GAHANNA, Ohio, Oct. 17, 2017 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQB:HLAN), today reported third quarter net income increased 23.5% to $2.8 million, or $1.68 per diluted share, compared to $2.2 million, or $1.37 per diluted share, in the preceding quarter and grew 35.1% from $2.0 million, or $1.26 per diluted share, in the third quarter a year ago. In the first nine months of 2017, net income increased 17.0% to $6.8 million, or $4.18 per diluted share, compared to $5.8 million, or $3.64 per diluted share, in the first nine months of 2016.
The company also announced its board of directors declared a regular quarterly cash dividend of $0.4301 per share. The dividend will be payable January 10, 2018, to shareholders of record as of December 25, 2017, providing a 2.30% current yield at recent market prices.
“We reported strong third quarter operating results, delivering steady loan growth and solid revenue with an above average net interest margin. This growth demonstrates the continued success of our business model; to provide value and stability to our clients,” stated G. Scott McComb, Chairman, President and CEO. “Knowing that your local community bank was built to last, not sell, adds a degree of certainty for clients and their desire for focused local management decisions. Additionally, we continue to expand our branch network with a recently opened branch in Clintonville and additional branches in Whitehall and Upper Arlington scheduled to open in 2018.”
Third Quarter Financial Highlights (at or for the period ended September 30, 2017)
- Net income was $2.8 million, or $1.68 per diluted share, in 3Q17.
- Net interest margin improved to 4.05% compared to 3.97% in the preceding quarter and 3.86% in the third quarter a year ago.
- Annualized return on average assets was 1.26% for the third quarter of 2017.
- Annualized return on average equity was 14.28%.
- Total assets increased 11.9% to $885.1 million, compared to $790.6 million a year earlier.
- Total deposits increased 14.5% to $765.0 million from a year ago.
- Net loans increased 13.3% to $681.4 million from a year ago.
- Tangible book value per share increased 6.0% to $47.91 per share compared to $45.21 per share one year earlier.
- Declared quarterly cash dividend of $0.4301 per share, which represents a 2.28% yield based on the September 30, 2017, stock price ($75.50).
Balance Sheet Review
“Loan growth was robust during the quarter, particularly in the agricultural, commercial and industrial (C&I), and residential mortgage sectors,” said McComb. Net loans increased 13.3% to $681.4 million at September 30, 2017, compared to $601.4 million at September 30, 2016 and increased 2.7% compared to $663.4 million at June 30, 2017.
Total deposits increased 14.5% to $765.0 million at September 30, 2017, compared to $667.9 million a year earlier and increased 6.7% compared to $716.8 million three months earlier. Demand deposit accounts represented 23.8%; savings, NOW and money market accounts represented 37.6%; and CDs comprised 38.6% of the total deposit portfolio, at September 30, 2017.
Heartland’s total assets increased 11.9% to $885.1 million at September 30, 2017, compared to $790.6 million a year earlier and shareholders’ equity increased 7.9% to $77.5 million at September 30, 2017, compared to $71.9 million one year ago. At quarter end, Heartland’s tangible book value increased 6.0% to $47.91 per share compared to $45.21 per share one year earlier.
Operating Results
Heartland’s net interest income before the provision for loan loss increased 15.0% to $8.1 million in the third quarter of 2017, compared to $7.0 million in the third quarter a year ago, and increased 6.8% compared to $7.5 million in the preceding quarter. In the first nine months of the year, net interest income before the provision for loan loss increased 10.8% to $22.7 million, compared to $20.5 million in the first nine months of 2016.
Heartland’s total revenues (net interest income before the provision for loan losses, plus non-interest income) increased 19.0% to $9.4 million in the third quarter, compared to $7.9 million in the third quarter a year ago, and increased 7.7% compared to $8.7 million in the preceding quarter. Year-to-date, total revenues increased 13.1% to $26.2 million, compared to $23.2 million in the first nine months of 2016.
Net interest margin improved to 4.05% in the third quarter of 2017, compared to 3.97% in the preceding quarter and 3.86% in the third quarter a year ago. “The eight basis point increase in the net interest margin during the current quarter was primarily due to increased amortization of net loan origination fees. Commercial bankers at Heartland create value for their clients, and they are now better managed and more disciplined in being rewarded for that value. Growth in the construction portfolio along with the addition of SWAP products have enhanced this income category as well,” said McComb. In the first nine months of 2017, the net interest margin was 3.99% compared to 3.93% in the first nine months a year ago.
