Press Release

Heartland BancCorp Earns a Record $3.6 million, in Third Quarter 2019, Declares Quarterly Cash Dividend of $0.52 per Share

Company Release - 10/15/2019 4:00 PM ET

WHITEHALL, Ohio, Oct. 15, 2019 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQX: HLAN), today reported record third quarter 2019 net income of $3.6 million, or $1.77 per diluted share.  This compares to $3.2 million, or $1.55 per diluted share, in the second quarter of 2019, and $3.1 million, or $1.83 per diluted share, in the third quarter of 2018.  In the first nine months of the year, net income increased 17.4% to $9.7 million, compared to $8.3 million in the first nine 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 January 10, 2020, to shareholders of record as of December 25, 2019. Heartland has paid regular cash dividends since 1993.

“We continued our upward momentum into the third quarter, producing record net income, double-digit loan and deposit growth, an annualized return on average assets of 1.28% and an annualized return on average equity of 11.56%,” stated G. Scott McComb, Chairman and Chief Executive Officer.  “We have achieved top line revenue growth, putting us as a top quartile performer amongst our Ohio bank peers, all while growing our franchise.  We have both the banking talent and infrastructure in place to continue to expand our banking strategy throughout Central Ohio.”

Third Quarter Financial Highlights (at or for the period ended September 30, 2019)

  • Net income increased 18.3% to $3.6 million, compared to $3.1 million in the third quarter a year ago.
  • Earnings per share were $1.77 in the third quarter compared to $1.83 a year ago.
  • Net interest margin was 3.91%, which was unchanged compared to the preceding quarter and a five-basis point increase compared to 3.86% in the third quarter a year ago.
  • Noninterest income increased 39.4% to $2.0 million, compared to the third quarter a year ago.
  • Annualized return on average assets was 1.28%.
  • Annualized return on average equity was 11.56%.
  • Total assets increased 11.2% to $1.14 billion, compared to $1.02 billion a year earlier.
  • Net loans increased 9.8% to $873.3 million from $795.3 million a year ago.
  • Noninterest bearing demand deposits increased 25.1% compared to a year ago.
  • Total deposits increased 11.4% to $975.4 million from $875.4 million a year ago.
  • Tangible book value per share increased 2.2% to $61.31 per share, compared to $60.00 three months earlier, and grew 25.2% from $48.97 per share one year earlier.
  • Declared quarterly cash dividend of $0.52 per share, which represents a 2.48% yield based on the September 30, 2019, stock price ($84.00).

Balance Sheet Review

“The year-over-year double digit growth in the loan portfolio is a result of the excellent work of our lending teams and the diversification across all loan segments. We continue to take a holistic approach to the structure and the rate of new loans, while at the same time remaining competitive,” said Brian T. Mauntel, President and Chief Operating Officer.

Net loans increased 9.8% to $873.3 million at September 30, 2019, compared to $795.3 million at September 30, 2018, and increased 1.5% compared to $860.2 million at June 30, 2019.  Owner occupied commercial real estate loans (CRE) increased 5.2% to $241.0 million at September 30, 2019, compared to a year ago and comprise 27.3% of the total loan portfolio.  Non-owner occupied CRE loans increased 15.4% to $272.8 million compared to a year ago and comprise 30.9% of the total loan portfolio.  1-4 family residential real estate loans were up 8.6% from year ago levels to $221.0 million and represent 25.1% of total loans.  Commercial loans were up 15.3% from year ago levels to $104.9 million, at September 30, 2019, and comprise 11.9% of the total loan portfolio.  Home equity loans increased 1.7% from year ago levels to $30.8 million and represent 3.5% of total loans.  Consumer loans decreased from year ago levels to $11.3 million and represent 1.3% of the total loan portfolio.

