JONESBORO, Ga., Jan. 20, 2022 (GLOBE NEWSWIRE) -- Heritage Southeast Bancorporation, Inc. (“Company”) (OTCQX: HSBI) today announced record 2021 earnings of $13.8 million, or $1.92 per share compared to $4.4 million, or $0.62 per share in fiscal 2020. For the year ended December 31, 2021, net income increased 211% from the prior year ended December 31, 2020 due primarily to lower loan loss provisions associated with the pandemic uncertainty and higher gains on SBA loan sales. For the fourth quarter ending December 31, 2021, the Company reported net income of $3.1 million or $0.43 per diluted share, compared to $3.5 million or $0.49 per diluted share for the prior quarter. Fourth quarter earnings included lower net interest income and higher operating expenses relative to the prior quarter.
Highlights of the Company’s results for the quarter ended December 31, 2021 and status of the VyStar Credit Union acquisition include the following:
- All regulatory applications have been submitted and remain pending. On October 29, 2021, HSBI, Heritage Southeast Bank and VyStar Credit Union mutually agreed to extend the time available to obtain regulatory approvals until February 28, 2022.
- Pre-tax core earnings increased to $6.3 million for the fourth quarter ended December 31, 2021 compared to $4.8 million for the third quarter September 30, 2021. Earnings for the fiscal year ended December 31, 2021 excluding transaction costs was $17.7 million, or $2.45 per share.
- Total loans, excluding PPP loans, increased $64.2 million in 2021 or 6.5%.
- Asset quality continued to improve as non-performing assets to total assets declined to 0.16% at December 31, 2021 from 0.79% a year ago. Allowance for loan losses increased to 1.46% of total loans, excluding PPP loans, from 1.42% the prior quarter. The increase in the allowance for loan losses in the current quarter was primarily due to net loan recoveries totaling $391,000.
“The results for fiscal year 2021 reflect an outstanding effort on behalf of the Heritage Southeast Bank team to continue to produce strong results in the face of the pandemic and added responsibilities of preparing for the acquisition by VyStar Credit Union. The team at HSB worked diligently to grow all aspects of our balance sheet, while at the same time completely cleaning the balance sheet of pre-pandemic problem assets,” said Leonard Moreland, Chief Executive Officer. “When we combined our three banks just over two years ago, we knew the path would be challenging, but we also knew the potential was worth it. Everyone on the team pulled together and were intentional on creating an exceptional customer experience while leveraging our talents to grow earnings. I couldn’t be prouder of the commitment each team member has provided to Heritage Southeast Bank.” Moreland added, “as we transition HSB into VyStar, the momentum we have in Georgia will provide VyStar with a great start to developing their vision.”
Net Interest Income
The Company’s net interest income decreased to $12.6 million during the fourth quarter of 2021 from $13.2 million in the third quarter. The Company’s reported net interest margin decreased 14 basis points to 3.31% for the fourth quarter of 2021 from 3.45% for the preceding quarter. Net interest income and margin was negatively impacted by lower revenue on the PPP portfolio. At December 31, 2021, the Company holds less than 100 PPP loans totaling $11.2 million, down approximately $12.5 million from the previous quarter. Related interest and fees totaled $428,000 in the period compared to $1.0 million during the third quarter. The earning asset yield decreased 18 basis points to 3.60% during the fourth quarter of 2021 while the cost of funds decreased 4 basis points to 0.29% over the same time frame. The net interest margin excluding PPP loans decreased to 3.23% for the fourth quarter from 3.28% one quarter earlier.
Loan Loss Provisions
The Company did not recognize any loan loss provisions for the fourth quarter. Management believes the improved economic and pandemic climate has provided better clarity on the ability for borrowers to meet their loan obligations. Additionally, asset quality continued to improve. As such, the current level of reserves is believed to be sufficient as of December 31, 2021.
Non-interest Income
Fourth quarter non-interest income increased to $5.4 million from $4.5 million for the third quarter of 2021. Gains on the sale of SBA loans increased to $1.5 million during the quarter from $652,000 the previous quarter. Meanwhile, service charges and fees as well as interchange and ATM fees remained similar to the prior quarter.
