GAHANNA, Ohio, Jan. 17, 2017 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQB:HLAN), today reported fourth quarter net income increased 6% to $2.2 million, or $1.33 per diluted share, compared to $2.0 million, or $1.26 per diluted share, in the preceding quarter.  In the fourth quarter a year ago, following a $879,000 life insurance benefit, Heartland earned $2.8 million. Excluding the life insurance benefit, Heartland’s 4Q15 core earnings were $1.9 million, or $1.21 per diluted share. 

For the year, Heartland’s core earnings increased 11% to $8.0 million, or $4.97 per diluted share, compared to $7.2 million, or $4.57 per diluted share in 2015, excluding the life insurance benefit.  Including the life insurance benefit, earnings in 2015 were $8.1 million, or $5.13 per diluted share.   

The company also announced its board of directors increased its regular quarterly cash dividend by 10% to $0.4301 per share.  The dividend will be payable April 10, 2017, to shareholders of record as of March 25, 2017, providing a 2.36% current yield at recent market prices.  This is the fifth consecutive year Heartland has increased its quarterly cash dividend.

“Solid profitability, record revenue generation, robust loan and deposit growth and building out our support infrastructure were the highlights of our 2016 financial results,” said G. Scott McComb, Chairman, President and CEO. “The strength of our team and the strategy to seek those that appreciate value is working very nicely.  Our focus in the coming year remains on expanding market share in Central Ohio, while continuing to look for growth opportunities in other Ohio markets.”

Fourth Quarter Financial Highlights (at or for the period ended December 31, 2016)

• Net income was $2.2 million, up from core net income of $1.9 million in the fourth quarter a year ago.
• Net interest margin remained strong at 3.99% compared to 3.90% in the preceding quarter and 3.99% in the fourth quarter a year ago.
• Annualized return on average assets was 1.12% for the fourth quarter of 2016, compared to the average of 0.79% generated by the 536 banks in the SNL MicroCap U.S. Bank Index in the third quarter of 2016.
• Annualized return on average equity was 12.24%, compared to the average of 7.88% generated by the SNL MicroCap U.S. Bank Index.
• Total deposits increased 6.7% to $664.7 million from a year ago.
• Net loans increased 14.2% to $617.9 million from a year ago.
• Non-performing assets improved to $4.6 million, or 0.59% of total assets, at December 31, 2016, compared to $5.2 million, or 0.66%, three months earlier and $5.2 million, or 0.72%, one year earlier.
• Tangible book value per share increased 5.7% to $44.83 per share compared to $42.40 per share one year earlier.
• Declared quarterly cash dividend of $0.4301 per share, which represents a 2.69% yield based on the December 31, 2016 stock price ($64.01).

Balance Sheet Review

“Our loan production remains solid, again boosted by the growth in agricultural, commercial and industrial (C&I) and residential mortgage loans,” said McComb.  Net loans increased 2.7% to $617.9 million at December 31, 2016, compared to $601.4 million at September 30, 2016 and increased 14.2% compared to $541.0 million at December 31, 2015. 

Heartland’s total deposits increased 6.7% to $664.7 million at year end, compared to $623.0 million a year earlier and declined slightly compared to $667.9 million three months earlier.  Demand deposit accounts represented 24.5%, savings, NOW and money market accounts represented 33.7%, and CDs comprised 41.9% of the total deposit portfolio, at December 31, 2016. 

Total assets increased 7.1% to $781.3 million at December 31, 2016, compared to $729.5 million a year earlier and shareholders’ equity increased 7.1% to $71.4 million at December 31, 2016, compared to $66.7 million one year ago.  At year end, Heartland’s book value increased 5.8% to $45.10 per share compared to $42.61 per share one year earlier.

Operating Results

Net interest income before the provision for loan loss increased 10.5% to $7.3 million in the fourth quarter of 2016, compared to $6.58 million in the fourth quarter a year ago, and increased 3.9% compared to $7.0 million in the preceding quarter.  For the year, net interest income increased 9.1% to $27.8 million, compared to $25.5 million in 2015.

