WHITEHALL, Ohio, April 16, 2019 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQB: HLAN), today reported that growing revenues and a stable net interest margin contributed to first quarter 2019 net income of $3.0 million, or $1.45 per diluted share.  This compares with net income of $3.1 million or $1.68 per diluted share, in the fourth quarter of 2018, and $2.5 million, or $1.52 per diluted share, in the first quarter 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 July 10, 2019, to shareholders of record as of June 25, 2019. Heartland has paid regular cash dividends since 1993.

“Our first quarter 2019 operating results reflect the strategies we have put in place to grow our organization and expand market share in Central Ohio,” stated G. Scott McComb, Chairman, President and CEO.  “Profitability in our first quarter was consistent with our record results posted in the preceding quarter.  We, again, had double digit loan and deposit growth combined with higher noninterest income.”

First Quarter Financial Highlights (at or for the period ended March 31, 2019)

• Net income was $3.0 million, or $1.45 per diluted share.
• Net interest margin remained stable at 4.04%, compared to 4.04% in the preceding quarter.
• Annualized return on average assets was 1.14%.
• Annualized return on average equity was 10.31%.
• Total assets increased 13.5% to $1.06 billion, compared to $937.6 million a year earlier.
• Net loans increased 12.1% to $822.3 million from a year ago.
• Total deposits increased 9.9% to $894.9 million from a year ago.
• Tangible book value per share increased 2.9% to $57.99 per share compared to $56.33 three months earlier and grew 20.9% from $47.97 per share one year earlier.
• Declared quarterly cash dividend of $0.52 per share, which represents a 2.56% yield based on the March 31, 2019, stock price ($81.25).

Balance Sheet Review

“We had double digit loan growth year-over-year, with the increases primarily concentrated in residential real estate, commercial real estate, and agriculture loan segments,” said McComb. 

Net loans increased 12.1% to $822.3 million at March 31, 2019, compared to $733.3 million at March 31, 2018, and increased modestly compared to $816.8 million at December 31, 2018.  Owner occupied commercial real estate loans (CRE) increased 7.0% to $227.2 million at March 31, 2019, compared to a year ago and comprise 27.4% of the total loan portfolio.  Non-owner occupied CRE loans increased 15.6% to $251.5 million compared to a year ago and comprise 30.3% of the total loan portfolio.  1-4 family residential real estate loans were up 15.1% from year ago levels to $208.6 million and represent 25.1% of total loans.  Commercial loans were up 11.9% from year ago levels to $101.0 million at March 31, 2019 and comprise 12.2% of the total loan portfolio.  Home equity loans increased 6.0% from year ago levels to $30.3 million and represent 3.7% of total loans and consumer loans increased 17.1% from year ago levels to $11.4 million and represent 1.4% of the total loan portfolio.

Total deposits increased 9.9% to $894.9 million at March 31, 2019, compared to $814.2 million a year earlier and increased modestly compared to $880.4 million three months earlier.  Noninterest bearing demand deposit accounts increased 18.5% at March 31, 2019, compared to a year ago, and represented 27.6% of total deposits.  Savings, NOW and money market accounts increased 1.3% compared to a year ago and represented 35.3% of total deposits and CDs increased 13.0% when compared to a year ago and comprised 37.1% of the total deposit portfolio at March 31, 2019.

Heartland’s total assets increased 13.5% to $1.06 billion at March 31, 2019, compared to $937.6 million a year earlier. Shareholders’ equity increased 51.2% to $118.5 million at the end of the first quarter, compared to $78.4 million a year earlier, reflecting the capital raise during the fourth quarter of 2018.  At March 31, 2019, Heartland’s tangible book value increased 20.9% to $57.99 per share compared to $47.97 per share one year earlier.

Operating Results

“Our net interest margin increased from a year ago and remained stable compared to the prior quarter reflecting increased levels of earning assets to total assets along with higher balances in noninterest demand deposits during the first quarter, in addition to higher asset yields resulting from four 25-basis point rate hikes during 2018,” said McComb.  Heartland’s net interest margin was 4.04% in the first quarter of 2019, compared to 4.04% in the preceding quarter and 3.85% in first quarter a year ago. 

Net interest income before the provision for loan loss increased 19.9% to $9.9 million in the first quarter of 2019, compared to $8.2 million in the first quarter a year ago, and increased nominally compared to $9.8 million in the preceding quarter. 

