Heartland BancCorp Earnings Increase to $2.2 Million in 2Q17; Declares Quarterly Cash Dividend of $0.4301 per Share
GAHANNA, Ohio, July 18, 2017 (GLOBE NEWSWIRE) -- Heartland BancCorp (“the company,” and “the bank”) (OTCQB:HLAN), today reported second quarter net income increased 21.3% to $2.2 million, or $1.37 per diluted share, compared to $1.8 million, or $1.13 per diluted share, in the preceding quarter and grew 10.8% from $2.0 million, or $1.26 per diluted share, in the second quarter a year ago. In the first six months of 2017, net income increased 7.3% to $4.1 million, or $2.50 per diluted share, compared to $3.8 million, or $2.37 per diluted share, in the first six 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 October 10, 2017, to shareholders of record as of September 25, 2017, providing a 2.35% current yield at recent market prices.
“Our operating performance and loan and deposit growth during the second quarter is a direct result of expanding our banking team, investing in branch expansion, and the continual drive to deliver value,” stated G. Scott McComb, Chairman, President and CEO. “We made strategic investments in our personnel, added fixed costs to expand our branch network into new markets, and continue to seek diversification into new business verticals. We made these additional investments in our future, while returning double digit growth in quarterly earnings, total revenues, assets, loans and deposits from a year ago.”
Second Quarter Financial Highlights (at or for the period ended June 30, 2017)
- Net income was $2.2 million, or $1.37 per diluted share, in 2Q17.
- Net interest margin improved to 3.97% compared to 3.94% in the preceding quarter and 3.92% in the second quarter a year ago.
- Annualized return on average assets was 1.07% for the second quarter of 2017.
- Annualized return on average equity was 12.08%.
- Total assets increased 10.7% to $845.1 million, compared to $763.3 million a year earlier.
- Total deposits increased 11.5% to $716.8 million from a year ago.
- Net loans increased 14.9% to $663.4 million from a year ago.
- Non-performing assets improved to $3.2 million, or 0.39% of total assets, at June 30, 2017, compared to $4.3 million, or 0.53%, three months earlier and $5.7 million, or 0.75%, one year earlier.
- Tangible book value per share increased 5.9% to $47.16 per share compared to $44.55 per share one year earlier.
- Declared quarterly cash dividend of $0.4301 per share, which represents a 2.35% yield based on the June 30, 2017 stock price ($73.25).
Balance Sheet Review
“Our brand and reputation in the greater Columbus market continues to attract strong demand for loans, primarily in the agricultural, commercial and industrial (C&I), and residential mortgage sectors,” said McComb. Net loans increased 14.9% to $663.4 million at June 30, 2017, compared to $577.4 million at June 30, 2016 and increased 4.4% compared to $635.7 million at March 31, 2017.
Total deposits increased 11.5% to $716.8 million at June 30, 2017, compared to $642.7 million a year earlier and increased 1.8% compared to $704.2 million three months earlier. Demand deposit accounts represented 22.7%, savings, NOW and money market accounts represented 36.0%, and CDs comprised 41.3% of the total deposit portfolio, at June 30, 2017.
Heartland’s total assets increased 10.7% to $845.1 million at June 30, 2017, compared to $763.3 million a year earlier and shareholders’ equity increased 7.0% to $75.4 million at June 30, 2017, compared to $70.5 million one year ago. At quarter end, Heartland’s tangible book value increased 5.9% to $47.16 per share compared to $44.55 per share one year earlier.
Operating Results
Heartland’s net interest income before the provision for loan loss increased 11.5% to $7.5 million in the second quarter of 2017, compared to $6.8 million in the second quarter a year ago, and increased 6.2% compared to $7.1 million in the preceding quarter. In the first six months of the year, net interest income before the provision for loan loss increased 8.6% to $14.6 million, compared to $13.5 million in the first six months of 2016.
Heartland’s total revenues (net interest income before the provision for loan losses, plus non-interest income) increased 13.6% to $8.7 million in the second quarter, compared to $7.7 million in the second quarter a year ago, and increased 8.9% compared to $8.0 million in the preceding quarter. Year-to-date, total revenues increased 10.0% to $16.8 million, compared to $15.2 million in the first six months of 2016.
Net interest margin improved to 3.97% in the second quarter of 2017, compared to 3.94% in the preceding quarter and 3.92% in the second quarter a year ago. The slight increase in the net interest margin during the current quarter was due to strong loan growth, resulting in a loan-to-asset ratio of 78.5% at June 30, 2017 compared to 75.6% one year ago. In the first six months of 2017, the net interest margin was 3.95% compared to 3.97% in the first six months a year ago.