Total revenues (net interest income before the provision for loan losses, plus non-interest income) were $8.2 million in the fourth quarter, compared to $8.3 million in the fourth quarter a year ago, and increased 3.0% compared to $7.9 million in the preceding quarter.  For the year, total revenues increased 6.5% to a record $31.3 million, compared to $29.4 million in 2015.  Excluding the 4Q15 life insurance benefit of $879,000, total revenues were $7.4 million in the fourth quarter of 2015 and $28.5 million for the year.

“The net interest margin expanded nine basis points compared to the preceding quarter, and level with fourth quarter a year ago,” McComb said.  Heartland’s net interest margin was 3.99% in the fourth quarter of 2016, compared to 3.90% in the preceding quarter and 3.99% in the fourth quarter a year ago.  For the year, Heartland’s net interest margin was 3.94% compared to 4.02% in 2015. “Our net interest margin for the year was impacted by higher levels of long-term borrowing which are augmenting deposit growth to fund strong loan growth.”

Heartland’s noninterest income was $876,000 in the fourth quarter, compared to $1.7 million in the fourth quarter a year ago, and $914,000 in the preceding quarter.  Fourth quarter 2015 noninterest income included a $879,000 benefit in excess of life insurance cash value from a policy payout.  For the year, noninterest income was $3.6 million, compared to $4.0 million in 2015.  Excluding the life insurance benefit, Heartland’s noninterest income increased 12% from $780,000 in the fourth quarter of 2015, and 16% from $3.1 million for the year.

Fourth quarter noninterest expenses were $5.0 million, compared to $4.5 million in the fourth quarter a year ago and $5.0 million in the preceding quarter.  For the year, noninterest expense increased 11.3% to $19.5 million, compared to $17.6 million in 2015. “In 2016 we have added the necessary personnel in the back office to manage the risk, transactions and support of a Billion Dollar plus bank,” McComb said.  The efficiency ratio for the fourth quarter of 2016 was 61.27%, compared to 55.08% for the fourth quarter of 2015. Excluding the life insurance benefit, the efficiency ratio for 4Q15 was 61.69%.  “We continue efforts to increase our investment in personnel across business lines with a view to increasing revenues and reducing our efficiency ratio as the bank executes on its growth initiatives,” added McComb.

Credit Quality

Nonaccrual loans decreased 2.4% to $4.2 million at December 31, 2016, compared to $4.3 million three months earlier but increased compared to $3.3 million a year earlier.  There were no loans past due 90 days and still accruing at December 31, 2016, compared to $461,000 at the end of the third quarter and $1.9 million a year ago.  There were $1.2 million in restructured loans included in nonaccrual loans at December 31, 2016, as compared to $815,000 three months earlier.

Performing restructured loans that were not included in nonaccrual loans at the end of the fourth quarter of 2016 were $1.9 million, compared to $3.2 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 $400,000 in other real estate owned (OREO) and other non-performing assets on the books at December 31, 2016, the same as in the preceding quarter end.  There was no OREO and other non-performing assets at December 31, 2015.

Nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, were $4.6 million, or 0.59% of assets, at December 31, 2016, compared to $5.2 million, or 0.66% of assets, three months earlier, and $5.2 million, or 0.72% of assets a year ago. 

Heartland’s fourth quarter provision for loan losses was $135,000, the same as in the preceding quarter.  The provision for loan losses was $120,000 in the fourth quarter a year ago.  As of December 31, 2016, the allowance for loan losses represented 135.2% of nonaccrual loans compared to 135.8% three months earlier, and 172.2% one year earlier.

The allowance for loan losses was $5.7 million, or 0.91% of total loans at December 31, 2016, compared to $5.9 million, or 1.03% of total loans at September 30, 2016, and $5.7 million, or 1.04% of total loans a year ago.  Net charge-offs were $304,000 in the fourth quarter compared to $251,000 in the preceding quarter, and $54,000 in the fourth quarter a year ago.