Total revenues (net interest income before the provision for loan losses, plus noninterest income) increased 20.4% to $11.5 million in the first quarter, compared to $9.5 million in the first quarter a year ago, and increased 1.7% from $11.3 million in the preceding quarter. 

Heartland’s noninterest income increased 23.5% to $1.6 million in the first quarter, compared to $1.3 million in the first quarter a year ago, and increased 8.7% compared to $1.5 million in the preceding quarter.  The TransCounty Title Agency acquisition contributed $395,860 to noninterest income during the first quarter of 2019. 

First quarter noninterest expenses were $7.5 million, compared to $7.1 million in the preceding quarter and $6.0 million in the first quarter a year ago.  The increase was due to costs associated with the company’s branch expansion, including its new corporate headquarters, as well as costs associated with the subsidiary TransCounty Title Agency.  The efficiency ratio for the first quarter of 2019 was 65.17%, compared to 62.75% for the preceding quarter and 63.36% in the first quarter of 2018.  

Credit Quality

Nonaccrual loans were $2.0 million at March 31, 2019, compared to $1.8 million three months earlier and $6.8 million at March 31, 2018.  There were $29,000 in loans past due 90 days and still accruing at March 31, 2019, compared to $97,000 at December 31, 2018, and $62,000 a year ago.

Performing restructured loans that were not included in nonaccrual loans at March 31, 2019, were $292,000, compared to $293,000 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. 

There was no other real estate owned (OREO) and other non-performing assets on the books at March 31, 2019.  Non-performing assets (NPAs), consisting of non-performing loans, OREO, and loans delinquent 90 days or more, were $2.1 million, or 0.19% of assets, at March 31, 2019, compared to $1.9 million, or 0.18% of assets, three months earlier, and $6.9 million, or 0.74% of assets, a year ago.

Heartland’s first quarter provision for loan losses was $375,000, the same as in both the preceding quarter and the first quarter a year ago.  The allowance for loan losses was $7.7 million, or 0.93% of total loans at March 31, 2019, compared to $7.5 million, or 0.92% of total loans at December 31, 2018, and $6.6 million, or 0.90% of total loans a year ago.  As of March 31, 2019, the allowance for loan losses represented 377.4% of nonaccrual loans compared to 420.0% three months earlier, and 97.2% one year earlier.  Net charge-offs were $223,000 in the first quarter of 2019.  This compares to net charge-offs of $99,000 in the preceding quarter and net recoveries of $49,000 in the first quarter a year ago. 

Recent Events

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 (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.

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

   

Heartland BancCorp
Consolidated Balance Sheets
Assets		March 31, 2019				Dec. 31, 2018				March 31, 2018
	Cash and cash equivalents	$	26,195			$	29,922			$	30,839
	Interest bearing time deposits		-				-				250
	Available-for-sale securities		148,900				140,556				118,440
	Held-to-maturity securities, fair values of $1,551,368, $1,568,346 and $4,701,998 respectively		1,548				1,565				4,655
	Commercial		101,000				100,028				90,290
	CRE (Owner occupied)		227,157				228,461				212,385
	CRE (Non Owner occupied)		251,474				247,780				217,597
	1-4 Family		208,590				208,335				181,209
	Home Equity		30,300				27,869				28,592
	Consumer		11,371				11,660				9,709
	Net deferred loan costs, premiums and discounts		90				197				188
	Allowance for loan losses		(7,700	)			(7,547	)			(6,649	)
	Net Loans	$	822,282			$	816,783			$	733,320
	Premises and equipment		31,875				28,504				26,229
	Nonmarketable equity securities		4,174				3,526				2,830
	Interest receivable		5,028				4,169				3,695
	Goodwill		1,206				1,069				417
	Intangible Assets		420				446				-
	Deferred income taxes		1,433				1,433				805
	Life insurance assets		16,664				16,555				13,054
	Lease - Right of Use Asset		2,690				-				-
	Other		1,809				2,550				3,048
	Total assets	$	1,064,224			$	1,047,079			$	937,582
Liabilities and Shareholders' Equity
Liabilities
	Deposits
	Demand	$	247,302			$	232,682			$	208,713
	Saving, NOW and money market		315,867				321,497				311,966
	Time		331,691				326,261				293,498
	Total deposits		894,861				880,441				814,177
	Short-term borrowings		20,436				34,768				24,471
	Long-term debt		20,460				10,460				15,460
	Lease Liability		2,690				-				-
	Interest payable and other liabilities		7,250				6,382				5,090
	Total liabilities		945,697				932,051				859,199
Shareholders' Equity
	Common stock, without par value; authorized 5,000,000 shares; 2,015,976, 2,015,276 and 1,625,349 shares issued, respectively		55,297				55,080				25,298
	Retained earnings		63,774				61,855				55,421
	Accumulated other comprehensive income (expense)		(543	)			(1,907	)			(2,335	)
	Total shareholders' equity		118,528				115,028				78,384
	Total liabilities and shareholders' equity	$	1,064,224			$	1,047,079			$	937,582
	Book value per share	$	58.79			$	57.08			$	48.23