Noninterest income improved 49.5% to $1.4 million in the third quarter, compared to $914,000 in the third quarter a year ago, and increased 13.3% compared to $1.2 in the preceding quarter. In the first nine months of 2017, noninterest income increased 30.7% to $3.5 million, compared to $2.7 million in the first nine months of 2016.
Heartland’s third quarter noninterest expenses were $5.4 million, the same as in the preceding quarter. Noninterest expense was $5.0 million in the third quarter a year ago. The efficiency ratio for the third quarter of 2017 was 57.35%, compared to 61.43% for the preceding quarter and 62.53% in the third quarter of 2016.
Credit Quality
Nonaccrual loans decreased 25.8% to $3.2 million at September 30, 2017, compared to $4.3 million a year earlier and increased slightly compared to $3.1 million three months earlier. There were $753,000 in loans past due 90 days and still accruing at September 30, 2017, compared to $22,000 at the end of the preceding quarter and $461,000 a year ago. There were $662,000 in restructured loans included in nonaccrual loans at September 30, 2017, as compared to $735,000 three months earlier.
Performing restructured loans that were not included in nonaccrual loans at the end of the third quarter of 2017 were $1.8 million, compared to $1.9 million 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, 2017, compared to $400,000 a year ago.
Nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, were $4.0 million, or 0.45% of assets, at September 30, 2017, compared to $3.2 million, or 0.39% of assets, three months earlier, and decreased 23.6% compared to $5.2 million, or 0.66% of assets, a year ago.
Heartland’s third quarter provision for loan losses was $255,000, the same as in the preceding quarter. This compares to $135,000 in the third quarter a year ago. As of September 30, 2017, the allowance for loan losses represented 199.3% of nonaccrual loans compared to 198.5% three months earlier, and 135.8% one year earlier.
The allowance for loan losses was $6.4 million, or 1.00% of total loans at September 30, 2017, compared to $6.2 million, or 0.97% of total loans at June 30, 2017, and $5.9 million, or 1.03% of total loans a year ago. Net charge-offs were $107,000 in the third quarter, compared to $20,000 in the preceding quarter and $251,000 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 fourteen 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 2017, Heartland was ranked #57 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 12/31/16.
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.
The Cereghino Group
IR CONTACT: 206-388-5785
| Heartland BancCorp | |||||||||
| Consolidated Balance Sheets | |||||||||
| Assets | Sept 30, 2017 | June 30, 2017 | Sept 30, 2016 | ||||||
| Cash and cash equivalents | 30,513,677 | 26,859,082 | 40,463,763 | ||||||
| Available-for-sale securities | 123,636,370 | 108,841,483 | 110,158,614 | ||||||
| Held-to-maturity securities, fair value $5,170,466 and $6,289,982 at September 30, 2017 and 2016, respectively and $5,608,318 at June 30, 2017 | 5,070,790 | 5,464,807 | 5,972,843 | ||||||
| Loans, net of allowance for loan losses of $6,386,109 and $5,867,741 at September 30, 2017 and 2016, respectively and $6,237,997 at June 30, 2017 | 681,372,890 | 663,437,938 | 601,400,849 | ||||||
| Premises and equipment | 21,523,740 | 18,078,901 | 13,921,042 | ||||||
| Nonmarketable equity securities | 2,830,339 | 2,830,339 | 2,825,439 | ||||||
| Interest receivable | 3,133,047 | 2,365,999 | 2,614,368 | ||||||
| Goodwill | 417,353 | 417,353 | 417,353 | ||||||
| Deferred income taxes | 2,374,481 | 2,374,481 | 1,765,794 | ||||||
| Life insurance assets | 12,793,724 | 12,909,209 | 9,446,365 | ||||||