Non-interest Expense
Non-interest expense increased to $14.2 million for the fourth quarter of 2021 from $12.9 million the prior quarter. The fourth quarter included approximately $2.5 million in costs associated with the proposed transaction with VyStar Credit Union.
Balance Sheet
Total assets increased slightly to $1.65 billion at December 31, 2021, relative to $1.64 billion at the previous quarter end. Liquidity levels remained elevated as cash and cash equivalents increased to $291.2 million, from $287.5 million three months earlier. Securities available for sale increased by $25.5 million to $197.3 million at December 31, 2021 from $171.8 million three months earlier. Loans, excluding PPP loans, remained at $1.04 billion at December 31, 2021. Meanwhile, PPP loans decreased to $10.9 million at December 31, 2021 from $23.1 million three months earlier.
Total deposits increased slightly to $1.43 billion at December 31, 2021 from $1.41 billion three months earlier. Non-interest bearing deposits remain the largest component of the deposit portfolio representing 34.0% of total deposits followed by money market and savings deposits at 30.8%, interest-bearing demand deposits at 19.3% and time deposits at 15.9%.
Asset Quality
Classified assets, which include nonperforming assets and accruing classified loans, totaled $3.3 million at December 31, 2021, compared with $4.1 million at September 30, 2021. The decrease during the fourth quarter reflected a decrease of $408,000 in non-performing loans and $271,000 in other real estate owned. Nonperforming assets, which exclude accruing classified loans, totaled $2.6 million at December 31, 2021, or 0.16% of total assets compared to $3.3 million, or 0.20% during the prior quarter.
The allowance for loan losses increased slightly to $15.2 million, or 1.44% of total loans at December 31, 2021 despite the addition of zero loan loss provisions from $14.8 million, or 1.39% of total loans at September 30, 2021. The increase primarily related to net loan recoveries totaling $391,000 during the most recent quarter. Excluding PPP loans, which are supported by guarantees from the SBA, the allowance for loans losses were 1.46% of total loans at December 31, 2021.
Capital
Total shareholder equity increased to $154.0 million at December 31, 2021 from $152.3 million one quarter earlier. Shareholder equity relative to total assets was 9.31% and tangible shareholder equity relative to tangible assets was 7.31% at December 31, 2021. Tangible book value per share was $16.40 at December 31, 2021, an increase of 11.5% from December 31, 2020. At December 31, 2021, the Bank’s Leverage Ratio was 9.81%, its Common Equity Tier I and Tier 1 Capital ratios were 12.67%, and its Total Risk-Based Capital ratio was 13.90%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.
About Heritage Southeast Bancorporation, Inc.
Heritage Southeast Bancorporation, Inc. serves as the holding company for Heritage Southeast Bank, which is headquartered in Jonesboro, GA and operates under the names “Heritage Bank,” “The Heritage Bank,” and “Providence Bank” in its various markets. With approximately $1.7 billion in assets, the Bank provides a well-rounded offering of commercial and consumer products through its 23 locations. For additional information, visit the HSBI website at www.myhsbi.com.
Forward Looking Statements:
This press release contains forward-looking statements. These forward-looking statements include, but are not limited to, statements about the benefits of the proposed acquisition of HSBI by VyStar, statements related to the expected timing of the completion of the acquisition, the combined company's plans, objectives, expectations and intentions, and other statements that are not historical facts. Forward-looking statements may be identified by terminology such as "may," "will," "should," "scheduled," "plans," "intends," "anticipates," "expects," "believes," estimates," "potential," or "continue" or negatives of such terms or other comparable terminology. All forward-looking statements in this press release, or in any other written or oral communication that relates to the proposed acquisition or to matters that may affect such proposed acquisition are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of HSBI or VyStar to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, among others, (1) disruption from the proposed acquisition with customers, suppliers, employees or other business partners, (2) the occurrence of any event, change or other circumstances that could give rise to the termination of the agreement, (3) the ability by the parties to obtain required governmental approvals of the acquisition (4) the failure of the closing conditions in the agreement to be satisfied, or any unexpected delay in closing the acquisition, and (5) general competitive, economic, political and market conditions.