About Heartland BancCorp

Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates thirteen full-service banking offices. Heartland Bank, founded in 1911, provides full service commercial, small business, and consumer banking services; alternative investment services; insurance 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 HeartlandBank.com.  

In May 2016, Heartland was ranked #77 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 12/31/15.

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			Dec. 31, 2016			Sept. 30, 2016		Dec. 31, 2015
	Cash and cash equivalents		21,360,328			40,463,763		36,994,171
	Available-for-sale securities		103,040,574			110,158,614		114,492,664
	Held-to-maturity securities, fair value $5,771,601 and $6,407,215 at December 31, 2016 and 2015, respectively and $6,289,982 at September 30, 2016		5,570,879			5,972,843		6,044,094
	Loans, net of allowance for loan losses of $5,698,631 and $5,715,827 at December 31, 2016 and 2015, respectively and $5,867,741 at September 30, 2016		617,861,089			601,400,849		540,958,372
	Premises and equipment		14,055,450			13,921,042		13,506,350
	Nonmarketable equity securities		2,825,439			2,825,439		2,658,239
	Interest receivable		2,240,709			2,614,368		1,958,082
	Goodwill		417,353			417,353		417,353
	Deferred income taxes		1,765,794			1,765,794		1,722,934
	Life insurance assets		9,531,991			9,446,365		9,327,518
	Other		2,632,748			1,639,342		1,416,804
	Total assets	$	781,302,354		$	790,625,772	$	729,496,581
Liabilities and Shareholders' Equity
Liabilities
	Deposits
	Demand	$	162,690,185		$	150,913,820	$	139,226,242
	Saving, NOW and money market		223,817,354			241,181,130		219,076,813
	Time		278,166,617			275,809,945		264,651,203
	Total deposits		664,674,156			667,904,895		622,954,258
	Short-term borrowings		24,456,241			27,465,075		29,150,118
	Long-term debt		15,460,000			15,460,000		5,460,000
	Interest payable and other liabilities		5,311,787			7,931,744		5,270,849
	Total liabilities		709,902,184			718,761,714		662,835,225
Shareholders' Equity
	Common stock, without par value; authorized 5,000,000 shares;  issued 2016 -  1,583,228 shares 2015 -  1,564,581 shares and September 2016 - 1,580,228 shares		24,595,195			24,428,011		23,872,599
	Retained earnings		47,545,465			46,002,554		41,991,488
	Accumulated other comprehensive income (expense)		(740,492	)		1,433,493		797,269
	Total shareholders' equity		71,400,168			71,864,058		66,661,356
	Total liabilities and shareholders' equity	$	781,302,352		$	790,625,772	$	729,496,581
	Book value per share	$	45.10		$	45.48	$	42.61

 

 