| Other | 1,436,086 | 1,476,628 | 1,639,342 | ||||||
| Total assets | $ | 885,102,497 | $ | 845,056,220 | $ | 790,625,772 | |||
| Liabilities and Shareholders' Equity | |||||||||
| Liabilities | |||||||||
| Deposits | |||||||||
| Demand | $ | 182,342,329 | $ | 162,886,976 | $ | 150,913,820 | |||
| Saving, NOW and money market | 287,458,122 | 257,703,537 | 241,181,130 | ||||||
| Time | 295,224,771 | 296,232,569 | 275,809,945 | ||||||
| Total deposits | 765,025,222 | 716,823,082 | 667,904,895 | ||||||
| Short-term borrowings | 20,893,943 | 16,495,538 | 27,465,075 | ||||||
| Long-term debt | 15,460,000 | 30,960,000 | 15,460,000 | ||||||
| Interest payable and other liabilities | 6,195,572 | 5,426,589 | 7,931,744 | ||||||
| Total liabilities | 807,574,737 | 769,705,209 | 718,761,714 | ||||||
| Shareholders' Equity | |||||||||
| Common stock, without par value; authorized 5,000,000 shares; issued 2017 - 1,609,528 shares 2016 - 1,580,228 shares and June 2017 - 1,589,028 shares | 25,001,103 | 24,090,857 | 24,428,011 | ||||||
| Stock issued with notes receivable | (727,478 | ) | - | - | |||||
| Retained earnings | 53,097,717 | 50,978,591 | 46,002,554 | ||||||
| Accumulated other comprehensive income (expense) | 156,418 | 281,563 | 1,433,493 | ||||||
| Total shareholders' equity | 77,527,760 | 75,351,011 | 71,864,058 | ||||||
| Total liabilities and shareholders' equity | $ | 885,102,497 | $ | 845,056,220 | $ | 790,625,772 | |||
| Book value per share | $ | 48.17 | $ | 47.42 | $ | 45.48 | |||
| Heartland BancCorp | ||||||||||||||
| Consolidated Statements of Income | ||||||||||||||
| Three Months Ended, | Nine Months Ended | |||||||||||||
| Interest Income | Sept 30, 2017 | June 30, 2017 | Sept 30, 2016 | Sept 30, 2017 | Sept 30, 2016 | |||||||||
| Loans | $ | 8,452,381 | $ | 7,900,422 | $ | 7,198,912 | $ | 23,724,071 | $ | 20,909,075 | ||||
| Securities | ||||||||||||||
| Taxable | 429,856 | 390,666 | 417,825 | 1,184,686 | 1,254,422 | |||||||||
| Tax-exempt | 404,840 | 397,889 | 404,060 | 1,196,159 | 1,237,644 | |||||||||
| Other | 70,291 | 48,700 | 43,559 | 167,156 | 114,387 | |||||||||
| Total interest income | 9,357,368 | 8,737,677 | 8,064,356 | 26,272,072 | 23,515,528 | |||||||||
| Interest Expense | ||||||||||||||
| Deposits | 1,188,053 | 1,069,704 | 952,850 | 3,220,721 | 2,753,615 | |||||||||
| Borrowings | 116,829 | 129,388 | 108,922 | 362,921 | 282,642 | |||||||||
| Total interest expense | 1,304,882 | 1,199,092 | 1,061,772 | 3,583,642 | 3,036,257 | |||||||||
| Net Interest Income | 8,052,486 | 7,538,585 | 7,002,584 | 22,688,430 | 20,479,271 | |||||||||
| Provision for Loan Losses | 255,000 | 255,000 | 135,000 | 840,000 | 510,000 | |||||||||
| Net Interest Income After Provision for Loan Losses | 7,797,486 | 7,283,585 | 6,867,584 | 21,848,430 | 19,969,271 | |||||||||
| Noninterest income | ||||||||||||||
| Service charges | 514,781 | 509,996 | 502,355 | 1,505,619 | 1,446,943 | |||||||||
| Net Gains and commissions on loan sales | 308,261 | 307,185 | 158,832 | 776,224 | 405,284 | |||||||||
| Net realized gains on available-for-sale securities | - | - | - | 6,128 | 197,711 | |||||||||
| Net realized gain/(loss) on sales of foreclosed assets | - | 139,497 | - | 139,497 | - | |||||||||
| Gain on redemption of life insurance proceeds | 301,278 | - | 301,278 | |||||||||||
| Increase in cash value of life insurance | 86,341 | 84,614 | 86,090 | 263,560 | 212,237 | |||||||||
| Other | 155,396 | 164,873 | 166,321 | 515,115 | 421,172 | |||||||||
| Total noninterest income | 1,366,057 | 1,206,165 | 913,598 | 3,507,421 | 2,683,347 | |||||||||
| Noninterest Expense | ||||||||||||||
| Salaries and employee benefits | 3,205,006 | 3,111,741 | 2,790,860 | 9,483,003 | 8,518,363 | |||||||||
