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