HSBI disclaims any obligation to update or revise any forward-looking statements contained in this communication (which statements speak only as of the date hereof), or in any other written or oral communication that relates to the proposed combination or to matters that may affect such proposed combination, whether as a result of new information, future events or otherwise.
Heritage Southeast Bancorporation, Inc. and its subsidiary disclaim any obligation to update or revise any forward-looking statements contained in this press release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.
| CONTACT | |
| Leonard A. Moreland | Philip F. Resch |
| Chief Executive Officer | Chief Financial Officer |
| Heritage Southeast Bancorporation, Inc. | |
| 101 North Main Street | |
| P.O. Box 935 | |
| Jonesboro, GA 30236 | |
| (770) 824-9934 |
| HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY | |||||||||||||||
| Financial Highlights | |||||||||||||||
| (Unaudited) (in thousands, except per share data) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||||
| Earnings: | |||||||||||||||
| Net Interest Income | $ | 12,633 | $ | 13,152 | $ | 12,727 | $ | 12,769 | $ | 12,530 | |||||
| Net Income | 3,108 | 3,503 | 2,869 | 4,333 | 977 | ||||||||||
| Net Income excluding transaction costs | 4,809 | 4,368 | 4,146 | 4,333 | 977 | ||||||||||
| Per Share Data: | |||||||||||||||
| Earnings per share: | |||||||||||||||
| Basic | $ | 0.45 | $ | 0.50 | $ | 0.41 | $ | 0.62 | $ | 0.14 | |||||
| Diluted | $ | 0.43 | $ | 0.49 | $ | 0.40 | $ | 0.60 | $ | 0.14 | |||||
| Diluted excluding transaction costs | $ | 0.67 | $ | 0.60 | $ | 0.57 | $ | 0.60 | $ | 0.14 | |||||
| Weighted average number of shares: | |||||||||||||||
| Basic | 6,979 | 6,976 | 6,967 | 6,956 | 6,924 | ||||||||||
| Diluted | 7,218 | 7,222 | 7,212 | 7,179 | 7,139 | ||||||||||
| Period-end number of shares (1) | 7,220 | 7,220 | 7,220 | 7,222 | 7,227 | ||||||||||
| Book value per share (period-end) | $ | 21.32 | $ | 21.09 | $ | 20.65 | $ | 20.18 | $ | 19.76 | |||||
| Tangible book value per share (period-end) | $ | 16.40 | $ | 16.13 | $ | 15.65 | $ | 15.16 | $ | 14.71 | |||||
| Key Ratios (percent): | |||||||||||||||
| Return on average assets | 0.75 | % | 0.84 | % | 0.69 | % | 1.10 | % | 0.25 | % | |||||
| Return on average assets excluding transaction costs | 1.16 | % | 1.05 | % | 1.00 | % | 1.10 | % | 0.25 | % | |||||
| Return on average tangible equity | 10.61 | % | 12.15 | % | 10.34 | % | 16.28 | % | 3.66 | % | |||||
| Return on average tangible equity excluding transaction costs | 16.41 | % | 15.15 | % | 14.95 | % | 16.28 | % | 3.66 | % | |||||
| Yield on interest earning assets | 3.60 | % | 3.78 | % | 3.72 | % | 4.00 | % | 4.05 | % | |||||
| Cost of funds | 0.29 | % | 0.33 | % | 0.36 | % | 0.42 | % | 0.52 | % | |||||
| Net interest margin | 3.31 | % | 3.45 | % | 3.36 | % | 3.58 | % | 3.53 | % | |||||
| Net interest margin, excluding PPP loans | 3.23 | % | 3.28 | % | 3.26 | % | 3.48 | % | 3.50 | % | |||||
| Non-interest income as a percent of total revenue | 29.9 | % | 25.4 | % | 26.6 | % | 26.0 | % | 26.7 | % | |||||
