilities | 8,787 | 6,410 | 6,610 | ||||||||||
| Total liabilities | 1,012,351 | 978,402 | 941,722 | ||||||||||
| Shareholders’ Equity | |||||||||||||
| Common stock, without par value; authorized 5,000,000 shares; 2,019,463, 2,016,913 and 1,637,522 shares issued, respectively | 55,775 | 55,526 | 25,739 | ||||||||||
| Retained earnings | 68,457 | 65,885 | 59,652 | ||||||||||
| Accumulated other comprehensive income (expense) | 1,754 | 1,215 | (3,683 | ) | |||||||||
| Total shareholders’ equity | 125,986 | 122,626 | 81,708 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 1,138,337 | $ | 1,101,028 | $ | 1,023,430 | |||||||
| Book value per share | $ | 62.39 | $ | 60.80 | $ | 49.90 | |||||||
| Heartland BancCorp | ||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||||||||||||
| Interest Income | ||||||||||||||||
| Loans | $ | 11,989 | $ | 11,361 | $ | 10,185 | $ | 34,199 | $ | 28,373 | ||||||
| Securities | – | – | – | – | – | |||||||||||
| Taxable | 723 | 745 | 599 | 2,209 | 1,553 | |||||||||||
| Tax-exempt | 465 | 442 | 404 | 1,339 | 1,238 | |||||||||||
| Other | 242 | 77 | 120 | 441 | 311 | |||||||||||
| Total interest income | 13,419 | 12,625 | 11,308 | 38,187 | 31,475 | |||||||||||
| Interest Expense | ||||||||||||||||
| Deposits | 2,900 | 2,460 | 1,818 | 7,472 | 4,653 | |||||||||||
| Borrowings | 167 | 274 | 263 | 618 | 662 | |||||||||||
| Total interest expense | 3,067 | 2,734 | 2,081 | 8,090 | 5,315 | |||||||||||
| Net Interest Income | 10,352 | 9,891 | 9,227 | 30,097 | 26,160 | |||||||||||
| Provision for Loan Losses | 375 | 375 | 375 | 1,125 | 1,125 | |||||||||||
| Net Interest Income After Provision for Loan Losses | 9,977 | 9,516 | 8,852 | 28,972 | 25,035 | |||||||||||
| Noninterest income | ||||||||||||||||
| Service charges | 560 | 556 | 555 | 1,618 | 1,599 | |||||||||||
| Net gains and commissions on loan sales and servicing | 536 | 383 | 416 | 1,317 | 1,183 | |||||||||||
| Title insurance income | 331 | 307 | 86 | 817 | 86 | |||||||||||
| Net realized gains on sales of available-for-sale securities | – | – | 2 | – | (64 | ) | ||||||||||
| Net realized gain/(loss) on sales of foreclosed assets | – | – | – | – | 11 | |||||||||||
| Increase in cash value of life insurance | 108 | 108 | 111 | 325 | 319 | |||||||||||
| Other | 470 | 598 | 268 | 1,487 | 652 | |||||||||||
| Total noninterest income | 2,005 | 1,952 | 1,438 | 5,564 | 3,786 | |||||||||||
| Noninterest Expense | ||||||||||||||||
| Salaries and employee benefits | 4,665 | 4,380 | 3,772 | 13,669 | 10,631 | |||||||||||
| Net occupancy and equipment expense | 908 | 981 | 845 | 2,850 | 2,523 | |||||||||||
| Data processing fees | 395 | 387 | 361 | 1,148 | 1,052 | |||||||||||
| Professional fees | 209 | 309 | 241 | 742 | 605 | |||||||||||
| Marketing expense | 247 | 242 | 213 | 728 | 638 | |||||||||||
| Printing and office supplies | 72 | 79 | 65 | 225 | 217 | |||||||||||
| State financial institution tax | 226 | 205 | 156 | 636 | 469 | |||||||||||
| FDIC insurance premiums | 2 | 73 | 132 | 102 | 365 | |||||||||||
| Other | 862 | 914 | 749 | 2,524 | 2,201 | |||||||||||
| Total noninterest expense | 7,586 | 7,570 | 6,534 | 22,625 | 18,701 | |||||||||||