Noninterest income improved 28.3% to $1.2 million in the second quarter, compared to $940,000 in the second quarter a year ago, and increased 29.0% compared to $935,000 in the preceding quarter. In the first six months of 2017, noninterest income increased 21.0% to 2.1 million, compared to $1.8 million in the first six months of 2016.
Heartland’s second quarter noninterest expenses were $5.4 million, compared to $4.8 million in the second quarter a year ago and $5.2 million in the preceding quarter. The efficiency ratio for the second quarter of 2017 was 61.43%, compared to 62.99% for the second quarter of 2016. “We continue to invest in seasoned bankers while increasing revenues and reducing our efficiency ratio as the bank executes on its organic growth strategy,” said McComb.
Credit Quality
Nonaccrual loans decreased 13.5% to $3.1 million at June 30, 2017, compared to $3.6 million three months earlier and decreased 40.1% compared to $5.2 million a year earlier. There were $22,000 in loans past due 90 days and still accruing at June 30, 2017, compared to $271,000 at the end of the preceding quarter and $479,000 a year ago. There were $735,000 in restructured loans included in nonaccrual loans at June 30, 2017, as compared to $740,000 three months earlier.
Performing restructured loans that were not included in nonaccrual loans at the end of the second quarter of 2017 were $1.9 million, compared to $2.3 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 June 30, 2017, compared to $400,000 at March 31, 2017.
Heartland’s nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, decreased 26.5% to $3.2 million, or 0.39% of assets, at June 30, 2017, compared to $4.3 million, or 0.53% of assets, three months earlier, and decreased 44.7% compared to $5.7 million, or 0.75% of assets, a year ago.
The second quarter provision for loan losses was $255,000, compared to $330,000 in the preceding quarter and $135,000 in the second quarter a year ago. As of June 30, 2017, the allowance for loan losses represented 198.5% of nonaccrual loans compared to 165.3% three months earlier, and 114.1% one year earlier.
The allowance for loan losses was $6.2 million, or 0.97% of total loans at June 30, 2017, compared to $6.0 million, or 0.94% of total loans at March 31, 2017, and $6.0 million, or 1.03% of total loans a year ago. Net charge-offs were $20,000 in the second quarter, which was unchanged compared to the preceding quarter. Net charge-offs were $56,000 in the second quarter a year ago.
About Heartland BancCorp
Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates thirteen full-service banking offices. Heartland Bank, founded in 1911, provides full service commercial, small business, and consumer banking services; alternative investment services; insurance 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 HeartlandBank.com.
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.
| Heartland BancCorp | |||||||||
| Consolidated Balance Sheets | |||||||||
| Assets | June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||
| Cash and cash equivalents | 26,859,082 | 35,295,248 | 33,727,073 | ||||||
| Available-for-sale securities | 108,841,483 | 103,322,669 | 115,496,339 | ||||||
| Held-to-maturity securities, fair value $5,608,318 and $6,362,826 at June 30, 2017 and 2016, respectively and $5,722,494 at March 31, 2017 | 5,464,807 | 5,552,890 | 5,987,094 | ||||||
| Loans, net of allowance for loan losses of $6,237,997 and $5,983,550 at June 30, 2017 and 2016, respectively and $6,008,531 at March 31, 2017 | 663,437,938 | 635,681,470 | 577,357,438 | ||||||
| Premises and equipment | 18,078,901 | 14,910,491 | 13,930,605 | ||||||
| Nonmarketable equity securities | 2,830,339 | 2,830,339 | 2,825,439 | ||||||
| Foreclosed assets held for sale | - | 400,000 | - | ||||||
| Interest receivable | 2,365,999 | 2,679,291 | 2,123,285 | ||||||