“We continue to focus on growing noninterest bearing demand deposits through new product offerings and shifting the deposit mix away from wholesale funding and higher cost CDs.  As a result, noninterest bearing demand deposits accounts increased 25.1% compared to a year ago,” said Mauntel.  Total deposits increased 11.4% to $975.4 million at September 30, 2019, compared to $875.4 million a year earlier and increased 5.3% compared to $925.9 million three months earlier.  Savings, NOW and money market accounts increased modestly compared to a year ago and represented 36.1% of total deposits and CDs increased 13.3% when compared to a year ago and comprised 36.9% of the total deposit portfolio, at September 30, 2019.

Total assets increased 11.2% to $1.14 billion at September 30, 2019, compared to $1.02 billion a year earlier. Shareholders’ equity increased 54.2% to $126.0 million at September 30, 2019, compared to $81.7 million a year earlier, reflecting the capital raise during the fourth quarter of 2018.  At September 30, 2019, Heartland’s tangible book value increased 25.2% to $61.31 per share compared to $48.97 per share one year earlier.

Operating Results

“Our net interest margin remained unchanged compared to the preceding quarter and increased five basis points compared to the third quarter a year ago.  As such, we remain well positioned in both rising and falling interest rate environments and expect to see minimal contraction with these two recent interest rate reductions,” said Carrie Almendinger, EVP and Chief Financial Officer.

Heartland’s net interest margin was 3.91% in the third quarter of 2019, the same as in the preceding quarter.  In the third quarter of 2018, the net interest margin was 3.86%.  In the first nine months of 2019, Heartland’s net interest margin improved 10 basis points to 3.94%, compared to 3.84% in the first nine months of 2018.

Net interest income before the provision for loan loss increased 12.2% to $10.4 million in the third quarter of 2019, compared to $9.2 million in the third quarter a year ago, and increased 4.7% compared to $9.9 million in the preceding quarter.  In the first nine months of 2019, net interest income before the provision for loan losses increased 15.1% to $30.1 million, compared to $26.2 million in the first nine months of 2018.

Heartland’s total revenues (net interest income before the provision for loan losses, plus noninterest income) increased 15.9% to $12.4 million in the third quarter, compared to $10.7 million in the third quarter a year ago, and increased 4.3% from $11.8 million in the preceding quarter.  Year-to-date, revenues increased 19.1% to $35.7 million, compared to $29.9 million in the same period one year earlier.

Noninterest income increased 39.4% to $2.0 million in the third quarter, compared to $1.4 million in the third quarter a year ago, and increased 2.8% compared to the preceding quarter.  The TransCounty Title Agency acquisition contributed $583,000 to noninterest income during the third quarter of 2019.  In the first nine months of 2019, noninterest income increased 47.0% to $5.6 million, compared to $3.8 million in the first nine months of 2018, with the TransCounty Title Agency acquisition contributing $1.6 million to noninterest income year-to-date.

Third quarter noninterest expenses were $7.6 million, which was unchanged from the preceding quarter. In the third quarter a year ago, noninterest expense totaled $6.5 million.  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 nine months of 2019, noninterest expenses totaled $22.6 million, compared to $18.7 million in the first nine months of 2018. The efficiency ratio for the third quarter of 2019 was 61.39%, compared to 63.92% for the preceding quarter and 61.28% for the third quarter of 2018.  

Credit Quality

Nonaccrual loans totaled $2.3 million at September 30, 2019, compared to $1.8 million three months earlier and $4.0 million at September 30, 2018.  There were $997,000 in loans past due 90 days and still accruing at September 30, 2019, compared to $253,000 at June 30, 2019, and $24,000 a year ago.

Performing restructured loans that were not included in nonaccrual loans at September 30, 2019, were $342,000, compared to $344,000 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 September 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 $3.3 million, or 0.29% of assets, at September 30, 2019, compared to $2.1 million, or 0.19% of total assets, three months earlier, and $4.0 million, or 0.39% of assets a year ago.

