WHITEHALL, Ohio, July 16, 2019 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQB: HLAN), today reported that record revenues contributed to second quarter 2019 net income of $3.2 million, or $1.55 per diluted share. This compares to $3.0 million or $1.45 per diluted share, in the first quarter of 2019, and $2.7 million, or $1.63 per diluted share, in the second quarter of 2018. In the first six months of the year, net income increased 16.9% to $6.1 million, compared to $5.2 million in the first six months 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 October 10, 2019, to shareholders of record as of September 25, 2019. Heartland has paid regular cash dividends since 1993.
“I am very pleased with the financial results and the efforts of our Heartland Community Bankers this quarter. The team continues to get better in every aspect of the business, staying true to the business principles that got us to where we are today,” stated G. Scott McComb, Chairman and CEO. “Our organic expansion strategy in Central Ohio is proving effective, with another quarter of nearly 10% loan and deposit growth year-over-year combined with meaningfully higher noninterest income.”
Second Quarter Financial Highlights (at or for the period ended June 30, 2019)
- Net income increased 16.3% to $3.2 million, compared to $2.7 million in the second quarter a year ago.
- Net interest margin was 3.91%, compared to 4.04% in the preceding quarter and 3.83% in the second quarter a year ago.
- Noninterest income increased 86.6% to $2.0 million, compared to the second quarter a year ago.
- Annualized return on average assets was 1.17%.
- Annualized return on average equity was 10.51%.
- Total assets increased 9.9% to $1.10 billion, compared to $1.00 billion a year earlier.
- Net loans increased 9.7% to $860.2 million from a year ago.
- Total deposits increased 9.6% to $925.9 million from a year ago.
- Tangible book value per share increased 3.5% to $60.00 per share compared to $57.99 three months earlier and grew 22.5% from $48.99 per share one year earlier.
- Declared quarterly cash dividend of $0.52 per share, which represents a 2.57% yield based on the June 30, 2019, stock price ($81.00).
Balance Sheet Review
“The loan portfolio continues to be well-diversified and is originated predominately within our Central Ohio markets, with the increases primarily concentrated in residential real estate, commercial real estate, and agriculture loan segments,” said McComb.
Net loans increased 9.7% to $860.2 million at June 30, 2019, compared to $784.4 million at June 30, 2018, and increased 4.6% compared to $822.3 million at March 31, 2019. Owner occupied commercial real estate loans (CRE) decreased modestly to $226.9 million at June 30, 2019, compared to a year ago and comprise 26.1% of the total loan portfolio. Non-owner occupied CRE loans increased 20.9% to $273.8 million compared to a year ago and comprise 31.5% of the total loan portfolio. 1-4 family residential real estate loans were up 6.4% from year ago levels to $210.6 million and represent 24.3% of total loans. Commercial loans were up 11.2% from year ago levels to $108.7 million at June 30, 2019 and comprise 12.5% of the total loan portfolio. Home equity loans increased 20.8% from year ago levels to $36.4 million and represent 4.2% of total loans and consumer loans increased 15.7% from year ago levels to $11.7 million and represent 1.4% of the total loan portfolio.
Total deposits increased 9.6% to $925.9 million at June 30, 2019, compared to $844.4 million a year earlier and increased 3.5% compared to $894.9 million three months earlier. Noninterest bearing demand deposit accounts increased 5.0% at June 30, 2019, compared to a year ago, and represented 23.4% of total deposits. Savings, NOW and money market accounts decreased modestly compared to a year ago and represented 36.5% of total deposits and CDs increased 24.1% when compared to a year ago and comprised 40.1% of the total deposit portfolio at June 30, 2019.
Heartland’s total assets increased 9.9% to $1.10 billion at June 30, 2019, compared to $1.00 billion a year earlier. Shareholders’ equity increased 52.7% to $122.6 million at the end of the second quarter, compared to $80.3 million a year earlier, reflecting the capital raise during the fourth quarter of 2018. At June 30, 2019, Heartland’s tangible book value increased 22.5% to $60.00 per share compared to $48.99 per share one year earlier.
Operating Results
“Our net interest margin increased from a year ago but contracted compared to the prior quarter, primarily due to the increase in funding costs,” said McComb. Heartland’s net interest margin was 3.91% in the second quarter of 2019, compared to 4.04% in the preceding quarter and 3.83% in second quarter a year ago. In the first six months of 2019, Heartland’s net interest margin improved 14 basis points to 3.94%, compared to 3.80% in the first six months of 2018.