| Goodwill | 417,353 | 417,353 | 417,353 | ||||||
| Deferred income taxes | 2,374,481 | 2,374,481 | 1,765,794 | ||||||
| Life insurance assets | 12,909,209 | 12,824,596 | 9,453,665 | ||||||
| Other | 1,476,628 | 2,131,784 | 261,743 | ||||||
| Total assets | $ | 845,056,220 | $ | 818,420,612 | $ | 763,345,828 | |||
| Liabilities and Shareholders' Equity | |||||||||
| Liabilities | |||||||||
| Deposits | |||||||||
| Demand | $ | 162,886,976 | $ | 157,531,055 | $ | 132,048,433 | |||
| Saving, NOW and money market | 257,703,537 | 263,127,467 | 230,829,215 | ||||||
| Time | 296,232,569 | 283,518,058 | 279,800,706 | ||||||
| Total deposits | 716,823,082 | 704,176,580 | 642,678,354 | ||||||
| Short-term borrowings | 16,495,538 | 20,422,504 | 24,290,996 | ||||||
| Long-term debt | 30,960,000 | 15,460,000 | 15,460,000 | ||||||
| Interest payable and other liabilities | 5,426,589 | 5,727,564 | 10,464,687 | ||||||
| Total liabilities | 769,705,209 | 745,786,648 | 692,894,037 | ||||||
| Shareholders' Equity | |||||||||
| Common stock, without par value; authorized 5,000,000 shares; issued 2017 - 1,589,028 shares 2016 - 1,572,178 shares and March 2017 - 1,587,228 shares | 24,090,857 | 24,033,757 | 24,115,306 | ||||||
| Retained earnings | 50,978,591 | 49,408,956 | 44,582,957 | ||||||
| Accumulated other comprehensive income (expense) | 281,563 | (808,749 | ) | 1,753,528 | |||||
| Total shareholders' equity | 75,351,011 | 72,633,964 | 70,451,791 | ||||||
| Total liabilities and shareholders' equity | $ | 845,056,220 | $ | 818,420,612 | $ | 763,345,828 | |||
| Book value per share | $ | 47.42 | $ | 45.76 | $ | 44.81 | |||
| Heartland BancCorp | ||||||||||||||
| Consolidated Statements of Income | ||||||||||||||
| Three Months Ended, | Six Months Ended | |||||||||||||
| Interest Income | June 30, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||
| Loans | $ | 7,900,422 | $ | 7,371,268 | $ | 6,908,443 | $ | 15,271,690 | $ | 13,710,163 | ||||
| Securities | ||||||||||||||
| Taxable | 390,666 | 364,164 | 401,212 | 754,830 | 836,597 | |||||||||
| Tax-exempt | 397,889 | 393,430 | 422,614 | 791,319 | 833,584 | |||||||||
| Other | 48,700 | 48,165 | 34,617 | 96,865 | 70,828 | |||||||||
| Total interest income | 8,737,677 | 8,177,027 | 7,766,886 | 16,914,704 | 15,451,172 | |||||||||
| Interest Expense | ||||||||||||||
| Deposits | 1,069,704 | 962,964 | 908,841 | 2,032,668 | 1,800,765 | |||||||||
| Borrowings | 129,388 | 116,704 | 99,498 | 246,092 | 173,720 | |||||||||
| Total interest expense | 1,199,092 | 1,079,668 | 1,008,339 | 2,278,760 | 1,974,485 | |||||||||
| Net Interest Income | 7,538,585 | 7,097,359 | 6,758,547 | 14,635,944 | 13,476,687 | |||||||||
| Provision for Loan Losses | 255,000 | 330,000 | 135,000 | 585,000 | 375,000 | |||||||||
| Net Interest Income After Provision for Loan Losses | 7,283,585 | 6,767,359 | 6,623,547 | 14,050,944 | 13,101,687 | |||||||||
| Noninterest income | ||||||||||||||
| Service charges | 509,996 | 480,842 | 489,939 | 990,838 | 944,588 | |||||||||
| Net Gains and commissions on loan sales | 307,185 | 160,778 | 123,727 | 467,963 | 246,452 | |||||||||
| Net realized gains on available-for-sale securities | - | 6,128 | 133,425 | 6,128 | 197,711 | |||||||||
| Net realized gain/(loss) on sales of foreclosed assets | 139,497 | - | - | 139,497 | - | |||||||||
| (Loss) gain on sale of premises and equipment | - | - | - | - | - | |||||||||
| Gain on redemption of life insurance proceeds | - | - | - | |||||||||||
| Increase in cash value of life insurance | 84,614 | 92,605 | 60,709 | 177,219 | 126,147 | |||||||||
| Other | 164,873 | 194,846 | 132,193 | 359,719 | 254,851 | |||||||||
| Total noninterest income | 1,206,165 | 935,199 | 939,993 | 2,141,364 | 1,769,749 | |||||||||
| Noninterest Expense | ||||||||||||||
| Salaries and employee benefits | 3,111,741 | 3,166,256 | 2,792,939 | 6,277,997 | 5,727,503 | |||||||||