The third quarter provision for loan losses was $375,000, the same as in both the preceding quarter and the third quarter a year ago.  The allowance for loan losses was $8.5 million, or 0.97% of total loans at September 30, 2019, compared to $8.0 million, or 0.92% of total loans at June 30, 2019, and $7.3 million, or 0.91% of total loans a year ago.  As of September 30, 2019, the allowance for loan losses represented 376.3% of nonaccrual loans compared to 437.3% three months earlier, and 183.7% one year earlier.  Heartland recorded net loan recoveries of $166,000 in the third quarter of 2019.  This compares to net charge-offs of $81,000 in the preceding quarter and $2,000 in the third 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 (OTCQX) 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. In September of 2019, Heartland stock uplisted to the OTCQX® Best Market after previously trading on the OTCQB® Venture Market.

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  
   
           
 Sep. 30, 2019 Jun. 30, 2019 Sep. 30, 2018  
Assets             
Cash and cash equivalents$57,356  $26,482  $37,908   
Available-for-sale securities 140,156   147,592   128,886   
Held-to-maturity securities, fair values of, $906,529, $1,551,817 and $3,085,795 respectively 918   1,548   3,085   
           
Commercial 104,904   108,662   91,008   
CRE (Owner occupied) 241,038   226,906   229,173   
CRE (Non Owner occupied) 272,820   273,751   236,502   
1-4 Family 221,022   210,609   203,547   
Home Equity 30,779   36,449   30,266   
Consumer 11,307   11,717   11,893   
Net deferred loan costs, premiums and discounts 6   50   230   
Allowance for loan losses (8,534)  (7,994)  (7,271)  
Net Loans 873,342   860,150   795,348   
           
Premises and equipment 32,442   32,508   27,894   
Nonmarketable equity securities 4,431   4,431   3,527   
Interest receivable 5,266   4,579   4,215   
Goodwill 1,206   1,206   1,069   
Intangible Assets 964   409   442   
Deferred income taxes 1,433   1,433   805   
Life insurance assets 16,880   16,772   16,443   
Lease - Right of Use Asset 2,619   2,655   -   
Other 1,324   1,263   3,808   
Total assets$1,138,337  $1,101,028  $1,023,430   
           
Liabilities and Shareholders' Equity          
Liabilities          
Deposits          
Demand$263,604  $216,392  $210,639   
Saving, NOW and money market 351,821   338,178   347,126   
Time 359,949   371,337   317,613   
Total deposits 975,374   925,907   875,378   
Short-term borrowings 10,111   27,970   49,274   
Long-term debt 15,460   15,460   10,460   
Lease Liability 2,619   2,655   -   
Interest payable and other liabilities 8,787   6,410   6,610   
Total liabilities 1,012,351   978,402   941,722   
           
Shareholders' Equity          
Common stock, without par value; authorized 5,000,000 shares; 2,019,463, 2,016,913 and 1,637,522 shares issued, respectively 55,775   55,526   25,739   
Retained earnings 68,457   65,885   59,652   
Accumulated other comprehensive income (expense) 1,754   1,215   (3,683)  
Total shareholders' equity 125,986   122,626   81,708   
Total liabilities and shareholders' equity$1,138,337  $1,101,028  $1,023,430   
Book value per share$62.39  $60.80  $49.90   
           



