GAHANNA, Ohio, Oct. 17, 2017 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQB:HLAN), today reported third quarter net income increased 23.5% to $2.8 million, or $1.68 per diluted share, compared to $2.2 million, or $1.37 per diluted share, in the preceding quarter and grew 35.1% from $2.0 million, or $1.26 per diluted share, in the third quarter a year ago.  In the first nine months of 2017, net income increased 17.0% to $6.8 million, or $4.18 per diluted share, compared to $5.8 million, or $3.64 per diluted share, in the first nine months of 2016.

The company also announced its board of directors declared a regular quarterly cash dividend of $0.4301 per share.  The dividend will be payable January 10, 2018, to shareholders of record as of December 25, 2017, providing a 2.30% current yield at recent market prices. 

“We reported strong third quarter operating results, delivering steady loan growth and solid revenue with an above average net interest margin.  This growth demonstrates the continued success of our business model; to provide value and stability to our clients,” stated G. Scott McComb, Chairman, President and CEO.  “Knowing that your local community bank was built to last, not sell, adds a degree of certainty for clients and their desire for focused local management decisions.  Additionally, we continue to expand our branch network with a recently opened branch in Clintonville and additional branches in Whitehall and Upper Arlington scheduled to open in 2018.”

Third Quarter Financial Highlights (at or for the period ended September 30, 2017)

• Net income was $2.8 million, or $1.68 per diluted share, in 3Q17.
• Net interest margin improved to 4.05% compared to 3.97% in the preceding quarter and 3.86% in the third quarter a year ago.
• Annualized return on average assets was 1.26% for the third quarter of 2017.
• Annualized return on average equity was 14.28%.
• Total assets increased 11.9% to $885.1 million, compared to $790.6 million a year earlier.
• Total deposits increased 14.5% to $765.0 million from a year ago.
• Net loans increased 13.3% to $681.4 million from a year ago.
• Tangible book value per share increased 6.0% to $47.91 per share compared to $45.21 per share one year earlier.
• Declared quarterly cash dividend of $0.4301 per share, which represents a 2.28% yield based on the September 30, 2017, stock price ($75.50).

Balance Sheet Review

“Loan growth was robust during the quarter, particularly in the agricultural, commercial and industrial (C&I), and residential mortgage sectors,” said McComb.  Net loans increased 13.3% to $681.4 million at September 30, 2017, compared to $601.4 million at September 30, 2016 and increased 2.7% compared to $663.4 million at June 30, 2017. 

Total deposits increased 14.5% to $765.0 million at September 30, 2017, compared to $667.9 million a year earlier and increased 6.7% compared to $716.8 million three months earlier.  Demand deposit accounts represented 23.8%; savings, NOW and money market accounts represented 37.6%; and CDs comprised 38.6% of the total deposit portfolio, at September 30, 2017. 

Heartland’s total assets increased 11.9% to $885.1 million at September 30, 2017, compared to $790.6 million a year earlier and shareholders’ equity increased 7.9% to $77.5 million at September 30, 2017, compared to $71.9 million one year ago.  At quarter end, Heartland’s tangible book value increased 6.0% to $47.91 per share compared to $45.21 per share one year earlier.

Operating Results

Heartland’s net interest income before the provision for loan loss increased 15.0% to $8.1 million in the third quarter of 2017, compared to $7.0 million in the third quarter a year ago, and increased 6.8% compared to $7.5 million in the preceding quarter.  In the first nine months of the year, net interest income before the provision for loan loss increased 10.8% to $22.7 million, compared to $20.5 million in the first nine months of 2016.

Heartland’s total revenues (net interest income before the provision for loan losses, plus non-interest income) increased 19.0% to $9.4 million in the third quarter, compared to $7.9 million in the third quarter a year ago, and increased 7.7% compared to $8.7 million in the preceding quarter.  Year-to-date, total revenues increased 13.1% to $26.2 million, compared to $23.2 million in the first nine months of 2016.

Net interest margin improved to 4.05% in the third quarter of 2017, compared to 3.97% in the preceding quarter and 3.86% in the third quarter a year ago.  “The eight basis point increase in the net interest margin during the current quarter was primarily due to increased amortization of net loan origination fees.  Commercial bankers at Heartland create value for their clients, and they are now better managed and more disciplined in being rewarded for that value.  Growth in the construction portfolio along with the addition of SWAP products have enhanced this income category as well,” said McComb.  In the first nine months of 2017, the net interest margin was 3.99% compared to 3.93% in the first nine months a year ago.

Noninterest income improved 49.5% to $1.4 million in the third quarter, compared to $914,000 in the third quarter a year ago, and increased 13.3% compared to $1.2 in the preceding quarter.  In the first nine months of 2017, noninterest income increased 30.7% to $3.5 million, compared to $2.7 million in the first nine months of 2016.