| Net occupancy and equipment expense | 583,230 | 558,715 | 533,519 | 1,141,945 | 1,007,492 | |||||||||
| Data processing fees | 327,627 | 303,774 | 287,053 | 631,401 | 552,589 | |||||||||
| Professional fees | 159,584 | 124,880 | 129,549 | 284,464 | 241,588 | |||||||||
| Marketing expense | 271,000 | 141,000 | 149,349 | 412,000 | 298,698 | |||||||||
| Printing and office supplies | 49,022 | 64,994 | 51,960 | 114,016 | 96,157 | |||||||||
| State franchise taxes | 141,825 | 141,825 | 139,500 | 283,650 | 279,000 | |||||||||
| FDIC Insurance premiums | 80,500 | 79,500 | 98,000 | 160,000 | 196,000 | |||||||||
| Other | 647,681 | 607,687 | 583,718 | 1,255,368 | 1,191,831 | |||||||||
| Total noninterest expense | 5,372,210 | 5,188,631 | 4,765,587 | 10,560,841 | 9,590,858 | |||||||||
| Income before Income Tax | 3,117,540 | 2,513,927 | 2,797,953 | 5,631,467 | 5,280,578 | |||||||||
| Provision for Income Taxes | 888,953 | 677,365 | 787,318 | 1,566,318 | 1,491,738 | |||||||||
| Net Income | $ | 2,228,587 | $ | 1,836,562 | $ | 2,010,635 | $ | 4,065,149 | $ | 3,788,840 | ||||
| Basic Earnings Per Share | $ | 1.40 | $ | 1.16 | $ | 1.28 | $ | 2.56 | $ | 2.42 | ||||
| Diluted Earnings Per Share | $ | 1.37 | $ | 1.13 | $ | 1.26 | $ | 2.50 | $ | 2.37 | ||||
| ADDITIONAL FINANCIAL INFORMATION | ||||||||||||||||||
| (Dollars in thousands except per share amounts)(Unaudited) | Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||
| Performance Ratios: | ||||||||||||||||||
| Return on average assets | 1.07 | % | 0.93 | % | 1.07 | % | 1.01 | % | 1.01 | % | ||||||||
| Return on average equity | 12.08 | % | 10.34 | % | 11.77 | % | 11.21 | % | 11.12 | % | ||||||||
| Net interest margin | 3.97 | % | 3.94 | % | 3.92 | % | 3.95 | % | 3.97 | % | ||||||||
| Efficiency ratio | 61.43 | % | 64.64 | % | 62.99 | % | 62.97 | % | 63.73 | % | ||||||||
| Asset Quality Ratios and Data: | As of or for the Three Months Ended | |||||||||||||||||
| June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||||||||||||
| Non accrual loans | $ | 3,143 | $ | 3,635 | $ | 5,246 | ||||||||||||
| Loans past due 90 days and still accruing | 22 | 271 | 479 | |||||||||||||||
| Non-performing investment securities | - | - | - | |||||||||||||||
| OREO and other non-performing assets | - | 400 | - | |||||||||||||||
| Total non-performing assets | $ | 3,165 | $ | 4,306 | $ | 5,725 | ||||||||||||
| Non-performing assets to total assets | 0.39 | % | 0.53 | % | 0.75 | % | ||||||||||||
| Net charge-offs quarter ending | $ | 20 | $ | 20 | $ | 56 | ||||||||||||
| Allowance for loan loss | $ | 6,238 | $ | 6,008 | $ | 5,984 | ||||||||||||
| Non accrual loans | $ | 3,143 | $ | 3,635 | $ | 5,246 | ||||||||||||
| Allowance for loan loss to non accrual loans | 198.47 | % | 165.28 | % | 114.07 | % | ||||||||||||
| Allowance for loan losses to loans outstanding | 0.97 | % | 0.94 | % | 1.03 | % | ||||||||||||
| Restructured loans included in non-accrual | $ | 735 | $ | 740 | $ | 795 | ||||||||||||
| Performing restructured loans (RC-C) | $ | 1,902 | $ | 2,330 | $ | 3,800 | ||||||||||||
| Book Values: | ||||||||||||||||||
| Total shareholders' equity | $ | 75,351 | $ | 72,634 | $ | 70,452 | ||||||||||||
| Less, goodwill | 417 | 417 | 417 | |||||||||||||||
| Shareholders' equity less goodwill | $ | 74,934 | $ | 72,217 | $ | 70,035 | ||||||||||||
| Common shares outstanding | 1,589,028 | 1,587,228 | 1,572,178 | |||||||||||||||
| Less treasury shares | - | - | - | |||||||||||||||
| Common shares as adjusted | 1,589,028 | 1,587,228 | 1,572,178 | |||||||||||||||
| Book value per common share | $ | 47.42 | $ | 45.76 | $ | 44.81 | ||||||||||||
| Tangible book value per common share | $ | 47.16 | $ | 45.50 | $ | 44.55 | ||||||||||||
Contacts: G. Scott McComb, Chairman, President & CEO Heartland BancCorp 614-337-4600
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