| Efficiency ratio | 77.4 | % | 72.0 | % | 76.5 | % | 67.2 | % | 83.1 | % | |||||
| Efficiency ratio excluding transaction costs | 63.7 | % | 65.9 | % | 67.2 | % | 67.2 | % | 83.1 | % | |||||
| Tangible common equity to tangible assets | 7.31 | % | 7.26 | % | 6.99 | % | 6.81 | % | 6.93 | % | |||||
| Asset Quality (period-end): | |||||||||||||||
| Allowance for loan losses to total loans | 1.44 | % | 1.39 | % | 1.43 | % | 1.41 | % | 1.32 | % | |||||
| Allowance for loan losses to loans, excluding PPP loans | 1.46 | % | 1.42 | % | 1.52 | % | 1.53 | % | 1.44 | % | |||||
| Allowance for loan losses to total nonperforming loans | 877.7 | % | 692.3 | % | 1113.0 | % | 731.0 | % | 143.1 | % | |||||
| Nonperforming assets to total assets | 0.16 | % | 0.20 | % | 0.18 | % | 0.24 | % | 0.79 | % | |||||
| Net charge-offs (annualized) to average loans | -0.15 | % | 0.12 | % | 0.04 | % | -0.43 | % | 0.19 | % | |||||
| Net charge-offs (annualized) to average loans, excluding PPP loans | -0.15 | % | 0.13 | % | 0.04 | % | -0.46 | % | 0.21 | % | |||||
| Capital (period-end): | |||||||||||||||
| Heritage Southeast Bank (HSB) risk based capital ratios: | |||||||||||||||
| CET1 | 12.67 | % | 12.29 | % | 12.32 | % | 12.02 | % | 11.95 | % | |||||
| Tier 1 | 12.67 | % | 12.29 | % | 12.32 | % | 12.02 | % | 11.95 | % | |||||
| Total | 13.90 | % | 13.50 | % | 13.57 | % | 13.27 | % | 13.19 | % | |||||
| Leverage | 9.81 | % | 9.40 | % | 9.01 | % | 9.10 | % | 8.98 | % | |||||
| Other (period-end): | |||||||||||||||
| Branches | 23 | 23 | 22 | 22 | 22 | ||||||||||
| FTE | 280 | 278 | 276 | 278 | 288 | ||||||||||
| (1) Includes restricted stock and shares yet to be issued under a supplemental executive retirement plan. | |||||||||||||||
| HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY | |||||||||||
| Consolidated Statements of Income | |||||||||||
| (Unaudited) (in thousands, except per share data) | |||||||||||
| Three Months Ended | |||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | |||||||
| Interest and dividend revenue: | |||||||||||
| Loans, including fees | $ | 12,666 | $ | 12,705 | $ | 12,592 | $ | 12,625 | $ | 12,938 | |
| PPP loans, including fees | 428 | 1,014 | 1,024 | 1,071 | 984 | ||||||
| Investment securities | 518 | 564 | 376 | 516 | 393 | ||||||
| Fed funds sold, deposits in banks and other | 113 | 107 | 79 | 55 | 61 | ||||||
| Total interest and dividend revenue | 13,725 | 14,390 | 14,071 | 14,267 | 14,376 | ||||||
| Interest expense: | |||||||||||
| Deposits | 703 | 760 | 843 | 986 | 1,256 | ||||||
| Fed funds purchased and repurchase agreements | 8 | 8 | 6 | 10 | 15 | ||||||
| Line of credit | 253 | 192 | 124 | 110 | 181 | ||||||
| Subordinated notes | 47 | 198 | 290 | 310 | 310 | ||||||
| Junior subordinated debentures | 81 | 80 | 81 | 82 | 84 | ||||||
| Total interest expense | 1,092 | 1,238 | 1,344 | 1,498 | 1,846 | ||||||
| Net interest income | 12,633 | 13,152 | 12,727 | 12,769 | 12,530 | ||||||
| Provision for loan losses | - | - | - | - | 1,700 | ||||||
