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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