| Net occupancy and equipment expense | 585,311 | 583,230 | 554,864 | 1,727,256 | 1,562,356 | |||||||||
| Data processing fees | 316,111 | 327,627 | 264,328 | 947,512 | 816,917 | |||||||||
| Professional fees | 163,914 | 159,584 | 246,129 | 448,378 | 487,717 | |||||||||
| Marketing expense | 141,000 | 271,000 | 149,349 | 553,000 | 448,047 | |||||||||
| Printing and office supplies | 56,761 | 49,022 | 57,885 | 170,777 | 154,042 | |||||||||
| State franchise taxes | 141,825 | 141,825 | 128,701 | 425,475 | 407,701 | |||||||||
| FDIC Insurance premiums | 98,500 | 80,500 | 100,000 | 258,500 | 296,000 | |||||||||
| Other | 693,455 | 647,681 | 658,006 | 1,948,823 | 1,849,837 | |||||||||
| Total noninterest expense | 5,401,883 | 5,372,210 | 4,950,122 | 15,962,724 | 14,540,980 | |||||||||
| Income before Income Tax | 3,761,660 | 3,117,540 | 2,831,060 | 9,393,127 | 8,111,638 | |||||||||
| Provision for Income Taxes | 1,009,859 | 888,953 | 793,593 | 2,576,177 | 2,285,331 | |||||||||
| Net Income | $ | 2,751,801 | $ | 2,228,587 | $ | 2,037,467 | $ | 6,816,950 | $ | 5,826,307 | ||||
| Basic Earnings Per Share | $ | 1.73 | $ | 1.40 | $ | 1.29 | $ | 4.29 | $ | 3.71 | ||||
| Diluted Earnings Per Share | $ | 1.68 | $ | 1.37 | $ | 1.26 | $ | 4.18 | $ | 3.64 | ||||
| ADDITIONAL FINANCIAL INFORMATION | ||||||||||||||||||
| (Dollars in thousands except per share amounts)(Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||
| Sept 30, 2017 | June 30, 2017 | Sept. 30, 2016 | Sept 30, 2017 | Sept. 30, 2016 | ||||||||||||||
| Performance Ratios: | ||||||||||||||||||
| Return on average assets | 1.26 | % | 1.07 | % | 1.06 | % | 1.09 | % | 1.02 | % | ||||||||
| Return on average equity | 14.28 | % | 12.08 | % | 11.61 | % | 12.28 | % | 11.24 | % | ||||||||
| Net interest margin | 4.05 | % | 3.97 | % | 3.86 | % | 3.99 | % | 3.93 | % | ||||||||
| Efficiency ratio | 57.35 | % | 61.43 | % | 62.53 | % | 60.95 | % | 63.32 | % | ||||||||
| Asset Quality Ratios and Data: | As of or for the Three Months Ended | |||||||||||||||||
| Sept 30, 2017 | June 30, 2017 | Sept. 30, 2016 | ||||||||||||||||
| Non accrual loans | $ | 3,205 | $ | 3,143 | $ | 4,321 | ||||||||||||
| Loans past due 90 days and still accruing | 753 | 22 | 461 | |||||||||||||||
| Non-performing investment securities | - | - | - | |||||||||||||||
| OREO and other non-performing assets | - | - | 400 | |||||||||||||||
| Total non-performing assets | $ | 3,958 | $ | 3,165 | $ | 5,182 | ||||||||||||
| Non-performing assets to total assets | 0.45 | % | 0.39 | % | 0.66 | % | ||||||||||||
| Net charge-offs quarter ending | $ | 107 | $ | 20 | $ | 251 | ||||||||||||
| Allowance for loan loss | $ | 6,386 | $ | 6,238 | $ | 5,868 | ||||||||||||
| Non accrual loans | $ | 3,205 | $ | 3,143 | $ | 4,321 | ||||||||||||
| Allowance for loan loss to non accrual loans | 199.25 | % | 198.47 | % | 135.80 | % | ||||||||||||
| Allowance for loan losses to loans outstanding | 1.00 | % | 0.97 | % | 1.03 | % | ||||||||||||
| Restructured loans included in non-accrual | $ | 662 | $ | 735 | $ | 815 | ||||||||||||
| Performing restructured loans (RC-C) | $ | 1,814 | $ | 1,902 | $ | 3,200 | ||||||||||||
| Book Values: | ||||||||||||||||||
| Total shareholders' equity | $ | 77,528 | $ | 75,351 | $ | 71,864 | ||||||||||||
| Less, goodwill | 417 | 417 | 417 | |||||||||||||||
| Shareholders' equity less goodwill | $ | 77,111 | $ | 74,934 | $ | 71,447 | ||||||||||||
| Common shares outstanding | 1,609,528 | 1,589,028 | 1,580,228 | |||||||||||||||
| Less treasury shares | - | - | - | |||||||||||||||
| Common shares as adjusted | 1,609,528 | 1,589,028 | 1,580,228 | |||||||||||||||
| Book value per common share | $ | 48.17 | $ | 47.42 | $ | 45.48 | ||||||||||||
| Tangible book value per common share | $ | 47.91 | $ | 47.16 | $ | 45.21 | ||||||||||||