| Net interest revenue after provision for loan losses | 12,633 | 13,152 | 12,727 | 12,769 | 10,830 | ||||||
| Noninterest revenue: | |||||||||||
| Service charges and fees | 1,608 | 1,571 | 1,291 | 1,285 | 1,574 | ||||||
| Interchange and ATM fees | 1,506 | 1,517 | 1,665 | 1,536 | 1,480 | ||||||
| Gain on sale of SBA loans | 1,521 | 652 | 738 | 906 | 924 | ||||||
| Other | 759 | 741 | 913 | 765 | 579 | ||||||
| Total noninterest revenue | 5,394 | 4,481 | 4,607 | 4,492 | 4,557 | ||||||
| Operating expenses: | |||||||||||
| Salaries and employee benefits | 6,692 | 6,760 | 6,551 | 6,528 | 8,309 | ||||||
| Occupancy and equipment | 1,394 | 1,434 | 1,443 | 1,402 | 1,404 | ||||||
| Other real estate expenses, including losses | |||||||||||
| on sales and impairments, net | 93 | 27 | 165 | 7 | 391 | ||||||
| Transaction costs | 2,480 | 1,069 | 1,612 | - | - | ||||||
| Other | 3,538 | 3,634 | 3,720 | 3,904 | 4,335 | ||||||
| Total other operating expenses | 14,197 | 12,924 | 13,491 | 11,841 | 14,439 | ||||||
| Income before income tax expense | 3,830 | 4,709 | 3,843 | 5,420 | 948 | ||||||
| Income tax expense | 722 | 1,206 | 974 | 1,087 | (29 | ) | |||||
| Net income | $ | 3,108 | $ | 3,503 | $ | 2,869 | $ | 4,333 | $ | 977 | |
| Weighted-average number of shares outstanding: | |||||||||||
| Basic | 6,979 | 6,976 | 6,967 | 6,956 | 6,924 | ||||||
| Diluted | 7,218 | 7,222 | 7,212 | 7,179 | 7,139 | ||||||
| Earnings per share: | |||||||||||
| Basic | $ | 0.45 | $ | 0.50 | $ | 0.41 | $ | 0.62 | $ | 0.14 | |
| Diluted | $ | 0.43 | $ | 0.49 | $ | 0.40 | $ | 0.60 | $ | 0.14 | |
| HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY | ||||
| Consolidated Statements of Income | ||||
| (in thousands, except per share data) | ||||
| Years Ended | ||||
| (Unaudited) | ||||
| December 31, | December 31, | |||
| 2021 | 2020 | |||
| Interest and dividend revenue: | ||||
| Loans, including fees | $ | 50,263 | $ | 52,056 |
| PPP loans, including fees | 3,862 | 2,173 | ||
| Investment securities | 1,975 | 1,831 | ||
| Fed funds sold, deposits in banks and other | 354 | 524 | ||
| Total interest and dividend revenue | 56,454 | 56,584 | ||
| Interest expense: | ||||
| Deposits | 3,292 | 6,408 | ||
| Fed funds purchased and repurchase agreements | 33 | 106 | ||
| Federal Home Loan Bank advances | - | 38 | ||
| Line of credit | 678 | 612 | ||
| Subordinated debt | 844 | 623 | ||
| Junior subordinated debentures | 325 | 384 | ||
| Total interest expense | 5,172 | 8,171 | ||
| Net interest income | 51,282 | 48,413 | ||
| Provision for loan losses | - | 9,350 | ||
| Net interest revenue after provision for loan losses | 51,282 | 39,063 | ||
| Noninterest revenue: | ||||
| Service charges and fees | 5,755 | 5,923 | ||
| Interchange and ATM fees | 6,225 | 5,689 | ||
| Securities gains, net | - | 1,313 | ||
| Gain on sale of SBA loans | 3,817 | 1,811 | ||
| Other | 3,176 | 2,602 | ||
| Total noninterest revenue | 18,973 | 17,338 | ||
| Operating expenses: | ||||
| Salaries and employee benefits | 26,531 | 27,519 | ||
| Occupancy and equipment | 5,674 | 5,555 | ||