Heartland’s third quarter noninterest expenses were $5.4 million, the same as in the preceding quarter.  Noninterest expense was $5.0 million in the third quarter a year ago.  The efficiency ratio for the third quarter of 2017 was 57.35%, compared to 61.43% for the preceding quarter and 62.53% in the third quarter of 2016.   

Credit Quality

Nonaccrual loans decreased 25.8% to $3.2 million at September 30, 2017, compared to $4.3 million a year earlier and increased slightly compared to $3.1 million three months earlier.  There were $753,000 in loans past due 90 days and still accruing at September 30, 2017, compared to $22,000 at the end of the preceding quarter and $461,000 a year ago.  There were $662,000 in restructured loans included in nonaccrual loans at September 30, 2017, as compared to $735,000 three months earlier.

Performing restructured loans that were not included in nonaccrual loans at the end of the third quarter of 2017 were $1.8 million, compared to $1.9 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 September 30, 2017, compared to $400,000 a year ago. 

Nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, were $4.0 million, or 0.45% of assets, at September 30, 2017, compared to $3.2 million, or 0.39% of assets, three months earlier, and decreased 23.6% compared to $5.2 million, or 0.66% of assets, a year ago. 

Heartland’s third quarter provision for loan losses was $255,000, the same as in the preceding quarter.  This compares to $135,000 in the third quarter a year ago.  As of September 30, 2017, the allowance for loan losses represented 199.3% of nonaccrual loans compared to 198.5% three months earlier, and 135.8% one year earlier.

The allowance for loan losses was $6.4 million, or 1.00% of total loans at September 30, 2017, compared to $6.2 million, or 0.97% of total loans at June 30, 2017, and $5.9 million, or 1.03% of total loans a year ago.  Net charge-offs were $107,000 in the third quarter, compared to $20,000 in the preceding quarter and $251,000 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 fourteen 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 2017, Heartland was ranked #57 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 12/31/16.

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.

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

The Cereghino Group
IR CONTACT: 206-388-5785

Heartland BancCorp
Consolidated Balance Sheets
Assets			Sept 30, 2017			June 30, 2017		Sept 30, 2016
	Cash and cash equivalents		30,513,677			26,859,082		40,463,763
	Available-for-sale securities		123,636,370			108,841,483		110,158,614
	Held-to-maturity securities, fair value $5,170,466 and $6,289,982 at September 30, 2017 and 2016, respectively and $5,608,318 at June 30, 2017		5,070,790			5,464,807		5,972,843
	Loans, net of allowance for loan losses of $6,386,109 and $5,867,741 at September 30, 2017 and 2016, respectively and $6,237,997 at June 30, 2017		681,372,890			663,437,938		601,400,849
	Premises and equipment		21,523,740			18,078,901		13,921,042
	Nonmarketable equity securities		2,830,339			2,830,339		2,825,439
	Interest receivable		3,133,047			2,365,999		2,614,368
	Goodwill		417,353			417,353		417,353
	Deferred income taxes		2,374,481			2,374,481		1,765,794
	Life insurance assets		12,793,724			12,909,209		9,446,365
	Other		1,436,086			1,476,628		1,639,342
	Total assets	$	885,102,497		$	845,056,220	$	790,625,772
Liabilities and Shareholders' Equity
Liabilities
	Deposits
	Demand	$	182,342,329		$	162,886,976	$	150,913,820
	Saving, NOW and money market		287,458,122			257,703,537		241,181,130
	Time		295,224,771			296,232,569		275,809,945
	Total deposits		765,025,222			716,823,082		667,904,895
	Short-term borrowings		20,893,943			16,495,538		27,465,075
	Long-term debt		15,460,000			30,960,000		15,460,000
	Interest payable and other liabilities		6,195,572			5,426,589		7,931,744
	Total liabilities		807,574,737			769,705,209		718,761,714
Shareholders' Equity
	Common stock, without par value; authorized 5,000,000 shares;  issued 2017 -  1,609,528 shares 2016 -  1,580,228 shares and June 2017 - 1,589,028 shares		25,001,103			24,090,857		24,428,011
	Stock issued with notes receivable		(727,478	)		-		-
	Retained earnings		53,097,717			50,978,591		46,002,554
	Accumulated other comprehensive income (expense)		156,418			281,563		1,433,493
	Total shareholders' equity		77,527,760			75,351,011		71,864,058
	Total liabilities and shareholders' equity	$	885,102,497		$	845,056,220	$	790,625,772
	Book value per share	$	48.17		$	47.42	$	45.48

 