Net interest income before the provision for loan loss increased 13.5% to $9.9 million in the second quarter of 2019, compared to $8.7 million in the second quarter a year ago, and was unchanged compared to the preceding quarter. In the first six months of 2019, net interest income before the provision for loan losses increased 16.6% to $19.7 million, compared to $16.9 million in the first six months of 2018.
Total revenues (net interest income before the provision for loan losses, plus noninterest income) increased 21.3% to $11.8 million in the second quarter, compared to $9.8 million in the second quarter a year ago, and increased 3.3% from $11.5 million in the preceding quarter. Year-to-date, revenues increased 20.9% to $23.3 million, compared to $19.3 million in the same period one year earlier.
Heartland’s noninterest income increased 86.6% to $2.0 million in the second quarter, compared to $1.0 million in the second quarter a year ago, and increased 21.5% compared to $1.6 million in the preceding quarter. The TransCounty Title Agency acquisition contributed $635,000 to noninterest income during the second quarter of 2019. In the first six months of 2019, noninterest income increased 51.6% to $3.6 million, compared to $2.3 million in the first six months of 2018, with the TransCounty Title Agency acquisition contributing $1.0 million to noninterest income year-to-date.
Second quarter noninterest expenses were $7.6 million, compared to $7.5 million in the preceding quarter and $6.1 million in the second quarter a year ago. The year-over-year increase was due to costs associated with the company’s branch expansion, including its new Upper Arlington branch, as well as costs associated with the subsidiary TransCounty Title Agency. In the first six months of 2019, noninterest expenses totaled $15.0 million, compared to $12.2 million in the first six months of 2018. The efficiency ratio for the second quarter of 2019 was 63.92%, compared to 65.17% for the preceding quarter and 62.44% for the second quarter of 2018.
Credit Quality
Nonaccrual loans totaled $1.8 million at June 30, 2019, compared to $2.0 million three months earlier and $6.6 million at June 30, 2018. There were $253,000 in loans past due 90 days and still accruing at June 30, 2019, compared to $29,000 at March 31, 2019, and $55,000 a year ago.
Performing restructured loans that were not included in nonaccrual loans at June 30, 2019, were $344,000, compared to $292,000 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.
Heartland had no other real estate owned (OREO) and other non-performing assets on the books at June 30, 2019 or at the preceding quarter end. 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 June 30, 2019, unchanged compared to three months earlier. At June 30, 2018, NPAs were $6.7 million, or 0.67% of assets.
The second quarter provision for loan losses was $375,000, the same as in both the preceding quarter and the second quarter a year ago. The allowance for loan losses was $8.0 million, or 0.92% of total loans at June 30, 2019, compared to $7.7 million, or 0.93% of total loans at March 31, 2019, and $6.9 million, or 0.87% of total loans a year ago. As of June 30, 2019, the allowance for loan losses represented 437.3% of nonaccrual loans compared to 377.4% three months earlier, and 104.2% one year earlier. Net charge-offs were $81,000 in the second quarter of 2019. This compares to net charge-offs of $223,000 in the preceding quarter and $126,000 in the second quarter a year ago.
Capital
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 of 2019, Heartland was ranked #44 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 12/31/18.
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, 2019 | March 31, 2019 | June 30, 2018 | |||||||||
| Cash and cash equivalents | $ | 26,482 | $ | 26,195 | $ | 38,369 | ||||||
| Interest bearing time deposits | ||||||||||||
| Available-for-sale securities | 147,592 | 148,900 | 121,654 | |||||||||