| Other real estate expenses, including losses | ||||
| on sales and impairments, net | 292 | 1,196 | ||
| Transaction costs | 5,160 | - | ||
| Other | 14,795 | 16,639 | ||
| Total other operating expenses | 52,452 | 50,909 | ||
| Income before income tax expense | 17,803 | 5,492 | ||
| Income tax expense | 3,989 | 1,050 | ||
| Net income | $ | 13,814 | $ | 4,442 |
| Weighted-average number of shares outstanding: | ||||
| Basic | 6,971 | 6,911 | ||
| Diluted | 7,210 | 7,126 | ||
| Earnings per share: | ||||
| Basic | $ | 1.98 | $ | 0.64 |
| Diluted | $ | 1.92 | $ | 0.62 |
| HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||||||||||
| Consolidated Balance Sheets | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||||
| Assets | ||||||||||||||||
| Cash and due from banks | $ | 29,689 | $ | 28,201 | $ | 27,722 | $ | 23,851 | $ | 29,092 | ||||||
| Interest-bearing deposits with banks | 261,513 | 259,342 | 278,360 | 246,824 | 189,533 | |||||||||||
| Cash and cash equivalents | 291,202 | 287,543 | 306,082 | 270,675 | 218,625 | |||||||||||
| Securities available for sale, at fair value | 197,309 | 171,804 | 173,606 | 174,785 | 169,329 | |||||||||||
| Other investments | 786 | 786 | 786 | 786 | 1,203 | |||||||||||
| Loans: | ||||||||||||||||
| Loans, excluding PPP loans | 1,044,413 | 1,044,938 | 999,127 | 994,251 | 980,257 | |||||||||||
| PPP loans | 10,912 | 23,051 | 59,233 | 88,201 | 87,775 | |||||||||||
| Allowance for loan losses | (15,228 | ) | (14,837 | ) | (15,159 | ) | (15,256 | ) | (14,117 | ) | ||||||
| Loans, net | 1,040,097 | 1,053,152 | 1,043,201 | 1,067,196 | 1,053,915 | |||||||||||
| Premises and equipment, net | 35,136 | 35,770 | 36,114 | 37,220 | 37,165 | |||||||||||
| Bank owned life insurance | 34,634 | 34,404 | 34,174 | 33,925 | 28,734 | |||||||||||
| Other real estate owned | 857 | 1,128 | 1,533 | 1,839 | 2,593 | |||||||||||
| Goodwill | 28,275 | 28,275 | 28,275 | 28,275 | 28,275 | |||||||||||
| Core deposit intangible, net | 7,283 | 7,521 | 7,758 | 7,995 | 8,232 | |||||||||||
| Deferred tax asset, net | 12,093 | 12,261 | 13,313 | 14,362 | 14,900 | |||||||||||
| Other assets | 6,893 | 7,366 | 7,423 | 8,140 | 8,219 | |||||||||||
| Total Assets | $ | 1,654,565 | $ | 1,640,010 | $ | 1,652,265 | $ | 1,645,198 | $ | 1,571,190 | ||||||
| Liabilities | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Noninterest-bearing | $ | 485,754 | $ | 490,341 | $ | 488,877 | $ | 479,653 | $ | 415,476 | ||||||
| Interest-bearing demand | 275,115 | 259,811 | 270,380 | 269,517 | 283,009 | |||||||||||
| Money market and savings | 439,965 | 427,272 | 425,371 | 422,904 | 385,246 | |||||||||||
| Time | 226,604 | 237,292 | 250,839 | 261,710 | 278,825 | |||||||||||
| Total deposits | 1,427,438 | 1,414,716 | 1,435,467 | 1,433,784 | 1,362,556 | |||||||||||
| Securities sold under agreements to repurchase | 23,988 | 23,424 | 15,241 | 13,413 | 13,187 | |||||||||||
| Line of credit | 34,188 | 23,688 | 22,688 | 14,688 | 14,688 | |||||||||||
| Subordinated notes | - | 8,674 | 13,165 | 19,656 | 19,646 | |||||||||||