Heartland BancCorp
Consolidated Statements of Income
			Three Months Ended,							Nine Months Ended
Interest Income			Sept 30, 2017		June 30, 2017		Sept 30, 2016			Sept 30, 2017			Sept 30, 2016
	Loans	$	8,452,381	$	7,900,422	$	7,198,912		$	23,724,071		$	20,909,075
	Securities
	Taxable		429,856		390,666		417,825			1,184,686			1,254,422
	Tax-exempt		404,840		397,889		404,060			1,196,159			1,237,644
	Other		70,291		48,700		43,559			167,156			114,387
	Total interest income		9,357,368		8,737,677		8,064,356			26,272,072			23,515,528
Interest Expense
	Deposits		1,188,053		1,069,704		952,850			3,220,721			2,753,615
	Borrowings		116,829		129,388		108,922			362,921			282,642
	Total interest expense		1,304,882		1,199,092		1,061,772			3,583,642			3,036,257
Net Interest Income			8,052,486		7,538,585		7,002,584			22,688,430			20,479,271
Provision for Loan Losses			255,000		255,000		135,000			840,000			510,000
Net Interest Income After Provision for Loan Losses			7,797,486		7,283,585		6,867,584			21,848,430			19,969,271
Noninterest income
	Service charges		514,781		509,996		502,355			1,505,619			1,446,943
	Net Gains and commissions on loan sales		308,261		307,185		158,832			776,224			405,284
	Net realized gains on available-for-sale securities		-		-		-			6,128			197,711
	Net realized gain/(loss) on sales of foreclosed assets		-		139,497		-			139,497			-
	Gain on redemption of life insurance proceeds		301,278		-					301,278
	Increase in cash value of life insurance		86,341		84,614		86,090			263,560			212,237
	Other		155,396		164,873		166,321			515,115			421,172
	Total noninterest income		1,366,057		1,206,165		913,598			3,507,421			2,683,347
Noninterest Expense
	Salaries and employee benefits		3,205,006		3,111,741		2,790,860			9,483,003			8,518,363
	Net occupancy and equipment expense		585,311		583,230		554,864			1,727,256			1,562,356
	Data processing fees		316,111		327,627		264,328			947,512			816,917
	Professional fees		163,914		159,584		246,129			448,378			487,717
	Marketing expense		141,000		271,000		149,349			553,000			448,047
	Printing and office supplies		56,761		49,022		57,885			170,777			154,042
	State franchise taxes		141,825		141,825		128,701			425,475			407,701
	FDIC Insurance premiums		98,500		80,500		100,000			258,500			296,000
	Other		693,455		647,681		658,006			1,948,823			1,849,837
	Total noninterest expense		5,401,883		5,372,210		4,950,122			15,962,724			14,540,980
Income before Income Tax			3,761,660		3,117,540		2,831,060			9,393,127			8,111,638
Provision for Income Taxes			1,009,859		888,953		793,593			2,576,177			2,285,331
Net Income		$	2,751,801	$	2,228,587	$	2,037,467		$	6,816,950		$	5,826,307
Basic Earnings Per Share		$	1.73	$	1.40	$	1.29		$	4.29		$	3.71
Diluted Earnings Per Share		$	1.68	$	1.37	$	1.26		$	4.18		$	3.64

 

 

ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited)	Three Months Ended												Nine Months Ended
	Sept 30, 2017				June 30, 2017				Sept. 30, 2016				Sept 30, 2017			Sept. 30, 2016
Performance Ratios:
Return on average assets		1.26	%			1.07	%			1.06	%		1.09	%		1.02	%
Return on average equity		14.28	%			12.08	%			11.61	%		12.28	%		11.24	%
Net interest margin		4.05	%			3.97	%			3.86	%		3.99	%		3.93	%
Efficiency ratio		57.35	%			61.43	%			62.53	%		60.95	%		63.32	%
Asset Quality Ratios and Data:	As of or for the Three Months Ended
	Sept 30, 2017				June 30, 2017				Sept. 30, 2016
Non accrual loans	$	3,205			$	3,143			$	4,321
Loans past due 90 days and still accruing		753				22				461
Non-performing investment securities		-				-				-
OREO and other non-performing assets		-				-				400
Total non-performing assets	$	3,958			$	3,165			$	5,182
Non-performing assets to total assets		0.45	%			0.39	%			0.66	%
Net charge-offs quarter ending	$	107			$	20			$	251
Allowance for loan loss	$	6,386			$	6,238			$	5,868
Non accrual loans	$	3,205			$	3,143			$	4,321
Allowance for loan loss to non accrual loans		199.25	%			198.47	%			135.80	%
Allowance for loan losses to loans outstanding		1.00	%			0.97	%			1.03	%
Restructured loans included in non-accrual	$	662			$	735			$	815
Performing restructured loans (RC-C)	$	1,814			$	1,902			$	3,200
Book Values:
Total shareholders' equity	$	77,528			$	75,351			$	71,864
Less, goodwill		417				417				417
Shareholders' equity less goodwill	$	77,111			$	74,934			$	71,447
Common shares outstanding		1,609,528				1,589,028				1,580,228
Less treasury shares		-				-				-
Common shares as adjusted		1,609,528				1,589,028				1,580,228
Book value per common share	$	48.17			$	47.42			$	45.48
Tangible book value per common share	$	47.91			$	47.16			$	45.21