| Income before Income Tax | 4,396 | 3,898 | 3,756 | 11,911 | 10,119 | |||||||||||
| Provision for Income Taxes | 775 | 737 | 695 | 2,162 | 1,818 | |||||||||||
| Net Income | $ | 3,621 | $ | 3,161 | $ | 3,062 | $ | 9,749 | $ | 8,301 | ||||||
| Basic Earnings Per Share | $ | 1.79 | $ | 1.57 | $ | 1.88 | $ | 4.83 | $ | 5.11 | ||||||
| Diluted Earnings Per Share | $ | 1.77 | $ | 1.55 | $ | 1.83 | $ | 4.77 | $ | 4.99 | ||||||
| ADDITIONAL FINANCIAL INFORMATION | |||||||||||||||||||
| (Dollars in thousands except per share amounts)(Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||||||
| Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |||||||||||||||
| Performance Ratios: | |||||||||||||||||||
| Return on average assets | 1.28 | % | 1.17 | % | 1.20 | % | 1.20 | % | 1.15 | % | |||||||||
| Return on average equity | 11.56 | % | 10.51 | % | 15.00 | % | 10.78 | % | 13.88 | % | |||||||||
| Return on average tangible common equity | 11.73 | % | 10.66 | % | 15.18 | % | 10.94 | % | 14.00 | % | |||||||||
| Net interest margin | 3.91 | % | 3.91 | % | 3.86 | % | 3.94 | % | 3.84 | % | |||||||||
| Efficiency ratio | 61.39 | % | 63.92 | % | 61.28 | % | 63.44 | % | 62.32 | % | |||||||||
| Asset Quality Ratios and Data: | As of or for the Three Months Ended | ||||||||||||||||||
| Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | |||||||||||||||||
| Nonaccrual loans | $ | 2,268 | $ | 1,828 | $ | 3,959 | |||||||||||||
| Loans past due 90 days and still accruing | 997 | 253 | 24 | ||||||||||||||||
| Non-performing investment securities | – | – | – | ||||||||||||||||
| OREO and other non-performing assets | – | – | – | ||||||||||||||||
| Total non-performing assets | $ | 3,265 | $ | 2,081 | $ | 3,983 | |||||||||||||
| Non-performing assets to total assets | 0.29 | % | 0.19 | % | 0.39 | % | |||||||||||||
| Net charge-offs quarter ending | $ | (166) | $ | 81 | $ | 2 | |||||||||||||
| Allowance for loan loss | $ | 8,534 | $ | 7,994 | $ | 7,271 | |||||||||||||
| Nonaccrual loans | $ | 2,268 | $ | 1,828 | $ | 3,959 | |||||||||||||
| Allowance for loan loss to non accrual loans | 376.29 | % | 437.29 | % | 183.65 | % | |||||||||||||
| Allowance for loan losses to loans outstanding | 0.97 | % | 0.92 | % | 0.91 | % | |||||||||||||
| Restructured loans included in non-accrual | $ | 289 | $ | 289 | $ | 324 | |||||||||||||
| Performing restructured loans (RC-C) | $ | 342 | $ | 344 | $ | 1,818 | |||||||||||||
| Book Values: | |||||||||||||||||||
| Total shareholders’ equity | $ | 125,986 | $ | 122,626 | $ | 81,708 | |||||||||||||
| Less: goodwill and intangible assets | 2,169 | 1,615 | 1,512 | ||||||||||||||||
| Shareholders’ equity less goodwill and intangible assets | $ | 123,816 | $ | 121,012 | $ | 80,197 | |||||||||||||
| Common shares outstanding | 2,019,463 | 2,016,913 | 1,637,522 | ||||||||||||||||
| Less: treasury shares | – | – | – | ||||||||||||||||
| Common shares as adjusted | 2,019,463 | 2,016,913 | 1,637,522 | ||||||||||||||||
| Book value per common share | $ | 62.39 | $ | 60.80 | $ | 49.90 | |||||||||||||
| Tangible book value per common share | $ | 61.31 | $ | 60.00 | $ | 48.97 | |||||||||||||
| Contacts: | G. Scott McComb, Chairman & CEO | |
| Heartland BancCorp 614-337-4600 |