| Held-to-maturity securities, fair values of $1,551,817, $1,551,368 and $3,696,526 respectively | 1,548 | 1,548 | 3,671 | |||||||||
| Commercial | 108,662 | 101,000 | 97,737 | |||||||||
| CRE (Owner occupied) | 226,906 | 227,157 | 228,632 | |||||||||
| CRE (Non Owner occupied) | 273,751 | 251,474 | 226,501 | |||||||||
| 1-4 Family | 210,609 | 208,590 | 197,898 | |||||||||
| Home Equity | 36,449 | 30,300 | 30,183 | |||||||||
| Consumer | 11,717 | 11,371 | 10,124 | |||||||||
| Net deferred loan costs, premiums and discounts | 50 | 90 | 201 | |||||||||
| Allowance for loan losses | (7,994 | ) | (7,700 | ) | (6,898 | ) | ||||||
| Net Loans | $ | 860,150 | $ | 822,282 | $ | 784,378 | ||||||
| Premises and equipment | 32,508 | 31,875 | 27,052 | |||||||||
| Nonmarketable equity securities | 4,431 | 4,174 | 2,836 | |||||||||
| Interest receivable | 4,579 | 5,028 | 3,593 | |||||||||
| Goodwill | 1,206 | 1,206 | 417 | |||||||||
| Intangible Assets | 409 | 420 | - | |||||||||
| Deferred income taxes | 1,433 | 1,433 | 805 | |||||||||
| Life insurance assets | 16,772 | 16,664 | 16,332 | |||||||||
| Lease - Right of Use Asset | 2,655 | 2,690 | - | |||||||||
| Other | 1,263 | 1,809 | 3,003 | |||||||||
| Total assets | $ | 1,101,028 | $ | 1,064,224 | $ | 1,002,110 | ||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Liabilities | ||||||||||||
| Deposits | ||||||||||||
| Demand | $ | 216,392 | $ | 247,302 | $ | 206,013 | ||||||
| Saving, NOW and money market | 338,178 | 315,867 | 339,081 | |||||||||
| Time | 371,337 | 331,691 | 299,331 | |||||||||
| Total deposits | 925,907 | 894,860 | 844,425 | |||||||||
| Short-term borrowings | 27,970 | 20,436 | 56,105 | |||||||||
| Long-term debt | 15,460 | 20,460 | 15,460 | |||||||||
| Lease Liability | 2,655 | 2,690 | - | |||||||||
| Interest payable and other liabilities | 6,410 | 7,250 | 5,841 | |||||||||
| Total liabilities | 978,402 | 945,696 | 921,831 | |||||||||
| Shareholders' Equity | ||||||||||||
| Common stock, without par value; authorized 5,000,000 shares; 2,016,913, 2,015,976 and 1,630,149 shares issued, respectively | 55,526 | 55,297 | 25,531 | |||||||||
| Retained earnings | 65,885 | 63,774 | 57,365 | |||||||||
| Accumulated other comprehensive income (expense) | 1,215 | (543 | ) | (2,617 | ) | |||||||
| Total shareholders' equity | 122,626 | 118,528 | 80,279 | |||||||||
| Total liabilities and shareholders' equity | $ | 1,101,028 | $ | 1,064,224 | $ | 1,002,110 | ||||||
| Book value per share | $ | 60.80 | $ | 58.79 | $ | 49.25 | ||||||
| Heartland BancCorp | ||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||
| Three Months Ended, | Six Months Ended | |||||||||||||||
| Interest Income | June 30, 2019 | March 31, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | |||||||||||
| Loans | $ | 11,361 | $ | 10,850 | $ | 9,450 | $ | 22,210 | $ | 18,188 | ||||||
| Securities | - | - | - | - | - | |||||||||||
| Taxable | 745 | 741 | 520 | 1,487 | 954 | |||||||||||
| Tax-exempt | 442 | 432 | 416 | 873 | 834 | |||||||||||
| Other | 77 | 121 | 108 | 199 | 192 | |||||||||||
| Total interest income | 12,625 | 12,144 | 10,494 | 24,769 | 20,168 | |||||||||||
| Interest Expense | ||||||||||||||||
| Deposits | 2,460 | 2,113 | 1,533 | 4,572 | 2,836 | |||||||||||
| Borrowings | 274 | 177 | 246 | 451 | 399 | |||||||||||
| Total interest expense | 2,734 | 2,290 | 1,779 | 5,023 | 3,235 | |||||||||||
| Net Interest Income | 9,891 | 9,854 | 8,715 | 19,746 | 16,933 | |||||||||||
| Provision for Loan Losses | 375 | 375 | 375 | 750 | 750 | |||||||||||
| Net Interest Income After Provision for Loan Losses | 9,516 | 9,479 | 8,340 | 18,996 | 16,183 | |||||||||||
| Noninterest income | ||||||||||||||||
| Service charges | 556 | 503 | 530 | 1,058 | 1,044 | |||||||||||
| Net Gains and commissions on loan sales and servicing | 383 | 398 | 220 | 781 | 767 | |||||||||||
| Title Insurance Income | 307 | 179 | - | 486 | - | |||||||||||
| 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 | 108 | 109 | 125 | 217 | 208 | |||||||||||
