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 | |||||||