Heartland BancCorp
Consolidated Statements of Income
			Three Months Ended,									Twelve Months Ended
Interest Income			Dec. 31, 2016			Sept. 30, 2016			Dec. 31, 2015			Dec. 31, 2016			Dec. 31, 2015
	Loans	$	7,569,129		$	7,198,912		$	6,645,404		$	28,478,204		$	25,775,945
	Securities
	Taxable		350,014			417,825			424,204			1,604,436			1,376,312
	Tax-exempt		397,670			404,060			395,358			1,635,314			1,551,627
	Other		23,351			43,559			15,888			137,738			50,925
	Total interest income		8,340,164			8,064,356			7,480,854			31,855,692			28,754,809
Interest Expense
	Deposits		948,685			952,850			851,796			3,702,300			3,256,624
	Borrowings		112,343			108,922			39,234			394,985			49,252
	Total interest expense		1,061,028			1,061,772			891,030			4,097,285			3,305,876
Net Interest Income			7,279,136			7,002,584			6,589,824			27,758,407			25,448,933
Provision for Loan Losses			135,000			135,000			120,000			645,000			760,000
Net Interest Income After Provision for Loan Losses			7,144,136			6,867,584			6,469,824			27,113,407			24,688,933
Noninterest income
	Service charges		497,286			502,355			477,606			1,944,229			1,925,467
	Net Gains and commissions on loan sales		198,565			158,832			34,621			603,849			241,742
	Net realized gains on available-for-sale securities		-			-			1,357			197,711			18,291
	Net realized gain/(loss) on sales of foreclosed assets		-			-			-			-			5,308
	Benefit in excess of life insurance cash value		-			-			879,488			-			879,488
	Other		180,594			252,411			272,255			814,003			879,945
	Total noninterest income		876,445			913,598			1,665,326			3,559,792			3,950,240
Noninterest Expense
	Salaries and employee benefits		2,894,910			2,790,860			2,800,345			11,413,273			10,331,707
	Net occupancy and equipment expense		563,235			554,864			456,349			2,125,591			1,842,702
	Data processing fees		303,607			264,328			265,293			1,120,524			1,082,143
	Professional fees		193,836			246,129			64,706			681,553			498,406
	Marketing expense		115,334			149,349			134,990			563,381			545,990
	Printing and office supplies		101,279			57,885			31,786			255,321			158,877
	State franchise taxes		123,301			128,701			105,981			531,002			423,926
	FDIC Insurance premiums		72,000			100,000			93,000			368,000			411,000
	Other		629,669			658,006			593,635			2,479,506			2,261,155
	Total noninterest expense		4,997,171			4,950,122			4,546,085			19,538,151			17,555,906
Income before Income Tax			3,023,410			2,831,060			3,589,065			11,135,048			11,083,267
Provision for Income Taxes			861,458			793,593			780,246			3,146,789			2,955,567
Net Income		$	2,161,952		$	2,037,467		$	2,808,819		$	7,988,259		$	8,127,700
Basic Earnings Per Share		$	1.37		$	1.29		$	1.80		$	5.08		$	5.21
Diluted Earnings Per Share		$	1.33		$	1.26		$	1.77		$	4.97		$	5.13

 

ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited)		Three Months Ended												Twelve Months Ended
		Dec. 31, 2016				Sept. 30, 2016				Dec. 31, 2015				Dec. 31, 2016			Dec. 31, 2015
Performance Ratios:
Return on average assets			1.12	%			1.06	%			1.59	%		1.05	%		1.18	%
Return on average equity			12.24	%			11.61	%			17.51	%		11.49	%		12.91	%
Net interest margin			3.99	%			3.90	%			3.99	%		3.94	%		4.02	%
Efficiency ratio			61.27	%			62.53	%			55.08	%		62.78	%		59.75	%
Asset Quality Ratios and Data:		As of or for the Three Months Ended
		Dec. 31, 2016				Sept. 30, 2016				Dec. 31, 2015
Non accrual loans		$	4,216			$	4,321			$	3,320
Loans past due 90 days and still accruing			-				461				1,919
Non-performing investment securities			-				-				-
OREO and other non-performing assets			400				400				-
Total non-performing assets		$	4,616			$	5,182			$	5,239
Non-performing assets to total assets			0.59	%			0.66	%			0.72	%
Net charge-offs quarter ending		$	304			$	251			$	54
Allowance for loan loss		$	5,698			$	5,868			$	5,716
Non accrual loans		$	4,216			$	4,321			$	3,320
Allowance for loan loss to non accrual loans			135.15	%			135.80	%			172.17	%
Allowance for loan losses to loans outstanding			0.91	%			1.03	%			1.04	%
Book Values:
Total shareholders' equity		$	71,400			$	71,864			$	66,758
Less, goodwill			417				417				417
Shareholders' equity less goodwill		$	70,983			$	71,447			$	66,341
Common shares outstanding			1,583,228				1,580,228				1,564,581
Less treasury shares			-				-				-
Common shares as adjusted			1,583,228				1,580,228				1,564,581
Book value per common share		$	45.10			$	45.48			$	42.67
Tangible book value per common share		$	44.83			$	45.21			$	42.40

 

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

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