 

Heartland BancCorp
Consolidated Statements of Income
			Three Months Ended,
Interest Income		March 31, 2019			Dec. 31, 2018			March 31, 2018
	Loans	$	10,850		$	10,838		$	8,738
	Securities		-			-			-
	Taxable		741			666			434
	Tax-exempt		432			404			418
	Other		121			148			84
	Total interest income		12,144			12,056			9,674
Interest Expense
	Deposits		2,113			2,009			1,303
	Borrowings		177			252			153
	Total interest expense		2,290			2,261			1,456
Net Interest Income			9,854			9,795			8,218
Provision for Loan Losses			375			375			375
Net Interest Income After Provision for Loan Losses			9,479			9,420			7,843
Noninterest income
	Service charges		503			544			513
	Net Gains and commissions on loan sales and servicing		398			204			547
	Title Insurance Income		179			195			-
	Net realized gains on sales of available-for-sale securities		-			-			(66	)
	Net realized gain/(loss) on sales of foreclosed assets		-			-			10
	Increase in cash value of life insurance		109			116			84
	Other		418			420			213
	Total noninterest income		1,607			1,479			1,301
Noninterest Expense
	Salaries and employee benefits		4,623			4,256			3,452
	Net occupancy and equipment expense		962			870			824
	Data processing fees		366			340			339
	Professional fees		224			177			165
	Marketing expense		240			228			212
	Printing and office supplies		75			83			73
	State financial institution tax		205			152			156
	FDIC Insurance premiums		27			102			122
	Other		748			866			729
	Total noninterest expense		7,469			7,074			6,073
Income before Income Tax			3,617			3,825			3,071
Provision for Income Taxes			650			711			548
Net Income		$	2,968		$	3,114		$	2,523
Basic Earnings Per Share		$	1.47		$	1.71		$	1.56
Diluted Earnings Per Share		$	1.45		$	1.68		$	1.52

 

ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited)		Three Months Ended
		March 31, 2019				Dec. 31, 2018				March 31, 2018
Performance Ratios:
Return on average assets			1.14	%			1.20	%			1.11	%
Return on average equity			10.31	%			12.66	%			13.04	%
Return on average tangible common equity			10.45	%			12.86	%			13.11	%
Net interest margin			4.04	%			4.04	%			3.85	%
Efficiency ratio			65.17	%			62.75	%			63.36	%
Asset Quality Ratios and Data:		As of or for the Three Months Ended
		March 31, 2019				Dec. 31, 2018				March 31, 2018
Nonaccrual loans		$	2,040			$	1,797			$	6,840
Loans past due 90 days and still accruing			29				97				62
Non-performing investment securities			-				-				-
OREO and other non-performing assets			-				-				-
Total non-performing assets		$	2,069			$	1,894			$	6,902
Non-performing assets to total assets			0.19	%			0.18	%			0.74	%
Net charge-offs quarter ending		$	223			$	99			$	(49	)
Allowance for loan loss		$	7,700			$	7,547			$	6,649
Nonaccrual loans		$	2,040			$	1,797			$	6,840
Allowance for loan loss to non accrual loans			377.43	%			419.99	%			97.21	%
Allowance for loan losses to loans outstanding			0.93	%			0.92	%			0.90	%
Restructured loans included in non-accrual		$	289			$	324			$	428
Performing restructured loans (RC-C)		$	292			$	293			$	1,663
Book Values:
Total shareholders' equity		$	118,528			$	115,028			$	78,384
Less, goodwill and intangible assets			1,626				1,515				417
Shareholders' equity less goodwill and intangible assets		$	116,902			$	113,513			$	77,966
Common shares outstanding			2,015,976				2,015,276				1,625,349
Less treasury shares			-				-				-
Common shares as adjusted			2,015,976				2,015,276				1,625,349
Book value per common share		$	58.79			$	57.08			$	48.23
Tangible book value per common share		$	57.99			$	56.33			$	47.97