| Junior subordinated debentures | 9,403 | 9,365 | 9,327 | 9,288 | 9,250 | |||||||||||
| Accrued expenses and other liabilities | 5,588 | 7,862 | 7,312 | 8,598 | 9,030 | |||||||||||
| Total liabilities | 1,500,605 | 1,487,729 | 1,503,200 | 1,499,427 | 1,428,357 | |||||||||||
| Shareholders' Equity | ||||||||||||||||
| Common stock | 703 | 702 | 702 | 702 | 702 | |||||||||||
| Additional paid in capital | 117,443 | 117,298 | 117,151 | 116,972 | 116,825 | |||||||||||
| Retained earnings | 37,798 | 34,689 | 31,186 | 28,316 | 23,983 | |||||||||||
| Other comprehensive income (loss) | (1,984 | ) | (408 | ) | 26 | (219 | ) | 1,323 | ||||||||
| Total Shareholders' Equity | 153,960 | 152,281 | 149,065 | 145,771 | 142,833 | |||||||||||
| Total Liabilities and Shareholders' Equity | $ | 1,654,565 | $ | 1,640,010 | $ | 1,652,265 | $ | 1,645,198 | $ | 1,571,190 | ||||||
| HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY | |||||||||||||||
| GAAP to Non-GAAP Reconciliation | |||||||||||||||
| (Unaudited) (in thousands) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||||
| Income before income tax expense (GAAP) | $ | 3,830 | $ | 4,709 | $ | 3,843 | $ | 5,420 | $ | 948 | |||||
| Provision for loan losses | - | - | - | - | 1,700 | ||||||||||
| Other real estate expenses, including losses on sales and impairments, net | 93 | 27 | 165 | 7 | 391 | ||||||||||
| Loss on sub-lease | - | - | - | - | 800 | ||||||||||
| Employee restructuring costs | 311 | - | - | - | 1,310 | ||||||||||
| Transaction costs | 2,480 | 1,069 | 1,612 | - | - | ||||||||||
| PPP impact | (428 | ) | (1,014 | ) | (1,024 | ) | (1,396 | ) | (984 | ) | |||||
| Pre-tax core earnings | $ | 6,286 | $ | 4,791 | $ | 4,596 | $ | 4,031 | $ | 4,165 | |||||
| HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY | |||||||||||||||
| Loan Portfolio | |||||||||||||||
| (Unaudited) (in thousands) | |||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||||
| Real estate loans: | |||||||||||||||
| Construction and land development | $ | 159,630 | $ | 154,487 | $ | 144,263 | $ | 152,889 | $ | 142,513 | |||||
| Single-family residential | 158,667 | 163,412 | 162,996 | 165,362 | 171,153 | ||||||||||
| Commercial - owner occupied | 265,900 | 275,220 | 260,186 | 266,258 | 259,592 | ||||||||||
| Commercial - other | 239,994 | 228,229 | 214,995 | 198,965 | 192,808 | ||||||||||
| Multifamily | 6,592 | 13,826 | 14,017 | 6,746 | 14,171 | ||||||||||
| Total real estate loans | 830,783 | 835,174 | 796,457 | 790,220 | 780,237 | ||||||||||
| Commercial loans (not secured by real estate) | 202,966 | 197,084 | 190,095 | 190,365 | 184,509 | ||||||||||
| Consumer loans (not secured by real estate) | 12,081 | 14,015 | 13,874 | 14,861 | 16,677 | ||||||||||
| Gross loans | 1,045,830 | 1,046,273 | 1,000,426 | 995,446 | 981,423 | ||||||||||
| Unearned income | (1,417 | ) | (1,335 | ) | (1,299 | ) | (1,195 | ) | (1,166 | ) | |||||
| Loans, net of unearned income | $ | 1,044,413 | $ | 1,044,938 | $ | 999,127 | $ | 994,251 | $ | 980,257 | |||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||||
| PPP loans: | |||||||||||||||