| Other | 598 | 418 | 171 | 1,016 | 384 | |||||||||||
| Total noninterest income | 1,952 | 1,607 | 1,046 | 3,558 | 2,347 | |||||||||||
| Noninterest Expense | ||||||||||||||||
| Salaries and employee benefits | 4,380 | 4,623 | 3,407 | 9,003 | 6,859 | |||||||||||
| Net occupancy and equipment expense | 981 | 962 | 853 | 1,943 | 1,677 | |||||||||||
| Data processing fees | 387 | 365 | 352 | 753 | 691 | |||||||||||
| Professional fees | 309 | 223 | 199 | 533 | 364 | |||||||||||
| Marketing expense | 242 | 240 | 212 | 481 | 425 | |||||||||||
| Printing and office supplies | 79 | 75 | 80 | 154 | 153 | |||||||||||
| State financial institution tax | 205 | 205 | 156 | 410 | 313 | |||||||||||
| FDIC Insurance premiums | 73 | 27 | 112 | 100 | 233 | |||||||||||
| Other | 914 | 748 | 723 | 1,662 | 1,452 | |||||||||||
| Total noninterest expense | 7,570 | 7,468 | 6,094 | 15,039 | 12,167 | |||||||||||
| Income before Income Tax | 3,898 | 3,618 | 3,292 | 7,515 | 6,363 | |||||||||||
| Provision for Income Taxes | 737 | 650 | 575 | 1,387 | 1,123 | |||||||||||
| Net Income | $ | 3,161 | $ | 2,968 | $ | 2,717 | $ | 6,128 | $ | 5,240 | ||||||
| Basic Earnings Per Share | $ | 1.57 | $ | 1.47 | $ | 1.67 | $ | 3.04 | 3.23 | |||||||
| Diluted Earnings Per Share | $ | 1.55 | $ | 1.45 | $ | 1.63 | $ | 3.00 | 3.15 | |||||||
| ADDITIONAL FINANCIAL INFORMATION | ||||||||||||||||||
| (Dollars in thousands except per share amounts)(Unaudited) | Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, 2019 | March 31, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||||
| Performance Ratios: | ||||||||||||||||||
| Return on average assets | 1.17% | 1.14% | 1.12% | 1.14% | 1.11% | |||||||||||||
| Return on average equity | 10.51% | 10.31% | 13.73% | 10.32% | 13.25% | |||||||||||||
| Return on average tangible common equity | 10.66% | 10.45% | 13.81% | 10.46% | 13.32% | |||||||||||||
| Net interest margin | 3.91% | 4.04% | 3.83% | 3.94% | 3.80% | |||||||||||||
| Efficiency ratio | 63.92% | 65.17% | 62.44% | 64.53% | 62.89% | |||||||||||||
| Asset Quality Ratios and Data: | As of or for the Three Months Ended | |||||||||||||||||
| June 30, 2019 | March 31, 2019 | June 30, 2018 | ||||||||||||||||
| Nonaccrual loans | $ | 1,828 | $ | 2,040 | $ | 6,622 | ||||||||||||
| Loans past due 90 days and still accruing | 253 | 29 | 55 | |||||||||||||||
| Non-performing investment securities | - | - | - | |||||||||||||||
| OREO and other non-performing assets | - | - | - | |||||||||||||||
| Total non-performing assets | $ | 2,081 | $ | 2,069 | $ | 6,677 | ||||||||||||
| Non-performing assets to total assets | 0.19% | 0.19% | 0.67% | |||||||||||||||
| Net charge-offs quarter ending | $ | 81 | $ | 223 | $ | 126 | ||||||||||||
| Allowance for loan loss | $ | 7,994 | $ | 7,700 | $ | 6,898 | ||||||||||||
| Nonaccrual loans | $ | 1,828 | $ | 2,040 | $ | 6,622 | ||||||||||||
| Allowance for loan loss to non accrual loans | 437.29% | 377.43% | 104.17% | |||||||||||||||
| Allowance for loan losses to loans outstanding | 0.92% | 0.93% | 0.87% | |||||||||||||||
| Restructured loans included in non-accrual | $ | 289 | $ | 289 | $ | 324 | ||||||||||||
| Performing restructured loans (RC-C) | $ | 344 | $ | 292 | $ | 1,833 | ||||||||||||
| Book Values: | ||||||||||||||||||
| Total shareholders' equity | $ | 122,626 | $ | 118,528 | $ | 80,279 | ||||||||||||
| Less, goodwill and intangible assets | 1,615 | 1,626 | 417 | |||||||||||||||
| Shareholders' equity less goodwill and intangible assets | $ | 121,012 | $ | 116,902 | $ | 79,862 | ||||||||||||
| Common shares outstanding | 2,016,913 | 2,015,976 | 1,630,149 | |||||||||||||||
| Less treasury shares | - | - | - | |||||||||||||||
| Common shares as adjusted | 2,016,913 | 2,015,976 | 1,630,149 | |||||||||||||||
| Book value per common share | $ | 60.80 | $ | 58.79 | $ | 49.25 | ||||||||||||
| Tangible book value per common share | $ | 60.00 | $ | 57.99 | $ | 48.99 | ||||||||||||