Heartland BancCorp 
Consolidated Statements of Income 
                
 Three Months Ended Nine Months Ended 
 Sep. 30, 2019 Jun. 30, 2019 Sep. 30, 2018 Sep. 30, 2019 Sep. 30, 2018 
Interest Income                
Loans$11,989 $11,361 $10,185 $34,199 $28,373  
Securities -  -  -  -  -  
Taxable 723  745  599  2,209  1,553  
Tax-exempt 465  442  404  1,339  1,238  
Other 242  77  120  441  311  
Total interest income 13,419  12,625  11,308  38,187  31,475  
Interest Expense               
Deposits 2,900  2,460  1,818  7,472  4,653  
Borrowings 167  274  263  618  662  
Total interest expense 3,067  2,734  2,081  8,090  5,315  
Net Interest Income 10,352  9,891  9,227  30,097  26,160  
Provision for Loan Losses 375  375  375  1,125  1,125  
Net Interest Income After Provision for Loan Losses 9,977  9,516  8,852  28,972  25,035  
Noninterest income               
Service charges 560  556  555  1,618  1,599  
Net gains and commissions on loan sales and servicing 536  383  416  1,317  1,183  
Title insurance income 331  307  86  817  86  
Net realized gains on sales of available-for-sale securities -  -  2  -  (64) 
Net realized gain/(loss) on sales of foreclosed assets -  -  -  -  11  
Increase in cash value of life insurance 108  108  111  325  319  
Other 470  598  268  1,487  652  
Total noninterest income 2,005  1,952  1,438  5,564  3,786  
Noninterest Expense               
Salaries and employee benefits 4,665  4,380  3,772  13,669  10,631  
Net occupancy and equipment expense 908  981  845  2,850  2,523  
Data processing fees 395  387  361  1,148  1,052  
Professional fees 209  309  241  742  605  
Marketing expense 247  242  213  728  638  
Printing and office supplies 72  79  65  225  217  
State financial institution tax 226  205  156  636  469  
FDIC insurance premiums 2  73  132  102  365  
Other 862  914  749  2,524  2,201  
Total noninterest expense 7,586  7,570  6,534  22,625  18,701  
Income before Income Tax 4,396  3,898  3,756  11,911  10,119  
Provision for Income Taxes 775  737  695  2,162  1,818  
Net Income$3,621 $3,161 $3,062 $9,749 $8,301  
Basic Earnings Per Share$1.79 $1.57 $1.88 $4.83 $5.11  
Diluted Earnings Per Share$1.77 $1.55 $1.83 $4.77 $4.99  
                



ADDITIONAL FINANCIAL INFORMATION                
(Dollars in thousands except per share amounts)(Unaudited) Three Months Ended Nine Months Ended
  Sep. 30, 2019 Jun. 30, 2019 Sep. 30, 2018 Sep. 30, 2019 Sep. 30, 2018 
Performance Ratios:                
Return on average assets 1.28% 1.17% 1.20% 1.20% 1.15% 
Return on average equity 11.56% 10.51% 15.00% 10.78% 13.88% 
Return on average tangible common equity 11.73% 10.66% 15.18% 10.94% 14.00% 
Net interest margin 3.91% 3.91% 3.86% 3.94% 3.84% 
Efficiency ratio 61.39% 63.92% 61.28% 63.44% 62.32% 
                 
Asset Quality Ratios and Data: As of or for the Three Months Ended      
  Sep. 30, 2019  Jun. 30, 2019  Sep. 30, 2018        
Nonaccrual loans $2,268  $1,828  $3,959        
Loans past due 90 days and still accruing 997  253  24        
Non-performing investment securities -  -  -        
OREO and other non-performing assets -  -  -        
Total non-performing assets $3,265  $2,081  $3,983        
                 
Non-performing assets to total assets 0.29% 0.19% 0.39%       
Net charge-offs quarter ending $(166)  $81  $2        
                 
Allowance for loan loss $8,534  $7,994  $7,271        
Nonaccrual loans $2,268  $1,828  $3,959        
Allowance for loan loss to non accrual loans 376.29% 437.29% 183.65%       
Allowance for loan losses to loans outstanding 0.97% 0.92% 0.91%       
                 
Restructured loans included in non-accrual $289  $289  $324        
Performing restructured loans (RC-C) $342  $344  $1,818        
                 
Book Values:                
Total shareholders' equity $125,986  $122,626  $81,708        
Less: goodwill and intangible assets 2,169  1,615  1,512        
Shareholders' equity less goodwill and intangible assets $123,816  $121,012  $80,197        
Common shares outstanding 2,019,463  2,016,913  1,637,522        
Less: treasury shares -  -  -        
Common shares as adjusted 2,019,463  2,016,913  1,637,522        
Book value per common share $ 62.39  $ 60.80  $ 49.90        
                 
Tangible book value per common share $ 61.31  $ 60.00  $ 48.97        
                 


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

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Source: Heartland BancCorp