| Up to $50,000 | $ | 644 | $ | 2,344 | $ | 7,033 | $ | 11,718 | $ | 11,701 | |||||
| $50,001 - $150,000 | 804 | 3,936 | 15,438 | 24,231 | 23,448 | ||||||||||
| $150,001 - $2 million | 9,788 | 15,328 | 26,384 | 35,498 | 36,357 | ||||||||||
| Greater than $2 million | - | 2,155 | 11,963 | 17,953 | 17,953 | ||||||||||
| Total PPP loans (1) | 11,236 | 23,763 | 60,818 | 89,400 | 89,459 | ||||||||||
| Unearned income | (324 | ) | (712 | ) | (1,585 | ) | (1,199 | ) | (1,684 | ) | |||||
| PPP loans, net of unearned income | $ | 10,912 | $ | 23,051 | $ | 59,233 | $ | 88,201 | $ | 87,775 | |||||
| (1) December 31, 2021 includes $10.2 million and $1.0 million of loans originated in 2021 and 2020, respectively. | |||||||||||||||
| HERITAGE SOUTHEAST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||||||||||
| Asset Quality Information | ||||||||||||||||
| (Unaudited) (in thousands) | ||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||||
| Classified assets: | ||||||||||||||||
| Nonperforming loans | $ | 1,735 | $ | 2,143 | $ | 1,362 | $ | 2,087 | $ | 9,866 | ||||||
| Other real estate owned | 857 | 1,128 | 1,533 | 1,839 | 2,593 | |||||||||||
| Total nonperforming assets | 2,592 | 3,271 | 2,895 | 3,926 | 12,459 | |||||||||||
| Accruing classified loans | 676 | 804 | 811 | 835 | 888 | |||||||||||
| Total classified assets | $ | 3,268 | $ | 4,075 | $ | 3,706 | $ | 4,761 | $ | 13,347 | ||||||
| Classified assets to HSB Tier 1 capital plus ALL | 1.9 | % | 2.5 | % | 2.3 | % | 3.1 | % | 8.9 | % | ||||||
| Nonperforming assets to total assets | 0.16 | % | 0.20 | % | 0.18 | % | 0.24 | % | 0.79 | % | ||||||
| Allowance for loan losses: | ||||||||||||||||
| Balance at beginning of period | $ | 14,837 | $ | 15,159 | $ | 15,256 | $ | 14,117 | $ | 12,925 | ||||||
| Provision for loan losses | - | - | - | - | 1,700 | |||||||||||
| Charge-offs | (295 | ) | (403 | ) | (195 | ) | (198 | ) | (860 | ) | ||||||
| Recoveries | 686 | 81 | 98 | 1,337 | 352 | |||||||||||
| Balance at end of period | $ | 15,228 | $ | 14,837 | $ | 15,159 | $ | 15,256 | $ | 14,117 | ||||||
| Loans, excluding PPP loans | $ | 1,044,413 | $ | 1,044,938 | $ | 999,127 | $ | 994,251 | $ | 980,257 | ||||||
| PPP loans | 10,912 | 23,051 | 59,233 | 88,201 | 87,775 | |||||||||||
| Performing past due loans | 1,277 | 3,541 | 1,464 | 2,500 | 2,472 | |||||||||||
| Allowance as % of loans | 1.44 | % | 1.39 | % | 1.43 | % | 1.41 | % | 1.32 | % | ||||||
| Allowance as % of loans, excluding PPP loans | 1.46 | % | 1.42 | % | 1.52 | % | 1.53 | % | 1.44 | % | ||||||
| Allowance as a % of nonperforming loans | 877.7 | % | 692.3 | % | 1113.0 | % | 731.0 | % | 143.1 | % | ||||||
| Average loans, excluding PPP loans | 1,044,492 | 1,017,213 | 993,346 | 988,230 | 960,808 | |||||||||||
| Average PPP loans | 15,164 | 40,910 | 77,325 | 83,489 | 100,725 | |||||||||||
| Net charge-offs (annualized) to average loans | -0.15 | % | 0.12 | % | 0.04 | % | -0.43 | % | 0.19 | % | ||||||
| Net charge-offs (annualized) to average loans, excluding PPP loans | -0.15 | % | 0.13 | % | 0.04 | % | -0.46 | % | 0.21 | % | ||||||
